Analysts called on China to finance Indonesia's energy transition China and Japan have sponsored large-scale development of the coal industry in Indonesia, which, according to experts, does not have enough funds to implement its plan to achieve zero emissions, according to the South China Morning Post.
Of the 31.9 gigawatts of coal-fired power plants in operation in Indonesia, about 41 percent were sponsored by Chinese organizations and about 17 percent by Japanese organizations, according to a study published in November by the Institute for Energy Economics and Financial Analysis (IEEFA). In addition, just over half of the 13.8 gigawatts of coal projects under development received financial assistance from Japan or China. Excessive expansion of coal production over the past 15 years has resulted in a 50-60 percent surplus in generating capacity at Indonesia's main state-owned electricity company, Perusahaan Listrik Negara, as IEEFA analysts Elrika Hamdi and Putra Adhiguna pointed out in their report, which has narrowed opportunities for renewable energy development. “Since Japanese and Chinese investors have reaped the benefits of this over-investment, it would have been logical for them to be part of the solution to support Indonesia's energy transition,” they said.
An Indonesian government study in October found that in order to achieve net zero carbon emissions by 2060, in line with its plan to save the planet, PRC's maritime neighbor needs to invest $ 150 billion to $ 200 billion annually in low-carbon energy over the next nine years. The head of the Swiss think tank Horasis, Frank-Jürgen Richter, pointed out that Indonesia does not have that kind of money. “Japan, through the Asian Development Bank, is supporting the energy transition in Southeast Asia, but this is not enough to overcome the huge funding gap,” he said. The expert expects that the PRC will follow Japan's example, otherwise it will signal China's bad influence in the region.
Indonesia uses coal to generate 70 percent of its electricity. In April 2022, the Asian state plans to introduce a carbon tax of US $ 2.1 per tonne, and to introduce mandatory emission quotas for coal-fired power plants by 2025.
In September, in its speech to the General Assembly UN President Xi Jinping has pledged that China will no longer build new coal-fired power plants abroad and will strengthen support for developing countries in the implementation of low-carbon energy projects. The Chinese leader also announced the country's plans to achieve carbon neutrality by 2060.