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December 20, 2023

Indonesia Considers Labelling Green Financing for Coal-powered EV Battery Makers

December 20, 2023

The Indonesian Financial Service Authority (OJK) considers categorizing coal-based power plants as eligible for green finance loans on the condition that such power plants supply to electric vehicle battery manufacturers. As Indonesia endeavors to enhance its “green taxonomy” framework by expanding opportunities for foreign investments in sustainable industries, the green finance designation for coal-based power plants would present an appealing investment channel for foreign EV manufacturers seeking to invest in Indonesia’s emerging EV battery market.

However, the Institute for Energy Economics and Financial Analysis (IEEFA) has recently questioned the validity of continued coal power use as an effective tool for environmental improvement. An IEEFA analyst asserted in a recent statement that Indonesia’s reluctance to end funding for coal assets “simply goes against scientific evidence” that carbon emissions not only harm the environment but also inhibit Indonesia’s progress toward its target of net zero emissions by 2060.

As Indonesia’s monetary authorities prepare to publish plans for the allocation of USD 20 billion toward sustainable energy infrastructure as part of the Just Energy Transition Partnership (JETP), coal assets will likely be factored into Indonesia’s planned expenditures.

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