Indonesia doubts its own climate commitments after US climate reversal

Indonesia is questioning its own climate targets under the Paris Agreement amid uncertainty around funding promised by the US to phase out coal-fired power plants, after the Trump administration's recent climate policy reversal, government officials said recently.

The recent shift in US climate policy and its strong backing for fossil fuels has had a ripple effect across developing countries and raised concerns about decarbonization financing and global leadership in climate change mitigation.

"We are being pushed to implement the Paris Agreement by using renewable energy. In principle, Indonesia agrees to move towards net zero emissions. But we must also observe global developments," Minister of Energy and Mineral Resources Bahlil Lahadalia told reporters.

He was referring to Washington's decision to withdraw from the Paris Agreement and pointed out that the US was one of the initiators of the climate agreement.

"So I want to ask, which institution will fund us if we retire [coal plants] now? Are we thinking about retiring coal-fired power plants, building schools, fostering synergy, or pursuing other government directives? This is a major dilemma," Lahadalia said.

"We are a developing country striving to become a developed one, so we should not be measured by the standards of developed nations. And now, developed countries are withdrawing [from climate pledges]," he added.

Lahadalia told reporters that the retirement of coal-fired power plants required massive financial investments.

According to the government's rough estimates, switching fuel sources from coal to gas for power generation would cost around Rupiah 72 trillion ($4.41 billion) or the equivalent of 250 LNG cargo shipments to build power plants with a total capacity of 10 GW.

"The question now is, should we use all our gas just for electricity generation? What I mean is, according to the directives from the President, we must push for energy self-sufficiency. The energy resources we currently have in abundance are water, coal, wind, and electricity," he added.

Funding block

Lahadalia reaffirmed the government's commitment to early coal-plant retirement, provided that funding is available and does not impose an economic burden on the state-owned power company PLN, or the public.

The government's challenges include obtaining funds for decarbonization such as low-interest loans and long-term financing, and keeping electricity prices affordable for the people. "Don't force our country to retire power plants and then just talk without providing the money," Lahadalia said.

The Just Energy Transition Partnership (JETP) program, launched in November 2022 with backing from the US and Japan, is expected to mobilize $20 billion of public and private finance to support Indonesia to finance early coal phaseout and renewable deployment.

On Jan. 31, Indonesia's presidential envoy for climate and energy, Hashim Djojohadikusumo, said that JETP is a failed project as it has been running for two years without a single dollar being disbursed. "The $20 billion JETP program will definitely be scrapped by the Trump administration," he said.

"There is a clause in JETP stating that the $5 billion will be granted if the funds are available. When we checked on when it could be disbursed, they said, 'Oh, sorry, it's not available.' This is the reality," Djojohadikusumo said.

"If the United States refuses to comply with an international agreement, why should a country like Indonesia be obligated to follow it? Where is the fairness?" Djojohadikusumo added.