ADB approves $500m loan for Indonesia’s energy transition efforts

JAKARTA: The Asian Development Bank (ADB) said on Friday it has approved a $500 million policy-based loan to Indonesia to fund a program designed to help its energy transition efforts.

Resource-rich Indonesia, which is aiming for net-zero carbon emissions by 2060, has been trying to reduce the use of coal with financial support from the G7’s Just Energy Transition Partnership (JETP).

Highlighting Indonesia’s reliance on coal, the ADB said in a statement the program “focuses on establishing a robust policy and regulatory framework for clean energy transition, strengthening sector governance and financial sustainability”.

“Indonesia is at a critical juncture in its energy transition journey,” said Jiro Tominaga, ADB’s country director for Indonesia, adding the loan supported Jakarta’s efforts “to accelerate its shift towards sustainable and clean energy”.

The ADB said the loan is intended to support “the sector’s policy development rather than one specific scope or project.”The program includes developing a JETP-supported investment and policy plan, and improvements for scaling up renewable energy capacity, said ADB, whose co-financing partners for the program include France’s development agency, Agence Française de Developpement (AFD), and German state lender KfW.

Funds worth $20 billion have been pledged under a JETP plan for Indonesia to cap emissions in the power sector at 290 metric tons of carbon in 2030, but disbursement of funds has been slow.

Asked about JETP’s slow implementation, Britain’s development minister Anneliese Dodds told Reuters this week that JETP is a long-term partnership that requires big changes around infrastructure.“This is not going to happen overnight,” she said. “The UK is really working to renew that approach so that together we can be focused on green growth and economic development.”