IKI’s support for the JETP in Indonesia
Several projects of the International Climate Initiative (IKI) are working with the Partnership for a Just Energy Transition (JETP) in Indonesia to realise the country's climate protection goals.
The global energy transition is one of the priority fields of action for the International Climate Initiative (IKI). Building on Germany’s experience, the focus in the energy transition field of action is on the further development of energy transition technologies, their financing, and their socially equitable design in order to ensure societal acceptance of the necessary transformation. In parallel with the ongoing energy transition in the partner countries, the IKI is supporting the decarbonisation of industry as a key component of global greenhouse gas mitigation. As defined in the IKI strategy up to 2030, the IKI tries to ensure a partner-orientated and efficient cooperation in the energy sector.
Alongside its bilateral climate partnerships, Germany is also involved in so-called 'Just Energy Transition Partnerships' (JETPs). JETPs are plurilateral partnerships that are supporting selected countries in the global South in their accelerated energy transition and ambitious mitigation action. Germany’s contribution, partly funded by the IKI, accompanies countries on this way.
The JETPs combine financial and technical assistance through an International Partner Group (IPG) to facilitate, among other things, the expansion of renewable energy and power grids, energy efficiency measures and a just transition to low-emission energy systems.
Net zero emissions in the power sector by 2050
JETPs aim for country-specific ownership, ensuring recipient governments lead negotiations to tailor solutions to their needs. In Indonesia, the JETP targets net-zero emissions in the electricity sector by 2050, with a peak in emissions and a 44% share of renewables by 2030. No new on-grid coal power plants will be built beyond those already planned, and approximately €20 billion will be mobilised from both public and private sectors to support this accelerated transition.
To achieve net zero emissions by 2060 or earlier, decarbonisation of Indonesia’s industries is crucial. The Climate Club, formed from Germany during its G7 Presidency, is helping to speed up the decarbonisation of especially emissions-intensive industrial sectors. Since early December 2023, the IKI has financed the Secretariat for the Climate Club’s Global Matchmaking Platform. Indonesia is an active member of the climate club and member of the Climate Club Steering Group.
JETP Secretariat and five JETP Working Groups
A JETP Secretariat was established in early 2023 to support the coordination among different stakeholders and the implementation of the energy transition goals. On November 2023, the government of Indonesia and the IPG launched the first Comprehensive Investment and Policy Plan (CIPP). This plan maps out a technical pathway for Indonesia’s power sector, identifies priority investment areas, recommends policy reforms needed to successfully transition the power sector, and outlines a just transition framework.
Under the guidance with the Government of Indonesia, the Indonesian National Energy Transition Task Force and the IPG, the JETP Secretariat is coordinating five working groups led by international institutions to support implementation of the JETP and prepare the updated draft of the CIPP. The first version of the CIPP provides a consolidated on-grid energy transition pathway for the power sector including financing needs and requirements, policy reform recommendations, and a Just Transition framework.
The following five working groups have been formed:
IKI support to the JETP for early retirement of captive coal-fired power plants: Energy Transition Mechanism Partnership Trust Fund (ETMPTF)
A significant part of IKI’s contribution is the German financing of €30 million for the Energy Transition Mechanism Partnership Trust Fund (ETMPTF) in 2022 in Indonesia. Coordinated by the Asian Development Bank (ADB), this fund accelerates the closure of coal plants replacing them with cleaner energy sources.
In December 2023, a nonbinding agreement was signed at COP 28 between the ADB, Indonesia’s state-owned power utility and transmission system operator PT PLN, PT Cirebon Electric Power (a coal fired power plant), and the Indonesia Investment Authority. The non-binding-agreement detailed a termination of the power purchase agreement for Cirebon-1, a 660 MW coal plant, by 2035, seven years earlier than planned. Discussion are still ongoing regarding the transaction. The successful closure of the deal will be an important first step for the early phase-out of Indonesia’s coal fleet.
IKI support to the JETP for the energy transition in Indonesia
The support to the JETP provided through several IKI projects can be clustered across three distinctive themes:
Industry Decarbonisation
As a member of the JETP 3EWG, the IKI-financed Sustainable Energy Transition Indonesia (SETI) project supports the development of a project pipeline for buildings and industry, that will be integrated in the next version of the CIPP. SETI seeks to integrate projects from the CIPP pipeline in the technical support being offered to companies that aim to increase application of renewable energy and energy efficiency.
Through additional JETP support provided to the Ministry of Energy and Mineral Resources (MEMR), as part of the IKI co-financed German-Indonesian Energy Cooperation Hub (Energy Hub), the IKI further supports ad-hoc technical studies in line with the JETP initiative. An ongoing case study assesses the potential of higher utilisation of renewable energy in energy-intensive nickel smelters in Sulawesi. This study is providing insights on how to phase out coal fired captive generation.
Hydrogen can play a role in decarbonising industries. To explore Indonesia’s potential and applicability, together with the Directorate of Various New and Renewable Energy under MEMR, the IKI project Strategic Exploration of Economic Mitigation Potentials Through Renewables (ExploRE) is currently developing an academic transcript jointly with MEMR on green hydrogen development, as a required process before the issuance of a corresponding government regulation. This government regulation is key to provide more legal certainty, encourage investment, and market creation in green hydrogen.
Just Energy Transition
Through the Energy Hub and the global Programme Innovation Regions for a Just Energy Transition (IKI JET), the IKI supports the development of a just framework. The IKI JET project contributed to the drafting of the very first JETP’s Just Energy Transition Framework, and supports the operationalisation of the framework in pilot regions, notably the coal mining regions South Sumatra and East Kalimantan.
Building upon the CIPP and the National Development Plan 2025-2045, IKI projects further supports the Indonesian Government to institutionalise just transition into national policies. Bappenas was advised on the development of a national just energy transition framework. IKI-JET further provided inputs to the Just Transition White Paper that was recently released by the Indonesian National Energy Transition Task Force.
Sustainable Energy Finance
To realise the JETP project pipeline, close involvement of the private sector is crucial. Initiatives are supported through the Energy Hub and the IKI projects SETI and the regional Clean, Affordable and Secure Energy for South East Asia (CASE). Here, the IKI projects facilitate the discussion between financier and the private sector, collaborating with the German Chamber of Commerce and Industry (KADIN) to advance the JETP initiative and boosting private sector involvement through high-level discussions at the Indonesia Sustainability Forum (ISF) 2024. The IKI projects further organise matchmaking events and business dialogues, to increase the involvement of the private sector to advance clean energy projects and investments. These efforts facilitate potential transactions and technical follow-ups, directly contributing to the operationalization of Indonesia's energy transition and accelerating progress under the JETP framework. Seven potential projects for follow-up were identified.
The project CASE further organises, together with other GIZ projects financed by IKI and BMZ, the annual Indonesia Sustainable Energy Week (ISEW), with the last one held from 10-13 September 2024. Co-financed by IKI and BMZ, ISEW is a national platform to discuss Indonesia’s energy transition, as well as showcasing German-Indonesian cooperation successes. The platform is co-hosted by MEMR and Bappenas and provided the opportunity to discuss above outlined topics relevant to achieving the JETP, with broad stakeholder groups, from government to civil society, private sector and academia.
Beyond IKI projects implemented by GIZ, in 2024, the Asia Low Carbon Buildings Transition (ALCBT) started their main phase and work on renewable energy and energy efficiency in the building sector by engaging with relevant stakeholders.
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