Indonesia will push for the Group of 20 major economies to recognise lending for early retirement of coal power plants as sustainable investment at next week's meeting of finance chiefs, Finance Minister Sri Mulyani Indrawati said on Wednesday.
A coalition of countries, led by the United States and Japan, have promised to mobilise $20 billion of public and private finance to help Indonesia adopt greener power sources and bring forward the sector's peak emissions date by seven years to 2030.
However, bankers told Reuters that investors under the Just Energy Transition Partnership (JETP) still need convincing that coal power plant retirement, which may include compensating the owner to close operations earlier than the asset's life cycle, would not be considered as funding coal.
Many banks across the world have pledged to stop funding assets related to coal, the dirtiest fossil fuel, as part of their climate policy.
Sri Mulyani said governments in Southeast Asia's ASEAN bloc have revised its green taxonomy - a framework defining what investment is considered environmentally friendly - so that such financing would be considered green. She would promote this at the G20 for the grouping to make the same move.
"We want rules that recognise financing for (energy) transition, not rules that punish it," Sri Mulyani told a renewable energy conference.
"This weekend I will attend G20 finance ministers meeting in Gujarat and we will push this to be on of the global agenda so that financing for transition will not face any problem," she said, referring to meetings that will take place in India's Gandhinagar on July 14 to 18.
Coal makes up more than half of Indonesia's power generation. Indonesian state utility Perusahaan Listrik Negara has set a target to phase out coal power plants by 2056, as part of the country's goal to reach net zero carbon emission by 2060.
Indonesia is also working on detailed financial schemes for the energy transition, Sri Mulyani said, which she stressed must ensure that energy prices remain affordable for Indonesia's over 270 million people and the business community.
Jakarta aims to finalise a detailed investment plan for JETP by August, according to the head of Indonesia's JETP Secretariat.
