Joe Biden Ready to Fund Indonesia’s Energy Transition, Is This Debt?

energy transition

The President of the United States, Joe Biden, has committed to funding the energy transition in Indonesia of up to US$ 20 billion. Then, in what form is the funding assistance? Minister of Finance Sri Mulyani Indrawati explained.

As is well known, President of the United States Joe Biden during the first day of the G20 Summit, Tuesday (15/11/2022), had said that his party and developed countries were committed to raising US$ 20 billion in funds for Indonesia to support the development of New Renewable Energy ( EBT) and support the acceleration of the energy transition through the termination of the coal-fired Steam Power Plant (PLTU).

“We together with Indonesia and Japan created the Just Energy Transition Partnership (JETP) to achieve Net Zero Emissions (NZE). Together we mobilized US$ 20 billion in developing EBT and supporting the energy transition away from coal. US$ 20 billion ambition financial institution for the energy transition whose impact can be felt on the world,” he said during the G20 Summit in Bali, Tuesday (11/15/2022).

Biden said this could also be used to promote projects based on renewable energy such as supporting the development of electric vehicles and technology.

This funding will be channeled through the Just Energy Transition Partnership (JETP) initiative led by the United States and Japan. The two developed countries will lead negotiations with the International Partners Group regarding funding for the energy transition in Indonesia, especially to leave coal as an energy source for power plants.

Furthermore, Sri Mulyani said, the details of this funding commitment will still be discussed in more detail with some related parties because this is a combination of multilateral development banks, bilateral, and also philanthropic, as well as grants.

“We will look at it from the detail side because it is various combinations from multilateral development banks, bilateral, and also from a philanthropic perspective, grants, that’s what we will see. Later we will see,” she said.

However, she stressed that the funding of US$ 20 billion would definitely come from international parties, not from Indonesian institutions.

“That will be international,” she said.

Sri Mulyani said that this program would later be aimed at accelerating the retirement of coal-fired power plants. However, it will be seen later whether there are PLN PLTU assets that are ready to be retired or PLTU from private power developers (Independent Power Producers/IPP).

“So it will be seen based on what was submitted yesterday, from PLN there are those that are ready to come from PLN’s own assets, from IPP the involvement has been announced from INA, so per project will be seen,” she explained.