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Indonesia could retire coal by 2040 with financial help

Out-Law News | 05 Nov 2021 | 1:50 am | 1 min. read

Indonesia could retire coal-fired power generation by 2040 if it gets enough international financial assistance, according to its finance minister Sri Mulyani Indrawati.

According to a Reuters report, Sri Mulyani said that the country would be able to retire coal by 2040 if it could get financial help from international development banks, the private sector and developed countries.

Speaking at a conference at Asia House ahead of COP26, Sri Mulyani said that Indonesia would need US$5.7 billion every year to fund its green energy transition. This followed a report by the Indonesian planning ministry which said the country would need to invest US$200bn per year over the next decade in order to meet its target of decarbonisation.

In August, Indonesia announced that it planned to make all power plants produce energy only from renewable sources by 2060. Maritime affairs and investment minister Luhut Binsar Pandjaitan said the government would need to invest US$1.165 trillion to transition away from coal.

Renewables and climate change expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “Some very large monetary figures are being articulated as being the probable cost for transitioning away from the current dependence on carbon intensive power generation. The reality is that no one really knows the true cost of decarbonising, and all that we can say with any certainty is that based on current knowledge and know-how, many countries that are reliant on coal fired power generation will need to shorten the operational life of such plants and seek to replace the displaced generation with renewable energy.”

“Whilst the proposition is an easy one to articulate, the implementation will be challenging, involving stakeholders with at times competing priorities.  Ultimately though a solution that addresses the need to decarbonise whilst enabling continued economic growth and ensuring a just transition will need to be found, which will need to involve the active input and participation of all such stakeholders,” he said.

In July, Indonesia’s environment and forestry minister Siti Nurbaya Bakar urged developed countries to lead the way in providing developing countries with the financial resources needed to execute climate plans.

Indonesia also set goals on the use of energies including coal and biofuels in its report Long-term Strategy for Low Carbon and Climate Resilience 2050 which it submitted to the UN Framework Convention on Climate Change in July. According to the report, Indonesia's greenhouse gas emissions are expected to peak in 2030 and the role of coal will remain significant until 2050.

In May, the country’s state-owned electricity distributor Perusahaan Listrik Negara (PLN) said it would stop building coal plants by 2023 after finishing the 35 gigawatts (GW)-worth of projects it had in the pipeline.