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Indonesia is seeking to retire coal-reliant power plants earlier by devising a way to fund renewable projects amid the challenges of rising interest rates and elevated energy costs.

“So we are going to be very, very serious first in making sure that this short-term disruption will not in this case also weaken our commitment,” Finance Minister Sri Mulyani Indrawati said in a Bloomberg Television interview with Haslinda Amin. She spoke from Bali on the sidelines of the Group of 20 finance ministers and central bank governors meeting.

The government is working out the details of the Energy Transition Mechanism, including how to price the cost of building out renewable power capacity to replace coal-guzzling plants, Indrawati said. 

The ETM platform would involve adopting a model called “blended finance,” that taps different types of investors including sovereign, multilateral and private, instead of bilateral funding. That means countries like Indonesia can retain more authority over their domestic energy strategy instead of signing on to policy-binding deals.

President Joko Widodo has pledged to shut all of Indonesia’s coal-power plants by 2055 and be 100% dependent on renewable sources five years later. No new coal-fired power plants will be approved and there are plans to finally roll out a carbon tax this year. 

Pushing countries to leave coal behind will become more difficult as many of them are in “survival mode” when it comes to access to energy, Indrawati said. Indonesia has been spending more state funds to keep local energy prices low as global oil costs surge.

Source: https://www.bloomberg.com/news/articles/2022-07-15/indonesia-seeks-ways-to-exit-coal-earlier-with-a-fund-mechanism#xj4y7vzkg