Just Energy Transition (JETP) Frequently Asked Questions

Last Update: June 2023

What is JETP? 

The Just Energy Transition Partnership (JETP) for Indonesia launched in November 2022 at the G20 Leaders’ Summit in Bali. The President of Indonesia and the International Partners Group (IPG), led by the United States and Japan, and including Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom, issued a Joint Statement to formalize the landmark partnership.

The JETP is an agreement to mobilize an initial $20 billion in public and private financing to decarbonize Indonesia’s energy sector, using a mix of grants, concessional loans, market-rate loans, guarantees, and private investments. It supports a global trajectory consistent with keeping the 1.5 °C global warming limit within reach.

Indonesia will develop a comprehensive JETP Investment and Policy Plan in August 2023, with support from international partners, that will outline pathways to achieve new and accelerated targets set forth in the JETP joint statement by:

• Peaking total power sector emissions by 2030, shifting the projected emissions peak forward;
• Capping power sector emissions at 290 MT of CO2 in 2030, down from the baseline value of 357 MT CO2;
• Establishing a goal to reach net zero emissions in the power sector by 2050, bringing forward Indonesia’s net zero power sector emissions target by ten years; and
• Accelerating the deployment of renewable energy so that renewable energy generation comprises at least 34 percent of all power generation by 2030, roughly doubling total renewables deployment over this decade compared to current plans.

For Indonesia to achieve these targets, the long-term partnership will need to mobilize the initial $20 billion in public and private financing over a three-to-five-year period and leverage the expertise, resources, and operations of the multilateral development banks. Indonesia recognizes the need for enhanced financing to pursue the JETP targets, additional sources of sustainable financing and the inclusion of international partners to leverage existing international initiatives, e.g., the G7 Partnership for Global Infrastructure and Investment.

Why was JETP created?

Our climate is changing faster than we can adapt. The climate crisis poses significant risks to Indonesia’s natural resources, including forests, rivers, biodiversity, and coastlines and the livelihoods of millions of Indonesians who depend on them. Indonesia is vulnerable to rising sea levels and extreme weather events that endanger people’s safety, homes, businesses, and infrastructure. The climate crisis also impacts agriculture and affects crop yields and food production, leading to food shortages and increased prices.

Transitioning away from fossil fuels to clean energy is crucial to addressing the climate crisis, capitalizing on long-term cost savings from renewables, and achieving energy security where Indonesia can generate its own energy and reduce its vulnerability to fluctuations in global fuel prices. In addition, renewable energy systems will help Indonesia achieve its goal for universal access to electricity. Remote island and rural communities can have reliable access to electricity independent of the power grid.

The Government of Indonesia recognizes its responsibility to address the climate crisis and contribute to global efforts to achieve net zero emissions. In doing so, the government will advance its commitment to creating quality jobs and protecting livelihoods and communities, especially women, youth, and vulnerable populations impacted by the coal industry.

Investing in renewable energy can stimulate economic growth and create job opportunities. The development of renewable energy infrastructure, such as solar and wind farms, requires skilled workers for manufacturing, installation, construction, maintenance, and operation. This can boost the local economy and provide employment opportunities for Indonesians.

Who is financing the $20 billion in JETP funds?

JETP intends to mobilize an initial $20 billion in public and private financing over three to five years, using a mix of grants, concessional loans, market-rate loans, guarantees, and private investments. Contributions to the JETP include $10 billion in public sector pledges from the International Partners Group and a commitment to work to mobilize $10 billion more from an initial set of private financial institutions, coordinated by the Glasgow Financial Alliance for Net Zero (GFANZ). Alliance members include Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, Mitsubishi UFJ Financial Group, and Standard Chartered. The partnership will also leverage the expertise, resources, and operations of multilateral development banks.

What is the anticipated impact of JETP for Indonesia?

Indonesia will have a modern, efficient, secure, and flexible power grid that will result in affordable, reliable, and sustainable electricity that will power economic growth and prosperity. Indonesia will achieve its decarbonization goals and mitigate the impacts of climate change in Indonesia and beyond its borders. Indonesians will also benefit from cleaner air and a healthier environment.

What Indonesia’s JETP Investment and Policy Plan include?

The JETP comprehensive Investment and Policy Plan will include:

• Decarbonization vision of Indonesia, JETP targets, and energy transition pathways
• Portfolio of JETP programs
• Implementation plan, policy, financing and just transition enablers required

What is PLN’s role in implementing JETP?

