KUALA LUMPUR, November 18 (Thomson Reuters Foundation) - After Indonesia signed one of its biggest climate finance deals to close coal plants early, it must think about how to protect communities that would lose out by switching to renewables . Analysts did not say.
The United States, Japan and other allies said this week that a coalition of rich countries has pledged $20 trillion in public and private financing to help Indonesia dismantle coal plants ahead of schedule.
Indonesia's Just Energy Transition Partnership (JETP), which provides grants and soft loans for three to five years to reduce emissions in the energy sector, builds on a similar agreement signed with South Africa last year. made
Tommy Pratama, head of political think tank at Traction Energy Asia Indonesia, said a "just transition" that benefits local communities is essential to the success of the green deal.
"Major spending decisions must be open and transparent with the full participation of recognized experts, affected communities and civil society groups," Pratama said in an interview.
"(This) should improve the quality of life for many communities that have suffered for decades from the Indonesian coal industry," he said.
Pratama explained that this includes reclaiming mining areas, renovating existing coal plants to reduce the negative impact on the health of local residents, and compensating fishing communities affected by the coal industry.
Under the Paris Agreement to combat global warming, Indonesia, one of the world's biggest carbon polluters, has pledged to cut its emissions by around 32% below business-as-usual levels by 2030 and hopes to hit zero. by 2060.
About 85% of the electricity in the Southeast Asian archipelago is produced from fossil fuels, most of which comes from coal-fired power plants, according to energy experts.
Indonesia has set a goal for its power sector to reach net zero emissions by 2050 under a new financing agreement that is split roughly evenly between public and private funding sources.
Alessandro Gazzini, a partner at Jakarta-based consultancy Kearney, said that with more stimulus and increased international scrutiny, Indonesia hopes it can make the necessary structural reforms to speed up the exit from coal and increase the share of renewables. strengthen the sector.
According to him, this includes the creation of an independent electricity grid administrator and an independent energy market regulator.
DANGERS OF MANAGING THE FOREST
Indonesia, the world's largest exporter of thermal coal, aims to increase the share of renewables in its power mix to 23% by 2025, but has only achieved around 12% so far, most of which comes from power hydroelectric.
Traction Energy Asia's Pratama said more details on the recently finalized clean energy deal are expected in the coming months.
It should improve fiscal and financial incentives for the clean energy transition and support policies to accelerate the growth of renewable energy sources such as solar, wind and geothermal, including phasing out subsidies for fossil fuels and agriculture. industry, to boldly promote clean energy options.
Pratama said Indonesia needs to develop strong governance systems to disburse funds, monitor and report carbon emissions, fight corruption and minimize the political influence of the fossil fuel industry.
The JETP should avoid supporting biofuels, biomass, carbon capture and storage, hydrogen, and nuclear power options that "threaten deforestation, are too expensive and unproven, or... too dangerous and impractical."
Indonesia, the world's third-largest area of rainforest and also the largest producer of palm oil, has since 2018 increased its mandatory quota for palm oil-derived biodiesel, a major driver of deforestation, to boost demand.
Sharp negotiations?
Energy experts say that the best sources of renewable energy for Indonesia are solar power, hydropower, and geothermal power.
But the country has not yet started using renewable energy, they added, despite having good renewable resources, especially solar power.
Sandeep Pai, senior director of research at the Center for Strategic and International Studies (CSIS), said the new energy deal would help Indonesia generate investment ideas needed to achieve zero emissions and a "just transition."
It will also trigger discussions among the industry, unions and other groups on how to make the transition, he said.
But he expressed concern about the lack of detail in the deal, which has been in the works for more than a year, on how to transfer the funds to Indonesia and then spend them.
Pratama of Traction Energy Asia said it was important that most of JETP's funding came in the form of loans and loan guarantees rather than subsidies, which would increase Indonesia's debt burden.
Pai told CSIS that the Indonesian government should develop an investment plan in consultation with local communities and workers, identify specific projects, and then reach an agreement with donors.
"It may be a long and difficult negotiation. But I hope it won't take years," Pai added.
Indonesia's green new deal should help more than just people working in coal industries, said Alloisius Joko Purvanto, energy economist at ASEAN and East Asia Economic Research Institute in Jakarta.
He also added that this should help workers, especially women, to gain new skills to take advantage of future opportunities with the introduction of renewable energy.
Cecilia Nurmala Devi, Asia director general of climate campaign group 350.org, said it was important to ensure coal miners could switch to renewable energy without putting their livelihoods at risk.
“This is the largest climate finance deal ever done in the world and shows the seriousness of the commitment,” he said.
"There will be difficulties in implementation."
Originally posted here: https://www.context.news/just-transition/can-indonesia-ditch-coal-and-improve-lives-with-new-green-deal
Reporting by Michael Taylor; Edited by Megan Rowling and Juman Farooqi. The Thomson Reuters Foundation is a charity of Thomson Reuters. Navigate to <a href="https://www.context.news/" target="_blank">https://www.context.news/</a>.
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