Indonesia’s strategic move in November unveiled an ambitious $20 billion investment initiative, rallying support from major global lenders spearheaded by the United States and Japan. This significant financial mobilization aims to expedite the country’s power sector’s decarbonization, emphasizing the urgency of prompt fund allocation for immediate impact.

Outlined within the Just Energy Transition Partnership (JETP), Indonesia sets a firm target to slash carbon dioxide emissions to 250 million metric tons by 2030 for its on-grid power sector, a marked contrast to the anticipated 350 million under usual business conditions. The official release of the Comprehensive Investment and Policy Plan (CIPP), subsequent to a comprehensive public review of its earlier draft earlier this month, solidifies this investment proposition. As one of the globe’s primary contributors to greenhouse gases, Indonesia is committed to significantly increasing the renewable energy component in its power generation to 44% by 2030, a substantial rise from the 12% recorded in 2022. Erick Thohir, the ad-interim chief minister for investment affairs, emphasized the pressing need for an intensified and accelerated partnership to prioritize key projects and promptly fulfill financial commitments. The CIPP estimates the necessity of $97.3 billion in investments to reach its objectives, with $66.9 billion allocated to 400 projects slated to commence by 2030 at the latest. Michael Kleine, the U.S. charge d’affaires in Jakarta, foresees JETP funding accelerating energy transition investment, attracting more financial aid. Yet, environmentalists worry about the heavy dependence on commercial loans. With half of the funds coming from private financing, debates ensue over the reliance on standard or market-rate loans, raising questions about their implications. Indonesia’s JETP stands as the largest initiative in its category, second only to Vietnam’s $15 billion program.