Government collaborates with ADB, PT SMI to launch energy transition mechanism

Jakarta – The government, in collaboration with the Asian Development Bank (ADB) and PT Sarana Multi Infrastruktur (PT SMI), launched the Country Platform for the Energy Transition Mechanism (ETM), officials said Friday (15/7).

Head of the Fiscal Policy Agency, Ministry of Finance, Febrio Kacaribu said in a written statement, that the step is a form of the government’s strong commitment in handling climate change. He said the launch is very appropriate, because it coincides with the beginning of the Indonesian G20 Presidency meeting.

“This is an important momentum to encourage all members and other countries to carry out their climate financing commitments with real and implementable initiatives,” said Kacaribu.

He said that ETM is an ambitious plan that can encourage the improvement of Indonesia’s energy infrastructure. In addition, to accelerate the energy transition to net zero emissions in a fair and affordable manner by 2060, or accelerated.

Since the meeting of the Minister of Finance Sri Mulyani Indrawati with ADB to announce a new collaboration to launch Indonesia’s ETM in November 2021, Indonesia has developed an effective and measurable ETM implementation design. According to him, the government has also agreed to set a series of goals and milestones that must be achieved by stakeholders towards the G20 Summit in Indonesia and COP 27 in Egypt later.

“The country places the highest priority on the energy transition to cleaner energy. However, with this transition, the Indonesian government needs to ensure that the economy can continue to grow and requires more energy and electricity, but at the same time it must reduce emissions,” explained Febrio.

To overcome this, it takes a combination of efforts to retire from coal-fired power plants and simultaneously develop renewable energy.

“ETM itself consists of two schemes. First, the emission reduction facility scheme is used for early retirement of coal-fired power plants (PLTU) in Indonesia. Meanwhile, the clean energy facility scheme is intended to develop or invest in the construction of green energy facilities,” he added.

The mechanism is expected to be a joint solution for the community, investors, the regional economy, and the environment. To reach the implementation level, Febrio said, the arrangements in the mechanism must be well defined. It includes participating institutions, financing instruments, challenges, and expected financial and economic benefits or losses.

“The country platform for ETM is a framework that provides financing needs to accelerate the national energy transition by mobilizing funds from public and private sources in a sustainable manner,” he said. (Hartatik)

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