US financial aid could accelerate Indonesia’s energy transition

Jakarta – The United States (US) government can support the acceleration of the energy transition in Indonesia as long as it produces concrete financing for the gradual cessation of coal powered plants operations and acceleration of renewable energy development and modernization of the grid, analysts said, Tuesday (13/9).

The US Government has a serious commitment to support energy transition efforts in developing countries, including partnering with the G7 in supporting Indonesia through the Just Energy Transition Partnership (JETP) to mobilise finances.

Fabby Tumiwa, Executive Director of IESR, said that “JETP also needs to consider anticipating the social impacts of closing coal powered plants and coal mines”.

He added that for the JETP to play a significant role in the energy transition in Indonesia, the Indonesian government through the president should form an Energy Transition Committee to prepare the JETP and negotiate with donor countries and parties interested in supporting financing for Indonesia’s energy transition.

Nathan Hultman, Founder and Director of the University of Maryland’s Center for Global Sustainability in a Public Lecture organised hybridly by the Institute for Essential Services Reform (IESR) in collaboration with the Office of the Presidential Staff (KSP), explained that the US government is doing several things to achieve its climate targets, such as building policies that complement each other, strong political commitment in the long term, create learning in more fields more quickly, and flexibility in the economic field.

“We are all learning about the right transition path and according to the context in Indonesia. There are several opportunities in areas that can collaborate such as the retirement of coal power plants, renewable energy development, sectors that are difficult to decarbonise such as industry, land and forestry, and energy transition financing, how to do better and concretely apply financing to make changes for the better in some time in the future,” said Hultman.

The US also passed the Infrastructure Investment and Jobs Act (IIJA) in 2021 covering an estimated USD500 billion cost to upgrade infrastructure that will accelerate clean energy development, reduce emissions and increase resilience through infrastructure upgrades. Most recently, in 2022 the US passed the Inflation Reduction Act with incentives worth USD 370 billion for clean low-carbon technologies and energy transitions in all sectors, as well as reducing greenhouse gases by 2030. (Hartatik)

Banner photo: Marcin Jozwiak/

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