Indonesia will revise its green taxonomy to facilitate funding for the early retirement of coal-fired power plants, according to domestic financial services authority (OJK).
The move followed publication of a revised taxonomy for sustainable finance issued by the Asean Secretariat in June. The report is an overarching guide for Asean governments, businesses and investors in the designing and implementation of sustainable development strategies. The Asean taxonomy board has now classified early retirement of coal-fired power plants as green or amber, depending on the assessment of the particulate plant.
The revision will make it easier for projects involving early retirement of coal-power plants to get sustainable funding, making the phase-out process efficient and more effective, the OJK said. Lack of funding and investments are key obstacles to early coal-power plant retirement efforts, which involve high financial costs associated with reducing the operational life of a plant, it added.
The proposed takeover of state-owned utility PLN's Pelabuhan Ratu coal-power plant by coal producer Bukit Asam to pave way for early retirement has been stuck since October 2022 because of the costs involved, with both companies still conducting their due diligence.
The revision of Indonesian green taxonomy will be complete by the end of the year. And under the new framework, the OJK is also looking at the possibility of including coal-power plants that sell power to industries creating green and sustainable products such as electricity vehicles, it added.
