Jakarta – Civil society organisations criticised the recently released investment plan of the Just Energy Transition Partnership (JETP) funding commitment for Indonesia. The #BersihkanIndonesia movement questions the portion of debt that dominates the JETP funds, compared to grants.
Last week, the government officially launched the JETP funding program’s Comprehensive Investment and Policy Plan (CIPP). This policy and investment plan document is a strategic roadmap, including a decarbonisation scenario for the electricity sector.
Program Manager of Trend Asia, Beyrra Triasdian, revealed that the funds promised by International Partners Group (IPG) in the JETP program seem large and increased with the inclusion of the ETM (energy transition mechanism) scheme to ensure that coal-powered plants’ early retirement goal was included in the JETP funding scheme. However, the portion of grants combined with technical assistance is only 1.38% of current JETP funds. “This will certainly have implications for Indonesia’s potentially high debt burden,” she said.
Developed countries agreed to a USD 20 billion JETP funding commitment for Indonesia during the G20 Summit in Bali at the end of 2022. The agreement has currently increased to USD 21.6 billion. It consists of USD 11.6 billion sourced from IPG public funds, while USD 10 billion will come from international banks joining the GFANZ working group.
The JETP agreement is between Indonesia and developed countries that are members of the IPG, led by the United States and Japan, and consists of Denmark, the United Kingdom, Italy, Germany, Canada, Norway, France and the European Union. The private funding, part of the Glasgow Financial Alliance for Net Zero (GFANZ), includes Bank of America, Citi, Deutsche Bank, HSBC, Macquarie, MUFG, and Standard Chartered.
Dominance of commercial loans
In the JETP CIPP document, commercial loan funds are much larger, which includes private funding initiated by GFANZ worth USD 10 billion, while grant funds only amount to USD 295.4 million. The grant portion consists of USD 141.6 million in technical assistance, almost half of which or USD 68 million, is a portion of technical assistance for specific programs such as the early retirement of coal-powered plants.
The Coordinator of the Ecological Action and Emancipation of the People (AEER) Association, Pius Ginting, believes that the JETP Secretariat and the government should strive to increase the portion of grants in JETP funding. He also gave an example of Japan as a member of the IPG, needing to increase funding responsibility through grants because it also invested in coal-powered plants in Indonesia.
He said other IPG countries need to emulate Germany, which allocates a grant of USD 167 million or 10% of the total public funding for JETP. “This portion of the grant amount should also be a reference for other IPG countries as an implementation of the principle of common but differentiated responsibility,” said Ginting.
‘Fake solutions’
In addition to highlighting the debt mechanism provided through the JETP program, the CSO coalition in the #BersihkanIndonesia movement also highlighted seven substantial problems in the CIPP document. Among them, according to them, is the inclusion of ‘false solutions’ such as biomass co-firing and carbon capture, utilizaton and storage (CCUS) as an effort to reduce global warming, as an alternative to fossil fuels.
“The CIPP-JETP document has proven to betray the spirit of an equitable energy transition. Instead of encouraging and maximizing the use of community-based renewable energy such as solar, micro hydro, and micro-scale wind, this document provides space for false solutions such as co-firing, hydrogen, ammonia, CCS/CCUS and nuclear which clearly favour large corporations, are profit-oriented, produce large carbon debts, produce environmental damage, and exacerbate human rights violations,” explained Didit Haryo Wicaksono, Greenpeace Indonesia’s Climate and Energy Campaigner. (Hartatik)
Banner photo: Activists who are members of the #BersihkanIndonesia movement held a theatrical action related to the Just Energy Transition Partnership (JETP) Comprehensive Investment and Policy Plan (CIPP) in front of the Japanese Embassy, Jakarta, Monday, 20 November. (Source: Greenpeace)
