Just Energy Transition Partnership (JETP)

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.

The Just Energy Transition Partnership (JETP) for Indonesia launched on November 15, 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, to define pathways to achieve new and accelerated targets 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 new targets and policies, JETP 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 its climate 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.

“INDONESIA IS COMMITTED TO USING OUR ENERGY TRANSITION TO ACHIEVE A GREEN ECONOMY AND DRIVE SUSTAINABLE DEVELOPMENT. WE ARE GRATEFUL FOR THE COOPERATION AND THE SUPPORT FROM OUR INTERNATIONAL PARTNERS TO REALIZE ITS FULL IMPLEMENTATION THAT WILL ACCELERATE THIS TRANSITION. THIS PARTNERSHIP WILL GENERATE VALUABLE LESSONS FOR THE GLOBAL COMMUNITY AND CAN BE REPLICATED IN OTHER COUNTRIES TO HELP MEET OUR SHARED CLIMATE GOALS THROUGH CONCRETE COLLABORATIVE ACTIONS.”

– INDONESIAN PRESIDENT JOKO WIDODO, NOVEMBER 15, 2022

Decarbonizing Indonesia’s Energy Sector

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.

Following Indonesia’s commitment to achieve Net Zero Emissions by 2060 and to align with the Enhanced Nationally Determined Contributions (NDCs) under the Paris Agreement to reduce Greenhouse Gas (GHG) emissions, PLN created a strategic roadmap to gradually reduce the use of fossil energy in power generation. In the short- to medium-term plan, PLN aims to reduce emissions intensity in all scopes by 15.7 percent in 2030 based on the 2021-2030 Electricity Supply Business Plan and reduce absolute GHG emissions by 98 million tons of CO2 in 2030. In the long-term plan, PLN aims to reduce emissions intensity from 0.892 tons of CO2/MWh in 2021 to zero by 2060, and achieve absolute zero GHG emissions in 2060 or sooner.

Between 2021-2022, PLN implemented eight lighthouse initiatives comprised of three categories to support the energy transition roadmap.

Decarbonization of coal power plants

Initiatives include planning and financing early retirement of coal plants, implementing biomass cofiring, conducting a pilot study on hydrogen and ammonia, and conducting a study on carbon capture storage (CCUS). PLN has already cancelled 13.3 GW of coal-fired power plants from planned in RUPTL 2019-2028 and 1.3GW PPA of coal power plants. PLN piloted Indonesia’s first carbon trading trial in 26 PLN Power plants and plans to replace 1.8GW of coal with renewable energy and 800MW of coal with natural gas. PLN also efficiently and cleanly converted biomass to electricity by adding biomass as a partial substitute fuel at 37 coal-fired power plants and plans to cofire up to 52 plants by 2025.

Expanding renewable energy capacity and its supporting system

PLN plans to build 21 Gigawatts (GW) of renewable energy plants under the 2021-2030 Green Electricity Supply Business Plan pipeline and roll out smart grids as a support system to meet Indonesia’s growing electricity demand for green energy.

Developing green ecosystem

PLN strives to develop green energy as a service, sustainably grow the use of new technologies, and cultivate new businesses related to electric vehicles and rooftop solar power systems.

Impact

PLN has already made significant progress to decarbonize Indonesia’s energy sector. PLN’s efforts will reduce or avoid a cumulative of approximately 3.2 billion tons of CO2. By acting and implementing sustainable practices with support from international partners, PLN will help Indonesia decarbonize and mitigate the impacts of climate change on the way to achieving its climate targets . Indonesia will have a modern, efficient, secure, and flexible power grid that will result in affordable, reliable, and sustainable electricity to power economic growth and prosperity. Indonesia will grow its renewable energy industry that will be a source of new green jobs in manufacturing, installing, constructing, maintaining, and operating solar and wind farms. Indonesians will also benefit from cleaner air and a healthier environment.