ADB Approves $500 Million Loan for Indonesia's Energy Transition

The Asian Development Bank (ADB) has sanctioned a $500 million policy-based loan to aid Indonesia's clean energy transition. The loan aims to establish a regulatory framework for sustainable energy and is supported by international funds like the G7's JETP. The initiative highlights Indonesia's shift from coal dependence to renewable energy solutions.

The Asian Development Bank (ADB) announced on Friday the approval of a $500 million policy-based loan to support Indonesia's energy transition initiatives. The funding aims to help the resource-rich country, which targets net-zero carbon emissions by 2060, reduce its coal dependency with financial backing from the G7's Just Energy Transition Partnership (JETP).

Emphasizing Indonesia's coal reliance, the ADB stated the program will focus on forming a strong policy and regulatory framework for clean energy transition, as well as bolstering sector governance and financial sustainability. Jiro Tominaga, ADB's country director for Indonesia, remarked that the loan would aid Jakarta in advancing towards sustainable and clean energy sources.

The loan's purpose is to assist in policy development for the sector without being tied to any specific project. The program will include creating a JETP-supported investment and policy plan and elevating renewable energy capacity. Co-financing partners include France's Agence Française de Développement and German state lender KfW.

Under the JETP plan, $20 billion in funds have been pledged to limit emissions in Indonesia's power sector to 290 metric tons of carbon by 2030, though disbursement has been slow. Britain's development minister Anneliese Dodds noted that JETP is a long-term partnership requiring significant infrastructure changes. She mentioned that the UK is committed to accelerating efforts, focusing on green growth and economic development in collaboration with other JETP partners.

(With inputs from agencies.)