As the G20 chair, coal-heavy Indonesia sends mixed signals to the green passage


Indonesia is using its tenure as chairman of the Group of 20 (G20) to push for more international funding for green energy transfers to developing countries – but analysts say Jakarta needs to back up its calls with a more ambitious plan to reduce emissions.

Indonesia, the world’s top exporter of thermal coal and its eighth largest carbon emitter, has transformed into a sustainable power in one of three focuses for 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 electricity by 2056 and advance its net-zero emissions target from 2070 to 2060 – but the challenge remains to rid itself of dirty, climate-heating fuels.

“The key issue for Indonesia is that we need to strike a balance,” said Fabi Tumiwa, executive director of the Institute for Essential Services Reform, an independent think tank that also advises the government on energy policy.

“Every country wants to prioritize its energy security and affordability because people are worried about high electricity prices, and this is very risky for the government,” he added.

Apart from palm oil, coal is not only one of Indonesia’s major export products, it generates about 60% of the electricity in the 270 million people of the islands, where about 30 million live below the national poverty line, earning about $ 1 a day.

According to Mr Tumiwar, coal-producing areas, including the province of East Kalimantan, which account for about half of national production, account for about one-third of local economic growth.

“There are many risks to Indonesia’s energy transformation – it can be created or broken, and financing is important,” he told the Thomson Reuters Foundation by phone from Jakarta.

Indonesia Transition Package?

Since assuming the G20 presidency late last year, Indonesian President Joko Widodo has repeatedly called on wealthy governments to provide funding and transfer clean technology to developing countries so that green transformation does not burden their citizens.

Indonesia needs $ 50 billion to move towards renewable energy, says Mr Widodo To say World Economic Forum earlier this year.

A flagship report from an intergovernmental panel on climate change highlighted a need this week Socially fair change Clearing energy while considering other key priorities like development of poor countries.

The report says that global warming emissions need to be cut faster and faster, but that the least developed countries lack funding to install large-scale clean energy.

In November, rich donor countries and South Africa announced a .5 8.5-billion partnership to help reduce emissions and move away from coal while caring for affected workers and their communities.

Analysts say Indonesia and Vietnam are now considering similar measures.

Mafalda Duarte, chief executive of the Climate Investment Fund (CIF), South Africa’s co-ordinating partner, said the “initial signal” was that Indonesia could be on the next line for a similar package but stressed that talks were not final.

“Countries seeking international support for the transition must come up with a credible plan that indicates that they are truly committed to the transition,” Ms Duart said.

“You are talking about a profound change in the economy. It’s a huge thing that countries haven’t necessarily gone before – it’s an unknown territory, “he added.

Indonesia, India, the Philippines and South Africa were the first countries to be given separate benefits Pilot program Led by the CIF announced in November to accelerate their transition from coal power to clean energy.

The approximately $ 2.5-billion scheme is backed by commitments from the United States, Britain, Germany, Canada and Denmark, with each country expected to receive $ 200 million- $ 500 million.

But environmentalists say some seemingly contradictory measures in Jakarta could reduce the likelihood of international support.

Although Indonesia said last year that it would stop building new coal-fired power plants after 2023, there are concerns that it would allow projects in the pipeline to move forward until then.

In January, the government began construction of a 3 2.3-billion coal gasification plant to convert coal resources into dimethyl ether, which could be used as fuel, a move Green Group said would encourage coal to continue in its energy mix.

Indonesia’s coal production, meanwhile, is projected to grow by about 10% this year, according to official estimates.

Andre Prosetti, a promoter of the nonprofit Trend Asia, which works with renewable energy in Jakarta, said, “If our energy conversion policy is inconsistent, it will be difficult to get financial support … which will make coal even more relevant.”

Alok Sharma, president of the UK’s COP26 climate talks, suggested that if Indonesia wanted to win a similar international fund given to South Africa, it would have to do more, which he said was to come up with an “ambitious” climate action plan.

“For any country – for example, Indonesia – that needs support, the same thing should happen,” said Mr Sharma. Dialogue With foreign policy experts in Jakarta in February.

Sharma said Indonesia has a “historic opportunity” to lead a change in energy through its G20 presidency, a group responsible for about 80% of global greenhouse gas emissions and whose leaders will meet in Bali in November.

Windfall gain

Measures that the Green Group has asked Indonesia to implement include increasing investment in renewable sources – mainly solar, hydroelectric and geothermal – which now accounts for about 11% of the national energy mix.

The government has promised to increase it by 23% by 2025.

But the much-anticipated carbon tax roll-out, welcomed as part of efforts to phase out fossil fuels, has been delayed three months since July amid rising energy prices.

As a top thermal coal exporter, energy analyst’s son Adhiguna says Indonesia should tap profitable profits from coal operators to facilitate its green transformation.

It would be “unfortunate” not to do so, said Adhiguna, an Indonesia-based policy expert at the Institute for Energy Economics and Financial Analysis.

As G20 president, what Indonesia does can “set the tone” and show how countries can go in the right direction, he added. – Beh Leah Yee / Thomson Reuters Foundation

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