The Asian Development Bank (ADB) has approved a $500 million policy-based loan to speed up Indonesia’s clean energy transition.
ADB made the announcement in Manila, Philippines, on the twentieth, saying the loan supports Indonesia’s greenhouse gas reduction goals and policy measures to support achieving net-zero emissions from the ability sector by 2050.
Policy-based lending (PBL) is provided to advertise national policy reform, and in contrast to infrastructure projects, it is a technique of providing funds for policy changes and institutional improvements. The primary goal is to transition to scrub energy and strengthen national energy security.
Indonesia has expanded its power supply capability, nevertheless it still relies on fossil fuels akin to coal, gas and diesel. The loan program focuses on establishing the policy and regulatory foundation for a clean energy transition, strengthening governance and financial sustainability within the energy sector, and ensuring a good and inclusive energy transition.
“Indonesia is at a critical juncture in its energy transition,” said Jiro Tominaga, ADB Indonesia Country Director. “This policy-based lending facility will support the event of policies needed to deal with the complex challenges Indonesia faces and transition to sustainable energy.”
Key actions include the event of a Comprehensive Investment and Policy Plan (CIPP) supported by Indonesia’s Just Energy Transition Partnership, which identifies investment needs and opportunities to implement it, in addition to initiatives to strengthen the capability and governance of state-owned energy corporations, akin to improving regulation to expand renewable energy capability and promoting gender equality.
This program is being implemented in collaboration with ADB and its co-financing partners, the French Development Agency (AFD) and the German Development Cooperation (KfW), to support the Indonesian government’s energy transition leadership. ADB will support the Indonesian government’s early regulatory development phase through energy transition mechanisms, state and non-state infrastructure financing, and various technical assistance projects.
Reporter Jaeseung Lee energy@aitimes.com
