JETP Investment Plan Launched; Indonesian Government Aims for Swift Implementation
"I express deep gratitude to all parties who have worked diligently to finalize this comprehensive technical document. From the relevant ministries and institutions to multilateral, international, and national entities involved in the working groups, as well as stakeholders who continuously coordinated in the development of the CIPP. Indonesia has invested significant attention and effort into this planning. It is now time for us to collaborate to realize concrete aspirations and goals outlined in this CIPP document," explained Luhut Binsar Pandjaitan, Coordinating Minister for Maritime Affairs and Investment.
The JETP collaboration involves Indonesia and advanced economies within the International Partners Group (IPG), led by the United States and Japan, with members including Denmark, the United Kingdom, Italy, Germany, Canada, Norway, France, and the European Union. The initially agreed funding commitment in the joint statement was $20 billion USD, but with various additions, it has now reached $21.6 billion USD. Out of this, $11.6 billion USD comes from public funds of IPG countries, while $10 billion USD will be sourced from international banks participating in the Glasgow Financial Alliance for Net Zero (GFANZ) working group.
"The planning era is over; now is the time for implementation. This technical document serves as a reference for the cooperation we hope will bring more support and investment needed for Indonesia to achieve its goals of decarbonization and the realization of a green economy," said Rachmat Kaimuddin, Deputy Coordinator for Infrastructure and Transportation, Ministry of Maritime Affairs and Investment, also serving as the Chairman of the National Energy Transition Task Force.
The CIPP outlines a decarbonization scenario with a shared conditional target of 250 million tons of CO2 emissions for the on-grid electricity sector by 2030, with a renewable energy share of 44%. Additionally, the JETP roadmap sets the achievement of net-zero emissions for the electricity sector by 2050, faster than the government's roadmap supporting the achievement of net-zero emissions in the energy sector by 2060 or earlier.
"Funding in JETP is only a fraction of what Indonesia needs to transition its energy by 2030. Therefore, it is hoped that JETP funds can catalyze greater investment and support for Indonesia's energy transition in the future by driving projects with a multiplier effect on the energy sector and local economy," stated Febrio Kacaribu, Head of Fiscal Policy Agency, Ministry of Finance, also serving as the Vice Chairman of the National Energy Transition Task Force.
The funding requirement to achieve the JETP roadmap by 2030 is estimated at $97.3 billion USD or 1,515.8 trillion IDR, almost 4.5 times the promised JETP funds. The JETP funding composition includes non-concessional funding ($1.59 billion USD), concessional funding ($6.94 billion USD), equity investments ($384.5 million USD), grants and technical assistance ($295.4 million USD), guarantees ($75 million USD), multilateral guarantees ($2 billion USD), and other forms ($270.3 million USD).
"JETP, in collaboration with the Ministry of Energy and Mineral Resources (KESDM), PLN, and other stakeholders, has identified a list of priority projects until 2030. We hope JETP can support projects strengthening and developing transmission networks, early retirement of coal-fired power plants conditional on funding, and decarbonization of demand sectors through energy conservation. These three investment areas form the foundation of the energy transition and align with the net-zero emission roadmap for the energy sector developed by KESDM," said Yudo Dwinanda Priaadi, Director General of New and Renewable Energy, Ministry of Energy and Mineral Resources, also serving as the Vice Chairman of the National Energy Transition Task Force.
The Indonesian Government and IPG had previously agreed that the 2023 CIPP would focus on the on-grid electricity system. Meanwhile, for the off-grid electricity system, a more in-depth analysis will be conducted to determine decarbonization strategies in line with Indonesia's industrialization and downstream aspirations. The CIPP document is a "living document" that will be continually updated annually to reflect global economic conditions and domestic policy priorities.
"After the launch of the CIPP document, the Secretariat will play a role in JETP implementation by supporting the preparation process for priority projects, facilitating match-making with funding sources within JETP, conducting monitoring and evaluation while continuously updating this CIPP document," said Edo Mahendra, Head of the JETP Secretariat.
The formulation of the CIPP document was supported by various working groups consisting of international and multilateral organizations such as the International Energy Agency (IEA), World Bank, Asian Development Bank (ADB), and the United Nations Development Programme (UNDP).
Throughout the formulation process of the CIPP document, various consultation processes were carried out with investors, business entities, and community representatives. The document also received public input during the public consultation period held in November 2023.
Furthermore, the JETP Secretariat will soon establish the 5th working group focusing on decarbonizing demand sectors through electrification and energy efficiency.
