Western countries are reluctant to finance the early retirement of coal-fired power plants in Indonesia under the Just Energy Transition Partnership (JETP), according to a government official. Indonesia joined the JETP last year, which is intended to provide $20 billion from developed nations to help the country reduce its dependence on fossil fuels. However, discussions on investment plans have faced delays.

Indonesia is keen for financing to retire its coal-fired power plants and build a smart grid. Still, the Western countries involved in the partnership are reportedly more interested in funding renewable commercial projects. Indonesia currently faces an excess of electricity supply, and the government believes that retiring coal plants should be the priority.

Under the JETP agreement, Indonesia has committed to capping and peaking its power sector's carbon emissions at 290 million metric tons by 2030. This peak would be 25% lower than the previously projected peak in 2037. The country aims to eliminate 300 million metric tons of greenhouse gas emissions by 2030 and over 2 billion tons by 2060.

The financing for JETP includes a combination of equity investments, grants, and concessional loans, with the latter making up a significant portion of the funding. For instance, a plan to retire a 660-megawatt coal-fired power plant in Indonesia's West Java is set to receive up to $300 million in financing through the Asian Development Bank.

South Africa was the first country to secure financing under JETP, receiving an $8.5 billion pledge in 2021. Vietnam also secured $15.5 billion in funding through a deal reached in late 2022.