Can Indonesia’s JETP transform its power sector?

  • Jakarta

  • 26 January 2023

The deal came with ​290 million tonnes emissions cap by 2030, but more specifics are needed to speed up coal power retirement and make space for renewables.

A mini briefing published today by global energy think tank Ember unpacks Indonesia’s Just Energy Transition Partnership (JETP) and finds that Indonesia’s JETP power sector emissions cap of 290 million tonnes (Mt) in 2030 could help the country achieve its Net Zero Emissions target for all sector by 2060. But is it enough to ensure early retirement of coal-fired power plants and transform the country’s power sector to align with 1.5C pathways?

The USD20 billion JETP deal is crucial to fund Indonesia’s energy transition efforts and help it achieve net zero. As part of this agreement, Indonesia is required to cap its power sector emission at 290 Mt in 2030, which is broadly consistent with a recent IEA report and aligned with the government’s target to achieve net zero for all sectors by 2060.

The deal allows under construction coal-fired power plants to be completed, increasing coal power capacity in the next couple of years and the emission cap for the power sector is not aligned with the 1.5C pathway.

The JETP deal also does not specify restrictions for captive coal plants. It does require Indonesia to restrict the development of captive coal-fired power plants in accordance with Presidential Regulation 112/2022. However, this regulation explains that the government still allows captive coal power plants to be built, as long as it is integrated with industries or Indonesia’s National Strategic Projects.

To date, Indonesia has a total of 5 GW of captive coal power operating in 2021, with 4 GW under construction. The briefing finds that these coal plants are not included in the 290 Mt emissions cap and have no specific restrictions in the JETP agreement.

This means there are no requirements for Indonesia to stop coal plants that are under construction in both the power sector and the captive plants. In other words, JETP still allows the highest emitting energy source – coal power – to grow in the next few years.

Expecting more advanced pathways for Indonesia

To put the country on track for 1.5C, coal generation needs to decrease substantially by 2030 by closing some operating coal plants or significantly reducing coal power generation, or both. Coal fleet needs to be reduced by 10% and coal power generation should decline by 70% compared to the JETP scenario in 2030.

In addition, the share of renewables should increase significantly to replace coal in the 1.5C pathways. The IEA suggested that this share should reach about 60% of the total generation in 2030, around 25 percentage points higher than required by JETP and the IEA’s Announced Pledge Scenario.

Ember’s Asia electricity analyst, Dr Achmed Shahram Edianto, said:

“The JETP should be detailed further to include any possible scenarios for the country. This deal should also include options of any possible early retirement and lower down the average capacity factor of operating coal-fired power plants, plus a target to accelerate renewable energy uptakes, to demonstrate that international support could significantly help the country to reroute its transition pathway towards the 1.5C target.”

With JETP on the table, Indonesia should leverage the momentum and financial support to help the country reconfigure its transition pathway to align with the 1.5C pathway.