Supporting decarbonization in Asia, public-private financing of 70 billion yen in Indonesia
Prime Minister Kishida holds a meeting with Indonesian President Joko Widodo on the island of Bali, Indonesia on Nov. 14. (Photo courtesy of the Indonesian President's Office)
On the 14th, the governments of Japan and Indonesia agreed to promote a new initiative to support the decarbonization transition of Asia through the Japanese public and private sectors. First, a maximum of $500 million (approximately 70 billion yen) will be financed for the introduction of renewable energy and the enhancement of power transmission and distribution networks in Indonesia. Respond to concerns about lack of funds in Asian countries that have begun full-scale decarbonization efforts.
On the 14th, Prime Minister Fumio Kishida, who is visiting Indonesia, held talks with Indonesian President Joko Widodo and announced an agreement document. The prime minister has proposed the concept of "Asia Zero Emission Community (AZEC)". In addition to solar and wind power, the introduction of various energy sources such as hydrogen and ammonia will be accelerated in Asia.
As one of the concrete projects, Japan's public and private sectors will support Indonesia's transition to decarbonization.
On the 15th, Nippon Export and Investment Insurance (NEXI), wholly owned by the government, will sign a memorandum of understanding on a new collaboration with PLN, the Indonesian state-owned power company. Major banks in Japan and overseas will lend up to $500 million to PLN, and NEXI will provide trade insurance. Of this amount, 200 million dollars will be secured by the end of the fiscal year.
The funded PLN will expand decarbonization investments. PLN plans to stop building new coal-fired power plants and gradually replace existing coal-fired power plants with renewable energy power plants such as solar power from 2025. It is assumed that funds will be allocated to capital investment and feasibility studies that contribute to these efforts.
It is also expected to have the effect of encouraging Japanese companies related to renewable energy to enter the Asian market. PLN, NEXI, and the Japan External Trade Organization (JETRO) will work together to set up a framework to consider whether it is possible to introduce new technologies such as those of Japanese start-up companies related to renewable energy.
Using bilateral cooperation as a model, Japan and Indonesia will invite other Asian countries to participate in the AZEC initiative. Chinese companies are increasing their presence in the renewable energy field. By actively responding to the increasing demand for funds in the decarbonization transition, Japan also aims to expand cooperation in both diplomacy and security.
