The United States and Japan will lead a group of countries that will offer $15 billion to Indonesia to phase out its coal-fired power plants early and switch to low-carbon energy sources, Bloomberg reported, citing a Indonesian government official.
Dubbed the “Partnership for a Just Energy Transition”, the deal will focus on funding the closure of coal-fired power plants and the cancellation of new coal-generating capacity plans, according to unnamed sources.
The United States, Japan and their partners, which the report does not list, had been in talks on this agreement with Indonesia for a year and the final agreement could be announced as early as next week at the G30 summit. in Bali.
“I hope the size will be big enough to create confidence in terms of achieving the energy transition,” Indonesian Finance Minister Sri Mulyni Indrawati said at a Bloomberg event.
Yet the funding appears to be just a drop in the ocean of funding needed if Indonesia is to withdraw all of its coal production capacity. The total amount of money needed to do this would be $600 billion, according to Bloomberg. This amount would include not only the retirement of coal-fired power plants, but also the construction of low-carbon alternatives to replace them.
The news reflects a major theme from this year’s COP summit where financing the transition – and offsetting the effects of climate change – for poor countries has become one of the hottest talking points.
Leaders of island nations have urged wealthy nations to financially help them deal with the effects of climate change and even the World Bank has called on wealthy countries to provide funds that would be used to support energy transition efforts in developing countries. after years of reluctance. .
By Irina Slav for Oilprice.com
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