Indonesia announced a Just Energy Transition Partnership (JETP) with the G7, Denmark and Norway at the G20 summit, hosted in Bali in November 2022. This agreement – modelled on a similar initiative in South Africa – mobilises an initial $20 billion in finance from donor countries and private banks to support decarbonising Indonesia’s power sector, with targets to peak electricity emissions by 2030, ramp up the share of renewables and deliver a just transition that focuses on the workers and communities most affected by a transformation of the energy system away from coal.
Our project delivers a programme of work to support the mobilisation and deployment of finance for a socially just power sector transition in Indonesia. A key objective is to identify where finance is needed, estimate the magnitude required and critically appraise delivery instruments. The analysis is intended to offer critical insight to inform the development of a Just Energy Transition Investment and Policy Plan over the course of 2023.
An initial focus of the project is to identify the key aspects of finance needs, from early retirement of coal plants and mines; to build out of clean technologies; to supporting workers and affected communities; to developing the institutional capacity essential to facilitate the transition to low carbon, secure electricity supply in Indonesia. We will develop a methodology and accompanying open-source tool to estimate these. Whilst initially focusing on Indonesia’s energy transition, we anticipate designing an approach that can serve to inform similar processes elsewhere.
In a second phase, the project will apply and iterate the methodology to map (public) finance needs over time both to deliver, and go beyond, the initial targets of the JETP. This will draw on existing data sources, incorporate and align with ongoing research, develop new analysis and engage key stakeholders to ensure relevance and validate our findings.
The project runs until the end of 2023 and is delivered in collaboration with the Institute for Essential Services Reform (IESR), funded by the German Federal Foreign Office.