Indonesia scraps plans to shut down coal power plants early after calls for aid, not loans, fall on deaf ears
Indonesia earlier scrapped plans to shut down coal-fired power plants after expressing dismay at requests from rich nations to help them.
At the Group of 20 summit held in Bali last December, Indonesia and developed countries and banks announced a $20 billion deal to transition Southeast Asians from coal to clean energy.
But this announcement made many details clear. Since then, Indonesia has been pushing for the funds to provide grants rather than loans, adding to the country’s debt burden.
Yesterday, Indonesia published its investment plan which showed that its climate commitments have lost some water.
The reason is that the funding provided by international partners is insufficient, said Fabi Tumiwa, director of the Institute for Essential Services Improvement (IESR), which is part of a working group that advises the Indonesian government.
“I’m disappointed because we expected the plan to meet the targets of the Paris Agreement,” Tumiwa told Climate Home. “This puts JETP further away from that.”
Targets run out of water
Indonesia’s coal-fired generation capacity will serve a sixth by 2030, according to a draft plan published by Climate Home in August.
But that target was dropped from yesterday’s final edition. Instead, Indonesia now plans to begin closing coal plants before they close by 2035.
Meanwhile, It plans to reduce the capacity of large renewable plants and existing coal plants to meet emissions reduction targets by 2030.
“It’s very clear that they are,” an Indonesian government official told Reuters in September. [Western nations] They are not interested in paying for early retirement.
The government dropped plans to cap the power sector’s carbon dioxide emissions of 290 million tonnes by 2030.
Tied plants headache
While the new target of 250 million tonnes seems more ambitious, Tumiwa said it is not that much because it does not include captive coal-fired power plants.
These power plants do not provide general electricity to the public but generate a variety of industries such as Indonesia’s rapidly expanding nickel sector.
The blueprint released this week excludes these so-called captive plants entirely from the calculations because “further work is needed to develop a viable decarbonization plan” for them, the document says.
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This case, which He delayed the publication When the agreement was announced last year, the plan in August was complicated by the use of incorrect assumptions for the modeling of the agreed targets.
“The number of plants captured is much higher than previously thought,” Tumiwa said.
The result is that reaching the originally promised emissions peak is “extremely difficult,” the document now acknowledges.
It concluded that Indonesia’s power sector’s off-grid captive power capacity may be higher than projected.
A loan is not a grant.
Despite Indonesia’s complaints, the investment plan shows that the majority of financing is in the form of loans and grants, with only 2.5% of the funds.
About three-fifths of the funds are commercial loans and the rest are bank guarantees and ordinary loans at commercial interest.
The United States is the largest donor, but financing is secured by commercial loans and multilateral development bank guarantees.
The European Union and European countries like France, Germany – as well as Canada – are providing aid and concessional loans.
The investment plan is not completely final because it is subject to public consultation.