Government Launches ETM to Accelerate Energy Transition

Government Launches ETM to Accelerate Energy Transition

The government accelerates the transition from fossil energy to more environmentally friendly energy by launching the Energy Transition Mechanism (ETM) Country Platform program. The government inaugurated this program on Monday (14/11/2022), in Bali.

Energy Transition Mechanism (ETM), according to the Ministry of Finance, is a program to increase energy infrastructure development and accelerate the energy transition towards net zero emissions/NZE (Net Zero Emissions) with fair and affordable principles in 2060 or accelerated.

The main reason why Indonesia implements this ETM is that Indonesia’s economy is projected to continue to grow and is targeted to become a developed country in 2045. For this reason, Indonesia needs enormous energy, but must not harm the environment.

One of the ETM Schemes is the Carbon Reduction Facility. This scheme is used for early retirement from coal-fired power plants (PLTU) in Indonesia.

Furthermore, one of the first power plants to use the ETM scheme is PLTU Cirebon-1 with a capacity of 660 Megawatts (MW) operated by PT Cirebon Electric Power (CEP).

The early termination of operation for the Cirebon-1 PLTU was carried out through the Energy Transition Mechanism (ETM) scheme. This mechanism is a transformative program that helps Asia Pacific retire power plants and replace them with clean energy capacity.

Any country building an ETM will need leadership to really take the program seriously in the context of demand, market structure, resources, and policies.

“The Indonesian government has taken on this role and created the Indonesia ETM Country Platform which will be a vehicle for financing, managing, and monitoring the energy transition,” said ADB President Masatsugu Asakawa at the launch of Indonesia’s ETM yesterday, Monday (14/11/2022), in Bali.

In assisting Indonesia, ADB will work with the Indonesian government to oversee the progress of ETM in the country.

Minister of Finance Sri Mulyani Indrawati said the ETM was aimed at mobilizing funds to accelerate the energy transition, one of which was accelerating the termination of the operational period or early retirement of coal-based Steam Power Plants (PLTU).

Through this ETM, the Government of Indonesia has allocated US$ 500 million which will support more than US$ 4 billion in financing that will accelerate the retirement of a 2 Giga Watt (GW) coal-fired power plant.

“With the retirement of the Coal Power Plant, the result? CO2 emissions will decrease by around 50 million tons in 2030 and 160 million tons in 2040,” explained Sri Mulyani.

“This is to mobilize massive financial capital to accelerate the energy transition from fossil fuels to renewable energy. This is a manifestation of our nation’s commitment to realizing a fair and affordable energy transition,” he explained.