As G20 chair, coal-rich Indonesia sends mixed signals on green transition | Money

Indonesia needs $50 billion to switch to renewable energy, Widodo told the World Economic Forum earlier this year. — Reuters pi

KUALA LUMPUR, April 8 – Indonesia is using its tenure as G20 chair to push for more international funding for green energy transition in developing countries – but analysts say Jakarta must back up its calls with plans more ambitious to reduce emissions at home.

The world’s largest thermal coal exporter and eighth largest carbon emitter, Indonesia has made sustainable energy transition one of the three focuses of its first year-long presidency of the G20 group of the world’s 20 largest economies.

The Southeast Asian nation plans to phase out coal for power by 2056 and has advanced its net-zero emissions target from 2070 to 2060 or earlier – but weaning itself off dirty, climate fuel remains a challenge.

“The bottom line for Indonesia is that we have to find the balance,” said Fabby Tumiwa, executive director of the Institute for Essential Services Reform, an independent think tank that also advises the government on energy policies. .

“Every country wants to prioritize its energy security and accessibility because people are unhappy with rising energy prices, and it’s very risky for the government,” he added.

Coal is not only one of Indonesia’s main export products along with palm oil, but it also generates around 60% of the electricity in the archipelago of 270 million people, where nearly 30 million live below the national poverty line, on around $1 a day.

In coal-producing regions, including East Kalimantan province which accounts for almost half of national production, about a third of local economic growth is attributed to coal, according to Tumiwa.

“There are a lot of stakes in Indonesia’s energy transition – it could make or break, and funding is key,” he told the Thomson Reuters Foundation by phone from Jakarta.

Transition package for Indonesia?

Since assuming the G20 presidency late last year, Indonesian President Joko Widodo has repeatedly urged wealthy governments to provide finance and transfer clean technologies to developing countries so that the transition green does not burden their citizens.

Indonesia itself needs US$50 billion (RM210.9 billion) to switch to renewable energy, Widodo said the World Economic Forum earlier this year.

A landmark report by the Intergovernmental Panel on Climate Change highlighted this week the need for socially equitable change to clean energy, taking into account other key priorities, such as the development of the poorest countries.

The report says global warming emissions need to be reduced much more sharply and quickly, but funding to deploy clean energy at scale is still lacking in less developed countries.

In November, wealthy donor countries and South Africa announced an $8.5 billion partnership to help that country cut emissions and shift away from coal, while taking care of affected workers and their families. communities.

Analysts say Indonesia and Vietnam are among the countries currently being considered for a similar deal.

Mafalda Duarte, CEO of the Climate Investment Funds (CIF), a coordinating partner in the deal with South Africa, said there were “preliminary signals” that Indonesia could be the next in line for a similar package, but stressed that the talks were inconclusive.

“Countries seeking international support for the transition must come up with a credible plan that indicates they are truly committed to the transition,” Duarte said, adding that it must also be a “fair” process.

“You are talking about profound economy-wide transitions. It’s something huge that countries haven’t necessarily gone through before – it’s uncharted territory,” she added.

Indonesia, India, the Philippines and South Africa have been named as the first countries to benefit from a pilot program led by the CIF, announced in November, to accelerate their transition from coal to clean energy.

The nearly $2.5 billion program is backed by pledges from the United States, Britain, Germany, Canada and Denmark, with each country set to receive between $200 million and $500 million.

But environmentalists said some of Jakarta’s seemingly contradictory energy moves could lower its chances of receiving international support.

While Indonesia said last year it would stop building new coal-fired power plants after 2023, there are fears it will allow ongoing projects to continue until then.

In January, the government launched the construction of a building of 2.3 billion dollars coal gasification plant converting coal resources into dimethyl ether, which can be used as fuel, a move by environmental groups that would encourage keeping coal in its energy mix.

Indonesia’s coal production, meanwhile, is expected to increase by almost 10% this year, according to official projections.

“It’s going to be difficult to get financial help if we’re not consistent in our energy transition policy…it would make coal still relevant,” said Andri Prasetiyo, an activist with nonprofit Trend Asia. company working on renewable energy in Jakarta.

Alok Sharma, UK chair of the COP26 climate talks, has suggested Indonesia will have to do more if it is to secure international funding similar to that given to South Africa, which he said has proposed plans ambitious climate action plans.

“For any country – Indonesia, for example – that wants this support, the same will have to happen,” Sharma said. told a dialogue with foreign policy experts in Jakarta in February.

Sharma said Indonesia has a “historic opportunity” to lead the energy transition through its presidency of the G20, a group that accounts for around 80% of global greenhouse gas emissions and whose leaders are due to meet in Bali in November.

Extraordinary profits

Environmental groups have urged Indonesia to implement measures to boost investment in renewable sources – mainly solar, hydroelectric and geothermal – which now account for around 11% of the national energy mix.

The government has pledged to increase this figure to 23% by 2025.

But the rollout of a much-anticipated carbon tax, hailed as part of efforts to phase out fossil fuels, has been delayed three months to July due to soaring energy prices.

As the top exporter of thermal coal, energy analyst Putra Adhiguna said Indonesia should tap windfall profits from coal operators to facilitate its green transition.

Choosing not to would be “unfortunate,” said Adhiguna, an Indonesia-based policy scientist at the Institute of Energy Economics and Financial Analysis.

As G20 chair, what Indonesia is doing “can set the tone” and show how countries can move in the right direction, he added. —Thomson Reuters Foundation

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