Indonesia releases USD-20bn energy transition investment plan

Indonesia on Tuesday officially released the Comprehensive Investment and Policy Plan (CIPP) 2023, which envisages an initial commitment of USD 20 billion (EUR 18.28bn) to support the country’s energy transition.

Written by the Just Energy Transition Partnership (JETP) Secretariat team, this strategic “living document” serves as an energy transition roadmap and includes a number of scenarios with renewable energy and carbon dioxide (CO2) reduction targets. In addition, it gives policy reform recommendations and establishes a just transition framework.

For instance, the JETP Scenario for the period 2023-2050 assumes a renewable energy share of 44% in 2030 and 92% in 2050, a variable renewable energy (VRE) share of 14% in 2030 and 36% in 2050, with 38 GW and 309 GW of respective capacity, as well as no more than 250 million tonnes of CO2 emissions in 2030. In this scenario, net zero emissions in the power sector are expected to be achieved in 2050.

The estimated initial financing commitment of USD 20 billion is split between contributions from international partners such as the governments of the partnership co-leaders – Japan and the US – and private finance.

The CIPP estimates that over USD 97.1 billion has to be invested in the period 2023-2030 and USD 580.3 billion between 2023 and 2050. The cost for just transition assessments and interventions will separately reach at least USD 0.2 billion by 2030. The initial commitment of USD 20 billion is expected to cover about one-fifth of the total investment needed to reach the JETP targets set in 2030.

The document sets out five JETP investment focus areas (IFA), which are presented in the table below.

“JETP Secretariat’s recommendation to increase solar and wind targets substantially to 14% in 2030 and 25% in 2040, from below 1% today, will pave the way for Indonesia’s clean energy transition, unlocking opportunities for both governments and investors in the energy sector. However, it is also equally vital to emphasise the importance of including captive power decarbonisation in the policy framework, and seeing this has been included in the CIPP document is a welcome change. Recognising this as a key enabler is an essential first step towards a comprehensive, cleaner and more just energy transition,” commented Dinita Setyawati, Southeast Asia Senior Electricity Policy Analyst at independent energy think tank Ember.

(USD 1.0 = EUR 0.914)

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