Indonesia to bank on G7 investment deal to make huge emission savings, in boost for green transition

Indonesia will generate 44 per cent of its energy from renewables by 2030, details of a US$20 billion US and Japan-driven investment deal promised on Wednesday, dangling the prospect of saving tens of millions more tons of carbon emissions within the next seven years.

The plan, designed by the G7 to help Indonesia’s decarbonisation as part of the Just Energy Transition Partnership (JETP), only provides enough money to retire two coal-fired power plants of Indonesia’s 118 plants.

But it should restrict peak CO2 emissions from the power sector to 250 million tons instead of a projected 350 million by 2030.

Indonesia was the world’s ninth-largest source of CO2 emissions in 2021 according to data from the European Commission, with coal plants last year providing 67.5 per cent of the country’s electricity.

The JETP is seen as a kickstart to climate commitments in a country where green policy often falls short of promises.

It also represents a significant step in efforts by the United States and its allies, that form the International Partners Group, to win over developing nations seeking to decarbonise – a space contested with China.

“The JETP deal is important geostrategically because its success or failure – and specifically its ability to mobilise and deliver promised financing – will shape Indonesian [and Southeast Asian] perceptions on whether the US can deliver on big economic initiatives,” said Scot Marciel, former US ambassador to Indonesia and now a fellow at the Freeman Spogli Institute for International Studies. “The US inability to do so to date has hurt its standing in the region.”