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US, Japan-led JETP finalize climate deal worth $15bn for Indonesia

US, Japan-led JETP finalize climate deal worth $15bn for Indonesia

Japan, the United States, and other countries have reportedly finalized a deal that is set to offer nearly $15 billion to assist Indonesia in shifting from its coal-controlled power grid.

The climate pact, called Just Energy Transition Partnership (JETP), is expected to be announced around 15th November during the Group of 20 (G20) summit, following almost a year of negotiations, according to sources.

With the finance deal, Indonesia will be able to accelerate efforts in shutting off excess coal power generation capacity and controlling its pipeline of coal power plants, factors that are hampering the development of renewable energy.

Indonesia has been ramping up efforts in emission reduction, aiming for more aggressive cuts in greenhouse gases by 2030. It has set a goal of achieving net zero emissions by 2060 through the development of more geothermal, solar, and nuclear power plants.

Currently, the country’s economy is dominated by coal, making up for more than half of its electricity production and is a major growth driver, with Indonesia being the top global exporter of thermal coal.

The agreement has been designed on a similar $8.5 billion climate funding deal for South Africa that was first unveiled at the 2021 UN climate summit.

Earlier this month, South Africa presented a detailed investment plan which showcased how difficult it might be to turn initial concise deals into fully realized proposals.

Although the South African deal was advanced hastily, sources said that the Indonesian JETP was designed after an entire year of negotiations and had a more detailed initial framework.

The abundance of thermal coals and the huge volume of potential power plant projects in Indonesia have always been seen as a hindrance to the country relying more on renewables.

For instance, the state-operated electricity utility Perusahaan Listrik Negara (PLN) is constructing a pipeline of nearly 13.7 gigawatts of new coal generating capacity. The JETP deal will see that some of these new coal factories are not built and that new coal power capacity additions are reduced to around 10GW.

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Meghna Singh

An English Literature graduate, Meghna Singh ventured into the profession of content development to incorporate her knack for writing articles across verticals including technology, healthcare, business, and alike for News Origins and Newsorigins. She has also completed her MBA in Tourism and worked as a content creator in the field of product development.