The United States and Japan will lead a group of counties that will offer $15 billion to Indonesia for retiring its coal power plants earlier and moving on to lower-carbon sources of energy, Bloomberg has reported, citing an Indonesian government official.
Dubbed the “just energy transition partnership”, the deal will focus on financing the closure of coal power plants and the cancellation of new coal generation capacity plans, according to unnamed sources.
The United States, Japan, and their partners, which the report did not list, had been in talks on this deal with Indonesia for a year and the final agreement could be announced as soon as next week, at the G30 summit in Bali.
“I do hope the size is going to be big enough to create confidence in terms of delivering the transition of energy,” said the finance minister of Indonesia, Sri Mulyni Indrawati during a Bloomberg event.
Yet the funding appears to be just a drop in the ocean of finance needed if Indonesia is to retire all its coal-generating capacity. The total amount of money needed to do that would come in at $600 billion, according to Bloomberg. That amount would include not just the retirement of coal power plants but the buildout of low-carbon alternatives to replace them.
The news reflects a major theme at this year’s COP summit where the funding of the transition—and compensation for the effects of climate change—for poor countries has become one of the hottest topics of discussion.
Leaders of island nations have urged wealthy nations to help them financially to cope with the effects of climate change and even the World Bank has called on the wealthy countries to provide funding that would be used to support developing nations’ energy transition efforts after years of reluctance.