Indonesia minister floats net-zero emissions by 2055

Southeast Asia’s largest economy is currently pursuing a 2060 target for emissions neutrality, but has been struggling to receive favourable funding terms from foreign financiers to phase out coal power.

Luhut Ecosperity 2
Luhut Pandjaitan, Indonesia's coordinating minister of maritime and investment affairs, speaking to reporters at Ecosperity Week 2023 in Singapore. Image: Eco-Business/ Liang Lei.

Indonesia could reach net-zero greenhouse emissions by 2055 or earlier, instead of 2060, should there be greater international collaboration and technological developments, a senior official of the country has said.

Luhut Pandjaitan, Indonesia’s coordinating minister of maritime and investment affairs, said the country has ample renewable energy resources that can be unlocked through blended financing, shared between private and public investors.

“Our first [net-zero] target was 2070, and then we found that with technology and international support, we could [shift the target] to 2060. If we [continue to] move steadily this way, we can maybe do it earlier than 2060 – why not?” Luhut said at Ecosperity Week, a climate conference held in Singapore.

Indonesia is the world’s fourth most populous country with about 280 million people, and is heavily dependent on cheap but pollutive coal to power its economic growth.

It signed a US$20 billion “Just Energy Transition” partnership (JETP) with a handful of wealthy foreign countries and private donors at the end of 2022, to retire its coal plants early, scale up renewable energy to a third of total electricity capacity by 2030, and reach net-zero power generation by 2050.

However, in recent weeks, Luhut has also said publicly that it is not clear, based on discussions with stakeholders, how the funds pledged will materialise, and if the interest rates on any loans will be sufficiently low. On Tuesday (6 June), he reiterated that national economic development must not be blunted by JETP.

At Ecosperity, Luhut noted that Indonesia’s per-capita emissions, at 2.3 tonnes a year, are lower than the global average of around 4.5 tonnes, and the United States’ figure of over 14 tonnes. The figure Luhut cited does not include emissions from land-use changes like deforestation, which although slowing in recent years, still accounts for almost half the country’s total emissions over the past two decades, according to data platform Climate Action Tracker.

“We have a right to go up, to reach 4.5 [tonnes], before we [decrease our emissions],” he said, adding that Indonesia also has the right to be a high-income country one day.

Indonesia is to present an energy transition plan to its JETP funders by August. Luhut said the government is preparing detailed data, and has drawn up plans for decarbonising power generation, transportation and industrial activity, as well as to employ nature-based solutions and carbon capture technology.

The administration has identified 4.7 gigawatts (GW) of coal capacity to be phased out around capital city Jakarta and in neighbouring island Sumatra, Luhut said.

The Indonesian government had last year said it identified a total of 32 coal power units, totalling 16.8GW, for early retirement, according to Singapore newspaper The Straits Times. Indonesia also signed a deal last year with the Asian Development Bank to shut a 600 megawatt coal plant up to 15 years ahead of schedule.

Luhut said any loans to develop clean power in place of coal plants must contain subsidies, such that electricity prices can match that of existing coal power – at as low as 3 cents per kilowatt-hour. Renewable electricity can come with an initial price tag of 9 cents a kilowatt-hour, he estimated.

As it stands, Indonesia, Southeast Asia’s largest greenhouse gas emitter, may not be able to achieve its national climate targets, which includes its 2060 net-zero aspiration, according to a report released on Tuesday by consultant Bain & Company, Singapore state investor Temasek, investment firm GenZero and technology giant Amazon Web Services.

Even though green investments are increasingly flowing into Indonesia, the country still subsidises fossil fuels, and lacks concrete plans to green its electricity grid, the report said. Indonesia has also backtracked on a no-deforestation pledge it made in 2021, it noted.

Nonetheless, Luhut remains upbeat about harnessing Indonesia’s over 400 GW of renewable energy potential – over five times its installed capacity today.

“You talk about solar panels, we’re talking wind, we’re talking hydropower, geothermal. You name it, we have everything, but I don’t think we can do it alone,” he said.


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