ADB Approves $500 Million Loan to Boost Indonesia's Clean Energy Transition

The Asian Development Bank (ADB) has approved a $500 million policy-based loan to Indonesia aiming to support its clean energy transition efforts. The program focuses on reducing coal reliance and establishing a strong policy framework for renewable energy. Co-financing partners include France's AFD and Germany's KfW.

The Asian Development Bank (ADB) announced on Friday the approval of a $500 million policy-based loan to Indonesia, aimed at accelerating the nation's energy transition efforts. Resource-rich Indonesia, targeting net-zero carbon emissions by 2060, seeks to reduce coal dependence with financial backing from the G7's Just Energy Transition Partnership (JETP).

The ADB highlighted Indonesia's significant reliance on coal, emphasizing that the loan will establish a robust policy and regulatory framework for clean energy transition, strengthen sector governance, and ensure financial sustainability. 'Indonesia is at a critical juncture in its energy transition journey,' stated Jiro Tominaga, ADB's country director for Indonesia.

The program, supported by AFD and KfW, includes creating a JETP-backed investment and policy plan and enhancing renewable energy capacity. Despite a pledged $20 billion under JETP to cap power sector emissions by 2030, fund disbursement has been slow. Britain's development minister Anneliese Dodds asserted that JETP is a long-term partnership necessitating substantial infrastructural changes.