Indonesia recently inked agreements with significant countries and international lenders on the sidelines of G20. The deal will pave the way for billions of dollars as finance to support the country’s increased use of renewable energy and decreased reliance on coal.
On the eve of the Group of 20 meeting in Bali, Indonesia, the $20 billion deal was revealed. It is intended to assist developing nations in lessening their reliance on fossil fuels like coal and gas that produce carbon emissions that contribute to climate change. This program is known as the Just Energy Transition Partnership or JETP.
This agreement is a significant step for Indonesia, a significant coal exporter with a wealth of clean energy development possibilities.
Concessionary lending, grants, and equity of roughly $10 billion will be provided by participating countries, including those of the United States, Japan, Canada, Denmark, the European Union, France, Germany, Italy, Norway, and the United Kingdom. The remainder will be arranged, according to U.S. officials, by significant private international financial institutions that have previously committed to supporting climate investment.
Indonesia agreed to ensure that emissions from the nation’s power sector begin to decline by 2030 as part of the deal. The nation’s objective to eliminate all emissions from the electricity generation industry by 2050 has been signed up.
A JETP agreement was originally signed by South Africa at the COP26 climate summit in Glasgow the previous year. It demands that the Group of Seven’s main nations give the coal-rich nation $8.5 billion in grants and loans with favorable terms to assist it in reducing its reliance on fossil fuels.
U.S. officials claimed that the agreement with Indonesia had concrete, short timetables, will start shortly and will keep stakeholders informed in light of the lessons learned from the South Africa agreement.
The largest contract to date, which reflects the country’s huge reliance on coal, is with Indonesia. The third-largest coal producer in the world, Indonesia only has coal power facilities that are 12 or 13 years old on average. Such plants have a 45-year operational lifespan.
According to Swati D’Souza, an energy expert at the Institute for Energy, Economics, and Financial Analysis based in New Delhi, the initiative to create JETPs represents an awareness that developing countries are disproportionately facing the effects of climate change.
The negotiations with South Africa and Indonesia are being closely watched by other developing nations with coal-rich economies. Vietnam, Senegal, the Philippines, and India, the third-largest producer of greenhouse emissions in the world, are all thinking about joining similar agreements.
