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Indonesia joins coal exit transition programme

Out-Law News | 09 Nov 2021 | 10:53 am | 1 min. read

Indonesia has joined a pilot programme to support its transition from coal to clean energy, set up by global climate finance body the Climate Investment Funds (CIF).

The Accelerating Coal Transition (ACT) programme is worth US$2.5 billion. Initial beneficiaries include India, the Philippines and South Africa as well as Indonesia, which together representing over 15% of coal-related emissions globally, according to a CIF statement.

Yeap John

John Yeap

Consultant

The design and successful implementation of energy transition mechanisms, tailored to the specific considerations of each nation, will be the catalyst for accelerating the move away from coal.

Renewables and climate change expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: “Decarbonisation as an agenda should not be controversial, but its implementation will need to factor in considerations around climate justice, particularly for nations such as Indonesia that needs to maintain economic development whilst meeting its commitments to net zero.”

“No doubt all nations would like to find a solution that would enable the acceleration of coal power plant decommissioning whilst ensuring their growth trajectory is not impacted. The design and successful implementation of energy transition mechanisms, tailored to the specific considerations of each nation, will be the catalyst for accelerating the move away from coal,” he said.

The funds will be used to invest in projects to enhance participating countries’ capacity to manage the energy transition, repurpose or retire coal assets and create sustainable economic opportunities and social support for coal-dependent communities.

ACT will work with six international development banks to provide a comprehensive financial toolkit and technical assistance for participating coal transition countries. In the next phase, ACT aims to support more countries amid strong demand.

The programme has received financial support from the US, the UK, Germany, Canada and Denmark.

Indonesia signed the COP26 Global Coal to Clean Power Transition statement. However, it excluded a clause promising to “cease issuance of new permits for unabated coal-fired power generation projects, cease new construction of unabated coal-fired power generation projects and to end new direct government support for unabated international coal-fired power generation”.

Earlier this month, Indonesian finance minister Sri Mulyani Indrawati said 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.

CIF was established in 2008 to provide financial assistance to selected low and middle-income countries for low carbon and sustainable development.