A worker inspects solar panels installed on the roof of Santika Premiere Hotel in Palembang, South Sumatra, on July 7, 2021. (Antara Photo/Nova Wahyudi)

G7’s Climate Financing for Indonesia Under Negotiation: Envoy

BY :JAYANTY NADA SHOFA

OCTOBER 01, 2022

Jakarta. Negotiations in relation to the G7’s climate financing for Indonesia to move away from coal are underway, according to a German diplomat.

The 48th G7 Summit in Schloss Elmau earlier this year resulted in a plan to make Indonesia as a candidate for the Just Energy Transition Partnership (JETP). If all goes well, Indonesia would receive funding from the world’s wealthiest nations to end its reliance on coal. 

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German Ambassador to Indonesia Ina Lepel recently said the JETP deal with Indonesia was under negotiation. G7 member countries US and Japan are leading the Indonesian JETP negotiations, with the support of the bloc’s chair Germany and the COP26 host the UK.

“It [the JETP] is currently under negotiation,” Lepel told the Jakarta Globe on the sidelines of the European Union (EU) Climate Diplomacy Week 2022 event in Jakarta on Friday evening.

"We [Germany] are not the ones negotiating it. The US and Japan are taking the lead in the negotiations [with Indonesia]. They keep us informed that they are negotiating with the Indonesian government. Regarding the JETP, we are a supporting partner in our capacity as the G7 chair," Lepel said.

The diplomat said she hoped the JETP could succeed and help Indonesia take bold steps in phasing out coal-powered generation. “And hopefully, make an ambitious agenda for renewable energy,” she said.

The JETP builds on a similar partnership with South Africa. 

At the COP26 Summit in Glasgow last November, major economies -- namely the US, UK, France, Germany, and the EU -- pledged to mobilize an initial $8.5 billion in climate financing for South Africa under the JETP. 

About seven months after the COP26 summit, the G7 announced a plan to develop future JETPs with Indonesia, India, Senegal, and Vietnam. 

All G7 countries will partake in the negotiations for these partnerships. But for each prospective collaboration, they have identified two countries that will take the lead, according to Power Shift and German Watch’s policy brief. 

President Joko “Jokowi” Widodo at the G7 Summit, which took place in late June, announced that Indonesia would need $25-30 billion to shift to clean energy over the next eight years. 

“We can optimize this transition to drive economic growth, open up business opportunities, and generate new jobs,” Jokowi said at the time, while also calling the G7 countries to invest in Indonesia’s clean energy sector.

Indonesia has set a goal to achieve net-zero emissions by 2060 or sooner. 

Also, Indonesia has recently submitted an enhanced nationally determined contribution (NDC) to the United Nations Framework Convention on Climate Change (UNFCCC) secretariat. 

The country has increased its unconditional emission reduction target from 29 percent to 31.89 percent by 2030. With international support, the enhanced target goes up to 43.20 percent — higher than the previous conditional target of 41 percent.

Green Infrastructure Initiative
When it comes to bilateral cooperation, Germany has launched the Green Infrastructure Initiative (GII) to lend a hand in Indonesia’s emission reduction efforts. The GII focuses on urban public transport, solid waste management, and water and wastewater management.

“This is still in the early stages. We are doing pre-feasibility studies in six priority provinces. Once that comes around, this will make a huge difference to put major cities on a sustainable track, while also making people’s lives easier [by tackling] air pollution, traffic congestion, waste problem, and dirty water,” Lepel said.

The GII’s official website shows that the six provinces in question are West Java, Central Java, East Java, Bali, East Nusa Tenggara, and Yogyakarta. As part of the GII, the German Development Bank (KfW) would provide 2.5 billion euros (around $2.45 billion) over five years for green infrastructure projects in Indonesia.

Green Capital
The Indonesian government is now focusing on the construction of a new state capital named Nusantara that is green, smart, and sustainable. 

Jokowi plans to make Nusantara --  located in East Kalimantan -- a city where people mostly travel by public transportation. The city’s power generation will come from renewable sources.

When asked by the Globe if Germany had any interest in taking part in the ambitious infrastructure project, Lepel said she just had a meeting with the National Capital Authority of Nusantara last week. 

“It is an interesting idea to build a city from scratch and incorporate all the sustainability factors. On the other hand, building a city in a place where no big city has been before also raising some environmental issues on its own. There may be forests that need to be cut, indigenous populations that may not be entirely happy with the change of land use. So these aspects would need to be checked,” Lepel told the Globe.

“But at this stage, we are listening with great interest. We are watching, seeing what is being planned. Maybe we or our companies can play a role,” Lepel said.

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