Indonesia's Energy Sector Gets $400M From Global Climate Funds

ADB / WB

MANILA, PHILIPPINES (16 March 2010) – Indonesia's geothermal power capacity is set to nearly double following the endorsement of a new climate investment fund plan. The $400 million plan, endorsed by the Trust Fund Committee of the Clean Technology Fund (CTF), will help transform Indonesia's use of renewable energy and ultimately support the government to meet its long-term goal of reducing greenhouse gas emissions by 26% in 2020.

The plan will use co-financing from the multilateral CTF to expand large-scale geothermal power plants and to accelerate initiatives to promote energy efficiency and renewable energy by creating risk-sharing facilities and addressing financing barriers to small- and medium-scale investments. Under the Indonesia plan, the CTF is slated to mobilize an additional $2.7 billion from a range of other sources.

"The greater availability of power supplies will help the Government of Indonesia reach its objective of providing electricity access from the present 65% of the population to 90% by 2020," said Asian Development Bank (ADB) Vice-President for Knowledge Management and Sustainable Development, Ursula Schaefer-Preuss. "Through the utilization of a cleaner fuel source, geothermal development will also result in better health benefits and more energy access for poor people," she said.

Indonesia is the fourth Asian country to have a CTF-funded investment plan for the deployment of low-carbon technologies endorsed by governments – following in the footsteps of the Philippines, Thailand and Viet Nam. The Trust Fund Committee's endorsement of Indonesia's plan raises the level of CTF support to Asia to $1.2 billion, mobilizing a total of nearly $13 billion from government, private sector, and other sources for Asia's move to become a leader in the use of clean energy.

"The Climate Investment Funds are about demonstrating what can be done at scale and the Indonesia plan stands out," said World Bank Vice-President for Sustainable Development, Katherine Sierra. "Indonesia has the largest geothermal energy potential in the world. The co-financing will help Indonesia reduce the use of fossil fuels to meet its rapidly growing energy needs. It also gives a clear signal on the practical actions developing countries can take to combat global climate change," she said.

In addition to the Indonesian plan endorsement, the CTF meeting in Manila on Monday also endorsed plans for Colombia (CTF $150 million, leveraging an additional $2.85 billion from other sources, including private sector), Kazakhstan (CTF $200 million, leveraging $1.1 billion) and Ukraine (CTF $350 million, leveraging $2.3 billion).

The new endorsements bring the total of CTF-funded Investment Plans to 13. Egypt, Mexico, Morocco, South Africa, and Turkey already have Investment Plans endorsed and are in the process of developing and implementing projects, and five countries in the Middle East and North Africa have undertaken a $750 million regional Investment Plan for scaling up concentrated solar power.

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The Climate Investment Funds (CIF) are unique financing instruments designed to test what can be achieved to initiate transformational change towards low-carbon and climate-resilient development through scaled-up financing channeled through the Multilateral Development Banks. The Clean Technology Fund (CTF) finances scaled up demonstration, deployment and transfer of low-carbon technologies for significant greenhouse gas reductions within country investment plans; and the Strategic Climate Fund (SCF) finances targeted programs in developing countries to pilot new climate or sectoral approaches with scaling-up potential.

Both the CTF and SCF trust fund committees have equal representation from developed and developing countries. Recognizing the imperative of climate change deliberations underway in the UN Framework Convention on Climate Change (UNFCCC), the CIF were designed as an interim measure to strengthen the global knowledge base for low carbon and climate-resilient growth solutions.

The CIF are implemented jointly by the African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, Inter-American Development Bank, International Finance Corporation, and World Bank.

For more information, please visit: http://www.climateinvestmentfunds.org.

For more information, please contact:

Robert Bisset
Senior Communications Officer
World Bank
Mobile +1 (202) 415 9646
rbisset@worldbank.org

Philip Wood
Media Relations Specialist
Asian Development Bank
Tel (632) 632-4132
pwood@adb.org