The Asian Development Bank (ADB) has announced the approval of a $500 million policy-based loan to Indonesia to support its energy transition initiatives. As a resource-rich nation targeting net-zero carbon emissions by 2060, Indonesia is working to decrease its reliance on coal, with financial backing from the G7's Just Energy Transition Partnership (JETP).
Highlighting Indonesia’s reliance on coal, the ADB said the programme “focuses on establishing a robust policy and regulatory framework for clean energy transition, strengthening sector governance and financial sustainability”.
“Indonesia is at a critical juncture in its energy transition journey,” said Jiro Tominaga, ADB’s country director for Indonesia, adding the loan supported Jakarta’s efforts “to accelerate its shift towards sustainable and clean energy”. The ADB did not immediately respond to a request for comment when asked about specifics on how the funds would be spent.
The program encompasses the creation of a JETP-supported investment and policy plan, along with enhancements aimed at increasing renewable energy capacity. The ADB noted that its co-financing partners for this initiative include France’s development agency, Agence Française de Développement (AFD), and the German state lender KfW. Under the JETP plan, $20 billion has been pledged to help Indonesia limit emissions in the power sector to 290 million tonnes of carbon by 2030, although the disbursement of these funds has been sluggish.
Asked about JETP’s slow implementation, Britain’s development minister Anneliese Dodds said this week that JETP is a long-term partnership that requires big changes around infrastructure. “This is not going to happen overnight”, she said. “The UK is really working to renew that approach so that together we can be focused on green growth and economic development”. Dodds stated that Indonesia has the potential to serve as a carbon sink for the region and that Britain plans to collaborate with other JETP partners to expedite initiatives focused on poverty alleviation and reducing deforestation.