PLN has an important role in decarbonizing Indonesia’s energy sector and achieving JETP targets. PLN has made significant efforts to achieve the energy transition goal, decarbonization, with an emphasis on renewables and the development of a green ecosystem.

TRANSITIONING FROM FOSSIL FUEL TO RENEWABLES

With support from the International Partners Group and the initial $20 billion in public and private financing, PLN is accelerating the deployment of renewable energy and is exploring several energy transition scenarios, one which aims to achieve at least 34 percent of all power generation by 2030 to be powered by renewable energy. As part of the JETP, PLN will secure renewable solutions for power generation facilities outside Jawa-Bali, including captive power facilities. These solutions should be affordable (priced similarly or better than non-renewable alternatives), reliable (can provide base load), accessible, and timely (can be deployed within similar or better timelines than the non-renewable alternatives). All these factors will balance Indonesia’s imperative for industrial development and economic growth with its commitment to net zero.

As part of the transition away from fossil fuels, PLN will abstain from building any new on-grid coal power generation capacity . Additionally, with IPG support, PLN is exploring the early retirement of coal-fired power plants as prioritized and identified by the Indonesian Government in the JETP Investment and Policy Plan as a necessary element to achieve the JETP targets.

COMPREHENSIVE INVESTMENT AND POLICY PLAN

PLN is working with international partners to develop a comprehensive JETP Investment and Policy Plan (IPP) that will be released in August 2023. The IPP will outline the country’s long-term plan to increase renewable energy capacity. It will determine policy reforms required to achieve JETP targets, including tariff setting; local content requirements; power purchase agreements; supply side incentives; permitting requirements; procurement strategies and processes; local renewable energy manufacturing development; and other enabling policies. PLN will play a key role in implementing these policies and regulatory reforms.

What progress has PLN made toward the energy transition?

PLN has made significant efforts to achieve the energy transition goal, decarbonization, with an emphasis on renewables and the development of a green ecosystem. PLN will reduce or avoid a cumulative of approximately 3.2 billion tons of CO2 through the following activities:

• PLN canceled 13.3 GW of new coal power plants planned in Indonesia’s 2019 – 2028 Electricity Supply Business Plan and 1.3 GW coal power purchase agreement under the Green Electricity Supply Business Plan pipeline.
• PLN established biomass at 37 coal-fired power plants and will establish up to 52 plants by 2025. PLN replaced 1.8 GW of coal with renewable energy and 800 MW of coal with natural gas.
• PLN piloted Indonesia’s first carbon trading trial in 28 PLN power plants.
• PLN planned and developed 21 GW of renewable plants under the Green Electricity Supply Business Plan.
• PLN rolled out smart grid and control systems in several islands.
• PLN expanded the electric vehicle ecosystem with 600 units of charging stations.
• PLN also enabled more renewable energy consumption through green energy as a service.

What will the $20 billion in public and private financing fund?

The JETP Investment and Policy Plan will determine financing options required for JETP projects. PT Sarana Multi Infrastructure (PT SMI), a Special Mission Vehicle of the Ministry of Finance, will manage a country platform to administer and oversee energy transition funds.

PLN will play a key role in deploying JETP financing, subject to agreement with the JETP Investment and Policy Plan that includes a competitively tendered pipeline of projects. These projects must support continued progress in improvements to Indonesia’s policy and enabling environment, alignment with budgetary procedures and terms, responsiveness to progress by the Indonesian government and relevant actors, and transparent reporting.

What projects will PLN prioritize?

JETP is an integrated part of the greenest Electricity Supply Business Plan which is already planned until 2030 with a total project value of approximately $85 billion USD. The investment focus areas that will be funded by JETP financing will be published in the JETP Investment and Policy Plan.

What actions has PLN taken related to JETP?

PLN has taken concrete actions to support delivery of the JETP, by aligning the current Electricity Supply Business Plan with JETP. PLN has initiated an Energy Transition Team, consisting of seven work streams, to develop an official input to Indonesia’s JETP Investment and Policy Plan that takes into account the financial and technical implications of JETP for PLN. PLN also collaborates with the JETP Secretariat and JETP Working Groups with support from the Asian Development Bank, the International Energy Agency, and the United States Agency for International Development.