Paper Issuers Positions: Padarincang Residents Community, Wae Sano Residents Community, Poco Leok Residents Community, Mataloko Residents Community, Satar Punda Residents Community, Jailolo Residents Community, Dieng Residents Community, Gunung Slamet Residents Community, Sorik Marapi Residents Community, Gunung Gede Pangarango Residents Community , Community of Porong Residents, Aksata Syndicate, Save Malang Raya, Equitable Energy Coalition, JATAM Kaltara, JATAM East Kalimantan, JATAM Central Sulawesi, LBH Semarang, LBH Padang, JATAM, WALHI, WALHI East Java, WALHI NTT, KRuHA, JPIC OFM Indonesia, JPIC SVD Ruteng, Sunspirit-Labuan Bajo.

Abstract

On November 15, 2022, during a summit of the Governments of the G-20 club, the Government of Indonesia signed a letter of intent with international lending agencies and rich country governments, to increase its consumption of renewable energy and reduce its reliance on coal, under the “Just Energy Transition Partnership” (“JETP”) scheme. At the same time, the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change in Egypt agreed on the details of the carbon emissions compensation allowance trading rules, part of Article 6 of the Paris Agreement (COP 21, 2015). The Government of Indonesia was the second party to agree to the JETP Scheme, following the Government of South Africa two years earlier. The  JETP investment plan for Indonesia consists of $10 billion of funding from the IPG (“International Partners Group”, consisting of France, Germany, UK, US, EU), as well as $10 billion of debt under the coordination of GFANZ (Glasgow Financial Alliance for Net Zero working group, consisting of HSBC, Standard Chartered, Bank of America, Citi, Deutsche Bank, MacQuarie, MUFG). The JETP framework itself is integral to the World Bank Group’s (2008) allocation of CIF (Climate Investment Fund) loan funds, including the CTF (Clean Technology Fund) loan program for private investment in geothermal, batteries, solar power, and the ACT (Accelerating Coal Transition) loan program with four initial target countries – India, Indonesia, Philippines and South Africa. This position paper presents a critique and political stance on the JETP for Indonesia.

1   It’s Political, Not Technical

The three key words in the JETP, energy-transition, just, and partnership, are loaded with the political interests of the northern/rich/industrialized countries as the rulers of financial flows and the global economic nexus, in the face of the earth’s climate change crisis. There are at least three agendas that represent these interests:

First, the diversion of attention and mobilization of agreement of UN member states, from the issue of stopping the extraction, processing and consumption of fossil energy sources, namely oil, gas and coal, the main source of climate disaster, to the issue of financial compensation transactions for the enlargement of emissions from the fossil energy industry, especially in the name of the mechanisms of “low carbon economy”, “green economy”, “clean development”, the purchase of “polluting rights”    from companies holding carbon stock concessions operating in the tropical belt, and the application   of pollution reduction technology from the combustion of fossil energy sources. If you want to   continue polluting the air without doing anything, pay up.

In such an inversion of common sense, the giant fossil energy companies and the industries that depend on them will even be able to claim to have achieved Zero emissions while continuing to blow out more greenhouse gases.

Secondly, the enlargement and expansion of the energy industry market and the chain of extractive industries, technological and financial infrastructure associated with it. The main target is indeed the countries of the South (also called emerging markets), as capture markets and as sacrifice zones in the occupation and dismantling of their landscapes and waterscapes for the extraction of minerals vital for the production and consumption of renewable energy.

Third, the preparation of all protocols to guarantee the security of long-term investment interests in the industrial colonies – especially the energy colonies – of the North, including the reform of the system of transactions and calculation of national income, regulatory mechanisms and instruments, free access to any part of the country’s sovereign territory that can be exploited, and guarantees of long-term control of space.

It is impossible to insert any notion of justice into the JETP scheme, and the so-called partnership would be more accurately described as a colonial-imperial relationship between a political and financial patron and its client states.

