US withdrawal from Indonesia coal phase-down plan to have limited impact, official says

By Fransiska Nangoy

JAKARTA, June 26 (Reuters) - The withdrawal of the United States from an international collaboration to help developing countries move away from coal will have a limited impact on Indonesia, the country's top official for the initiative said on Thursday.

The U.S. withdrew from the Just Energy Transition Partnership (JETP) of 10 donor nations this year as part of President Donald Trump's plans to cut foreign aid.

Indonesia had been promised $20 billion in funds under the partnership in what was described as the "single largest climate finance transaction" by a U.S. official when the plan was first announced in 2022, but very little money has been disbursed.

"The direct impact of U.S. withdrawal from the JETP is not so severe as many people thought," Paul Butarbutar, acting head of the JETP Indonesia Secretariat told the Financial Times Energy Transition Summit Asia conference.

The Southeast Asian nation of more than 275 million has repeatedly referenced its low per-capita emissions compared with richer nations, and lack of inexpensive financing to justify reliance on its abundant coal reserves, which have helped provide electricity to its citizens at the lowest prices in the region.

Butarbutar said the U.S. had committed $60 million in grants to Indonesia - which will now not be received.

However, half of the $2 billion in proposed financial contributions were U.S. guarantees to the World Bank that would have helped Indonesian firms borrow money for energy transition, which have already been finalised.

"We still can use the guarantee. So now it is up to us whether we want to use it or not," he said.

The rest of the U.S. commitment can be channeled through bilateral cooperation between the two countries, though this funding will no longer be a part of JETP, Butarbutar said.

Beyond the guarantee, there could be financing through U.S. interests for select projects, he said, citing an example of the U.S. Development Finance Corp funding a geothermal project involving a U.S. company.