Indonesia has not yet received the promised G7 funds to reduce coal consumption

NUSA DUA, Indonesia: Indonesia is still waiting for cheaper financing under a deal with rich G7 countries to speed up the early closure of coal-fired power plants as part of a transition to clean electricity, senior government officials said on Monday.

The Southeast Asian country, with a population of more than 275 million, had been promised $20 billion in financial aid as part of the G7's Just Energy Transition Partnership (JETP) planned for 2022, but very little money has been disbursed so far.

Luhut Pandjaitan, a minister responsible for mining, said the current financing mechanism does not include any subsidies and does not solve existing problems such as the high cost of pensions.

“If you push us to shut down our coal-fired power plants early, how are we going to finance it? The interest rates for the financing must be attractive,” Luhut said at the Coaltrans Asia conference.

“If they quote a commercial (interest rate), what’s the point?”

Indonesia, which is seeking cheaper interest rates than those offered in the market, needs US$94.6 billion by 2030 to build infrastructure for the transmission and generation of clean energy and thus phase out coal power.

The grants mentioned in the JETP document amounted to only US$153.8 million of the total pledged.

The lack of progress on the plan, which a US Treasury official called “the largest single climate finance transaction” when it was first announced, has stalled efforts by the world’s largest coal-fired power producer to cut its emissions.

Indonesia is currently trying to close its 660 MW Cirebon-1 power plant in West Java, but Septian Hario Seto, deputy minister for investment affairs, said the final deal is still pending.

“Too many promises, nothing was kept,” Seto told Reuters on the sidelines of the conference.

The government is considering closing 13 coal-fired power plants owned by state-owned utility Perusahaan Listrik Negara (PLN), but has not yet set a timetable due to concerns about energy security and affordability.

Luhut urged other countries not to lecture Indonesia on decarbonization, citing a presentation in which he told U.S. Treasury Secretary Janet Yellen that Indonesia's per capita emissions were far lower than those of the United States.

At 2.3 tons, Indonesia far exceeds per capita carbon dioxide emissions in the United States (14.7 tons) and is below the global average of 4.5 tons.