2   What’s Wrong with JETP?

JETP is important to read as a global finance/finance industry investment plan. The JETP operator for Indonesia will have to formulate key aspects of financing needs within the year, including early “retirement” of power plants and coal mines as well as widespread application of “clean energy technologies” that ease the transition to “low-carbon energy” consumption production.

Has there been enough information and study put forward and discussed with Indonesian citizens about the financing plan of the JETP? What risks should the JETP managers be open about to the

public, be it financial risks, the risk of catastrophic escalation for residents of the areas burdened by the JETP program, or the risk of not addressing problems from within the energy industry companies themselves?

We can learn from the JETP package for South Africa, the first target of the partnership promoters. Of the 8.455 billion dollars worth of investments, 96 percent were concessional and commercial loans and debt guarantees. Only four percent was grant support. The grant/debt ratio of the six investors (CIF/ACT, UK, EU-European Investment Bank, US, France, Germany) ranged from 0.3% (France) to

25.7% (Germany).1 ESKOM as South Africa’s PLN is itself in deep crisis, and its own power supply chain is uncertain.

For Indonesia, the keyword “RE” in the JETP acronym itself needs to be publicly questioned. Over the last three decades (1990-2018), Indonesia’s greenhouse gas emissions growth has been 5x for

electricity and transportation, and 4x for manufacturing/construction.2 How does the formulation of energy demand take place? To serve what and whose interests?

Energy industry transition? Domestic coal consumption mix in 1985-2020 rose from ±10% to ±40%. Indonesia exports 70-80% of extracted coal, to be burned in several buyer countries. The Ministry of Energy and Mineral Resources itself continues to increase the coal extraction target, from 594 million tons (2020) up 20 percent to 697 million tons (2023). This means nothing less than a coordinated increase in emissions from Indonesia’s coal industry. If electricity supply is considered important as a source of emissions, today Indonesia’s peak demand is ±40GW, while the amount of electricity supply is ±70GW. How many gigatons of CO2 emissions does the electric energy industry unnecessarily produce? In the face of such blatant ignorance, why is the story of the planned “early retirement” of only a dozen PLTUs, including through mixed combustion with biomass, along with the “innovation” of the plantation/forest conversion category, from HTI to HTE (energy plantation forest), being brought up? Moreover, there is now an official promotion of financial transactions between power plant operators/owners as a fake mechanism for emission reduction through trading carbon financial instruments.

What about fossil oil and gas? Just like coal, every year the lifting target for oil and fossil gas continues to rise, contrary to the great promises of national emission reduction contribution. Why are they not even mentioned in the energy transition wording of the JETP?

3   A statement and call to all those who want Indonesia to be free from the colonial interests of rich countries, the energy industry and the global financial industry

The JETP investment plan for Indonesia will not contribute significantly to correcting Indonesia’s growing emissions “contribution” from the energy industry. The JETP alone, which includes nearly 20 billion dollars of new debt, will burden state finances for projects that have nothing to do with crisis recovery or protecting the economy of the masses.

JETP’s investment plans and business transactions especially with investors will take place within the pipeline of financial, information and commodity flows under industry control, and therefore will not provide any major benefits let alone protection for citizens in the energy industry’s areas of operation in the Indonesian archipelago. The JETP is unlikely to create social justice, let alone help remedy the ecological crisis at the scale of the biosphere and at the scale of the Indonesian archipelago and waters.

Investment plans and timetables in the global “climate-change economy”, particularly those concerning the expansion of the extraction areas and capture markets of the energy industry, including the expansion of extraction fields for geothermal, battery minerals, biofuels and other types of “renewable energy”, are a clear attack and threat to the security of waterscapes, food- producing lands and other sources of people’s livelihoods.

The JETP, and other multilateral financing programs for energy and extractive industry investments with the pretext of saving the world from climate crisis are the modus operandi of a debt trap, a carbon finance instrument trading trap, and are entirely colonial in nature.

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1 Fitchratings.com, 11/11/2022. Debt-Funded Energy Transition Schemes Unlikely to Weigh on EM Credit Profiles.

2 World Bank Group, 05/2023. “Indonesia Country Climate and Development Report.”