In a groundbreaking move, Indonesia has launched its Comprehensive Investment and Policy Plan (CIPP), aiming to leverage $20 billion in financing from global lenders, spearheaded by the United States and Japan. This initiative is part of Indonesia’s ambitious Just Energy Transition Partnership (JETP), designed to expedite the decarbonization of its power sector. The country sets a bold target of reducing carbon dioxide emissions to 250 million metric tons for its on-grid power sector by 2030, a significant decrease from the estimated business-as-usual emissions of over 350 million.
As one of the world’s major greenhouse gas emitters, Indonesia plans to substantially boost the share of renewable energy in its power generation to 44% by 2030, compared to the current 12% in 2022. The ad-interim Chief Minister for Investment Affairs, Erick Thohir, emphasized the urgency of swift action, stating, “We have to move quickly because 2030 is less than seven years away.” The partnership envisions half of the pledged funds coming from private financing, including commercial loans, equity investments, or other debt instruments. However, some critics, such as Bhima Yudhistira from the Center of Economic and Law Studies, raise concerns about the nature of the financing deals, questioning whether they truly represent a departure from business-as-usual loans with advanced countries. Indonesia’s JETP stands out as the largest of its kind globally, surpassing Vietnam’s $15 billion scheme.