Indonesia’s ambitious plan to retire 6.7 gigawatts of coal-fired power capacity by 2030 is in jeopardy, as the Just Energy Transition Partnership (JETP) has failed to deliver the $20 billion in pledged funding from donor nations. Officials warn that without concrete financial commitments, the government may be forced to reconsider its coal phaseout strategy.
Funding Shortfall
The JETP, announced in 2022 as the largest climate finance transaction ever brokered, was designed to accelerate Indonesia’s transition away from coal, which accounts for more than 60% of the country’s electricity mix. The funds were intended to cover the early retirement of plants representing 13.5% of national coal capacity.
However, according to Paul Butarbutar, head of the JETP Secretariat, “we have not seen any commitment from anyone to finance the coal phase-out.” Speaking at the COP30 climate summit in Brazil, he emphasized that donor countries have yet to disburse meaningful support, leaving Indonesia unable to proceed with scheduled closures CNA The Star Devdiscourse.
Domestic Pressures
Indonesia’s state utility PLN faces mounting costs from maintaining aging coal plants and long-term contracts with independent power producers. Subsidies and compensation to PLN rose by 24% in 2024 to $11 billion, representing 5% of the national budget ieefa.org. Without external financing, retiring coal assets risks destabilizing the grid and burdening public finances.
Climate and Policy Implications
The potential U-turn threatens Indonesia’s credibility as a climate leader in Southeast Asia. Environmental groups, including Greenpeace Indonesia, have criticized the government’s reliance on fossil fuels and warned that backtracking on coal retirement undermines commitments under the Paris Agreement The Star.
At the same time, stalled funding highlights broader challenges in global climate finance, where pledges often fail to translate into timely disbursement. Analysts argue that Indonesia’s case illustrates the gap between international promises and practical delivery, raising doubts about the viability of similar energy transition deals elsewhere.
Outlook
With donor nations slow to act, Indonesia may delay or scale back its coal retirement program, prioritizing energy security over climate goals. The decision will have far-reaching consequences for regional emissions trajectories, investor confidence, and the credibility of multilateral climate finance frameworks.
Jakarta Indonesia Skyline
Sources: Channel News Asia CNA; The Star The Star; Devdiscourse Devdiscourse; APBI-ICMA APBI-ICMA; Mining Weekly Mining Weekly; Energy News energynews.oedigital.com; IEEFA ieefa.org.
