When Indonesia agreed last year to clean up its energy system with an estimated $20 billion of help from a coalition of wealthy countries and large financial institutions, world leaders hailed the deal as 'extraordinary,' 'realistic,' and 'historically large.'
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"The process started top-down," said Edo Mahendra, chair of the secretariat tasked with turning the JETP, as the climate package is known, into reality."Once we do the bottom up, all the devils that lurk in the details come out." The initial promise of peaking Indonesia's power sector emissions by 2030 at no more than 290 million tons of carbon dioxide, about 20% below a baseline level for the year, looks out of the question. An alternate scenario laid out in the draft plan would raise the target maximum to 395 MT of COOfficials have said they are aiming to have a revised—perhaps final—investment plan before COP28 begins in Dubai at the end of November, taking on public feedback.
To make matters more complicated, there are significant restrictions on how the public money can be used. Around $4.2 billion has already been allocated to specific projects, including two early coal-plant retirements currently underway. The remainder is more flexible—but only roughly a quarter is eligible for shutting down coal-fired power plants, a cornerstone policy that has failed to attract meaningful support in practice.
This is no mere detail. The captive plants underpin a nickel-processing boom that has placed Indonesia among the major suppliers of minerals critical to the global energy transition. Jokowi, as Indonesia's president is known, hopes to parlay those reserves into domestic battery and electric-vehicle industries—manufacturing growth, in short, and jobs.
To wind down plants owned by the state utility Perusahaan Listrik Negara, known as PLN, all parties have to agree on the market value of the facilities. Those are likely to be lower than what's currently on the utility's books—in 2015, it revalued the assets to help cope with heavy debts—so any kind of sale or refinancing tied to early retirement would register as a loss.
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