| Project Detail |
The knowledge and support technical assistance (TA) will provide institutional support and implementation capacity to the Just Energy Transition Partnership Secretariat (JETP Secretariat), established in February 2023, to bolster the technical work, coordination, and operationalization of Indonesias Just Energy Transition Partnership (I-JETP). The Asian Development Bank (ADB) is the lead development partner providing institutional support and implementation capacity to the Secretariat. The I-JETP was launched on 15 November 2022 as a collaboration between the (i) Government of Indonesia; (ii) International Partners Group (IPG), consisting of the governments of Canada, Denmark, France, Germany, Italy, Japan, Norway, the United Kingdom, and the United States, as well as the European Union; and (iii) Glasgow Financial Alliance for Net Zero. Japan and the United States co-lead the IPG for the I-JETP.
Project Name Institutional and Capacity Building Support for the Just Energy Transition Partnership Secretariat
Project Number 57050-001
Country / Economy Indonesia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
The knowledge and support technical assistance (TA) will provide institutional support and implementation capacity to the Just Energy Transition Partnership Secretariat (JETP Secretariat), established in February 2023, to bolster the technical work, coordination, and operationalization of Indonesias Just Energy Transition Partnership (I-JETP). The Asian Development Bank (ADB) is the lead development partner providing institutional support and implementation capacity to the Secretariat. The I-JETP was launched on 15 November 2022 as a collaboration between the (i) Government of Indonesia; (ii) International Partners Group (IPG), consisting of the governments of Canada, Denmark, France, Germany, Italy, Japan, Norway, the United Kingdom, and the United States, as well as the European Union; and (iii) Glasgow Financial Alliance for Net Zero. Japan and the United States co-lead the IPG for the I-JETP. The I-JETP aims to support Indonesias accelerated and socially just energy transition, including the accelerated deployment of renewable energy and a phase-down of on-grid and off-grid coal-fired electricity generation, a more climate-resilient economy, and, ultimately, economy-wide net-zero emissions.
Project Rationale and Linkage to Country/Regional Strategy
As of 2021, Indonesia has been the fifth-heaviest cumulative greenhouse gas (GHG) emitter globally at more than 100 gigatons, from deforestation, peatland fires, and the use of fossil fuels. The countrys energy sector emissions increased by 122% to about 600 million tons of carbon dioxide between 2000 and 2021, and coal accounted for more than 70% of the increase. In 2019, Indonesias electricity generation capacity was dominated by coal at 50.7%, followed by gas at 26.0%, oil at 7.4%, hydropower at 7.0%, geothermal at 3.0%, biomass at 2.7%, wind and biogas at 0.2% each, solar at 0.1%, and a small amount of waste-to-energy.
Under Indonesias nationally determined contributions submitted in 2015, the government committed to reduce, by 2030, 29.0% of its GHG emissions unconditionally, and 41.0% conditional on international assistance, against the business-as-usual scenario. Under enhanced nationally determined contributions, submitted in 2022, it increased the unconditional reduction target to 31.89% and the conditional reduction target to 43.2%. Indonesia submitted the Long-Term Strategy for Low Carbon and Climate Resilience 2050 to the United Nations Framework Convention on Climate Change, providing a framework for reaching net-zero emissions by 2060. In September 2022, it issued Presidential Regulation No. 112/2022 on the Acceleration of Renewable Energy Development for the Supply of Power to overcome bottlenecks hindering growth of clean energy. State-owned utility PT Perusahaan Listrik Negara (PLN) announced that it will stop building new coal-fired power plants (CFPPs) after 2023 and that it intends to accelerate its effort to phase out operational CFPPs and scale up the use of clean energy.
A key pillar of Indonesias Group of 20 (G20) Presidency in 2022 was the acceleration of a just and affordable energy transition in the country. On 15 November 2022, the Government of Indonesia set up the ETM Country Platform, and state-owned enterprise PT Sarana Multi Infrastruktur (Persero) is acting as fund manager to coordinate various energy transition activities, channel fiscal support where needed, and support the just energy transition framework and its implementation.
The JETP Secretariat, which is hosted by Indonesias Ministry of Energy and Mineral Resources, has an important role in supporting the energy transition by coordinating the mobilization and deployment of an initial $20 billion over 35 years on a planned 50:50 basis between public and private financing under the I-JETP. In accordance with the I-JETP governance framework, the secretariat reports to the Government of Indonesia and the IPG. Four working groups were established to focus on technical, policy, financing, and just transition workstreams and support the secretariats delivery of commitments under the I-JETP. The government and the IPG appointed the International Energy Agency to lead the technical working group, the World Bank to lead the policy working group, ADB to lead the financing working group, and the United Nations Development Programme to lead the just transition working group.
As set forth in the joint statement issued by the Government of Indonesia and the IPG (footnote 2), the JETP Secretariats key deliverables include (i) a road map for 2030 for the power sector in line with the net-zero emission target; (ii) strategies to reform energy and finance sector policies and to leverage financial resources in support of Indonesias just energy transition activities; (iii) a work program that addresses the social and economic impacts of Indonesias just energy transition; (iv) detailed terms of I-JETP financing; (v) the finalization of initial sources of financing for specific I-JETP projects and initiatives; (vi) a road map for the enhancement of domestic renewable manufacturing capability that meets local content requirements; (vii) a plan to accelerate the early retirement, or avoid the construction, of CFPPs; (viii) the identification of financing instruments and enabling policies to improve PLNs long-term financial sustainability; and (ix) the preparation of the Comprehensive Investment and Policy Plan (CIPP). The CIPP will support the achievement of the following I-JETP targets: (i) power sector emissions peaking by 2030 at an absolute value of no more than 290 million tons of carbon dioxide and achieving net-zero emissions in the power sector by 2050; (ii) accelerating the deployment of renewable energy so that renewable energy will comprise at least 34% of all power generation by 2030; and (iii) accelerating, with IPG support, the early retirement of CFPPs, as prioritized and identified by the government. The CIPP will also ensure positive contributions to Indonesias economy, strengthen energy security and affordability, and enhance grid stability.
ADB has been supporting the Government of Indonesia in achieving its energy transition goals by (i) expeditiously recruiting suitably qualified staff consultants to operationalize the JETP Secretariat while processing longer-term TA resources, (ii) preparing terms of reference for all the working groups that are supporting the secretariats work, (iii) leading the I-JETP financing working group and participating as a member in the policy and just transition working groups; (iv) structuring a pilot ETM transaction to accelerate the retirement of the first privately owned CFPP, which will have significant replication potential within the country and across Southeast Asia; (v) preparing results-based and policy-based sovereign loans to ease the shift from fossil-fuel-based power to renewable energy; (vi) contributing to the design and operationalization of the ETM Country Platform; and (vii) undertaking a country-level strategic environmental and social assessment study to ensure that the negative socioeconomic impacts of energy transition are minimized. In accordance with ADBs gender equality commitments and corporate targets, gender considerations and mainstreaming are also incorporated into all these support activities. The TA will complement ADBs ongoing energy sector operations and is well aligned with the climate change mitigation priority of ADBs country partnership strategy, 20202024 for Indonesia. |
