CGD NOTE | JUNE 2023Decarbonizing the Maritime Industry: An Opportunity to Further Indonesia’s Just Energy TransitionAnnika SeilerThe race is on to decarbonize the energy sector in Indonesia. In November 2022, the government of Indonesia and the International Partners Group (IPG) 1 launched their Just Energy Transition Partnership (JETP). As part of the partnership, Indonesia committed to raise the share of renewables in its power generation mix from its current level of 19 percent to 34 percent by 2030. The country also committed to achieving an early peaking of carbon emissions and advancing its net-zero emission commitment by a decade from 2060 to 2050. In return for Indonesia’s increased policy ambitions, the IPG in conjunction with leading financial institutions pledged to support the country with an initial amount of $20 billion, half of which will come from the private sector. (Ministry of Finance of Japan, 2022)Indonesia’s JETP has received considerable attention as a leading test case for how donors, providers of official finance, and the private sector can partner with low- and middle-income countries to reduce emissions while promoting development progress. So far, most of the focus in Indonesia’s JETP has been on efforts to reduce the supply of carbon-intensive power by refinancing coal-fired power plants to retire them early and replace them with renewables. But this strategy alone may not deliver the speed and scale of the transition required as it relies on large amounts of grant and concessional funding, which may be difficult to secure. Efforts to boost demand for renewable-based energy deserve more attention. One such effort is particularly promising in generating synergies for In...
