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CIF Set To Fund Just Transition To Clean Power In Indonesia 

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The governing board of the Climate Investment Funds endorsed new investment plans for a just transition from coal to clean power in Indonesia for a total amount of $1 billion. The decision intends to equip each country with access to $500 million in concessional, risk-bearing capital from CIF’s Accelerating Coal Transition (CIF ACT) investment program to build momentum toward ambitious climate, energy, and development goals. 

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Indonesia’s Minister of Finance Mulyani Indrawati said “as a country, we are strongly committed to transitioning away from coal to cleaner forms of energy. Any potential solution must reflect our country-specific considerations like electricity over-supply, a young fleet of coal plants, and just the transition of our people. The Climate Investment Funds’ ACT Investment Program allows us that flexibility to deploy a financial toolkit to tackle these critical challenges holistically. I welcome the recent endorsement in principle of our ACT Investment Plan by the CIF governing body and look forward to our continued partnership to deliver on the critical energy transition agenda.”

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Coal is an abundant natural resource in Indonesia, the world’s largest coal exporter, and the power plant fleet potentially has decades of economic life and harmful emissions ahead. But coal combustion is costly for the economy and public health: it is the single-largest source of global temperature increase and contributes to air pollution, causing over 4 million deaths every year. Indonesia recently committed to reaching net zero by 2060. 

Coal is an abundant natural resource in Indonesia, the world’s largest coal exporter. The coal power fleet is relatively young there, with potentially decades of economic life and harmful emissions ahead. But coal combustion is costly for the economy and public health: it is the single-largest source of global temperature increase and contributes to air pollution, causing over 4 million deaths every year. Indonesia recently committed to reaching net zero by 2060.

Both countries plan to promote women’s climate leadership and support their involvement in designing and implementing coal-to-clean transition strategies.

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South Africa, India, Indonesia, and the Philippines, representing over 15% of coal-related emissions globally, were selected as the first beneficiaries of our Accelerating Coal Transition (ACT) investment program, the first multilateral effort to advance an equitable, inclusive shift away from coal power in developing countries. In 2021, G7 leaders committed up to $2 billion to capitalize ACT and related CIF energy transition initiatives. In fulfillment of this pledge, the United States recently announced a contribution of nearly $1 billion to CIF ACT.

Renewable energy is increasingly more cost-competitive than coal, with the number of uncompetitive coal plants expected to grow by over two-thirds globally by 2025. The transition to clean energy represents an enormous economic opportunity for developing countries and our shared climate future.

“With these new investment plans, South Africa and Indonesia are stepping up and striving to show the world a new path forward: One in which we break our dependence on coal, support those most vulnerable in the transition and unleash a new green economy all at the same time,” said CIF’s CEO Mafalda Duarte when announcing the investment plans.
 

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