When Bali hosted the G20 summit in late 2022, then Indonesian President Joko Widodo seized his moment to shine on the world stage. At a summit dominated by the war in Ukraine, he committed his country to phasing out coal.
Indonesia’s coal consumption has more than doubled over the past 10 years, and the country now ranks eighth in the world for carbon emissions. So it was significant when Widodo launched the Just Energy Transition Partnership (JETP) – a $20-billion plan to move Indonesia from coal to renewables.
The country’s JETP is backed by a host of wealthy nations – among them the UK, Japan, the European Union (EU) and Canada – plus international banks including HSBC, Citi and Bank of America. The US, originally one of the plan’s main proponents, pulled out this year under the administration of climate-change sceptic Donald Trump. The donors’ main goal is to help Indonesia reach net-zero power by 2050.
When the JETP was announced, Noel Quinn, then chief executive of HSBC, hailed it as “further proof that finance has an important role to play in facilitating the changes needed to achieve net zero”. He said his bank would allocate funds where they are “most needed”.
But The Bureau of Investigative Journalism (TBIJ) and Climate Home News can reveal that HSBC and other global banks appear to have undermined the plan from the start by continuing to fund companies driving the construction of new coal-fired power stations across Indonesia.
In total, HSBC, Standard Chartered, Citigroup, Deutsche Bank and Bank of America – which all joined the JETP – have helped raise almost $2bn for companies involved in coal expansion in Indonesia since the scheme was announced nearly three years ago.
“Ineffective” plan
A year after Indonesia launched its JETP, at the COP28 climate summit in Dubai, every UN member state recommitted to accelerating efforts to phase down coal power, a promise first made at COP26 in Glasgow.
But Indonesia has since continued building coal-fired power stations. Since the JETP was launched, 28 gigawatts (GW) of new coal-fired power capacity has come online, started construction or been announced – more than the output of all the UK’s power stations combined. This expansion has led to an oversupply of electricity, according to Global Energy Monitor, which tracks energy data.
At the Banten Suralaya coal-fired power station in the west of Java, Indonesia’s most populous island, two new units are slated to start operating this year, adding 2GW more power to the grid.
Locals have said the existing plant is so polluting that rainwater runs black with coal dust, and their banana and peanut crops can no longer thrive. According to a complaint filed on behalf of local residents in 2023 to the World Bank Group – one of the project investors – the impact of increasing the power station’s capacity would be “almost unimaginable”.
The new units are being built with backing from KEPCO, South Korea’s publicly owned electricity utility company. As recently as February, HSBC, Bank of America and Citigroup helped raise $400m for KEPCO, despite the banks’ own policies restricting coal financing.
KEPCO said in financial documents that the money raised would not be used for “any efforts and activities pertaining to the construction of new coal-fired generation units”.
Oct 30, 2025Investigations
Business-as-usual: Donors pour climate adaptation finance into big infrastructure, neglecting local needs
A deep-sea port project in Bangladesh highlights how some major donor nations are labelling funds for industry-friendly transport and energy projects as adaptation finance, reporting by Climate Home News showsRead more
Oct 27, 2025Clean Energy Frontier
COP30 could confront “glaring gap” in clean energy agenda: mining
Energy transition minerals may be tackled at UN climate talks for the first time, as resource-rich developing nations and Indigenous groups call for the industry’s costs and benefits to be fairly sharedRead more
Oct 24, 2025News
Political backing more important than money for new forest fund at COP30, Brazil says
The Tropical Forest Forever Facility is seeking $25bn in startup capital from donors but doesn’t need to hit this goal before its launch in Belém, Brazil’s finance ministry tells Climate Home eventRead more
But that sort of pledge is largely meaningless if the banks don’t require the company not to engage in such activities, according to Xavier Lerin, a senior research manager at ShareAction, a responsible investment organisation.
“The money raised cannot be distinguished from other financing sources,” he said. “Even if it could, it still supports the company’s financial standing and can free up liquidity elsewhere, indirectly enabling coal expansion.”
In a statement to TBIJ, HSBC said: “We follow a clear set of sustainability risk policies which support our ambition to align the financed emissions in our portfolio to net zero by 2050.” Bank of America and Citigroup did not respond to a request for comment.
Fabby Tumiwa, executive director of the Institute for Essential Services Reform (IESR), an Indonesian think-tank that was part of a JETP technical working group, said that if the same banks funding renewables are also financing fossil fuels, the scheme becomes “ineffective”. “I would like to see them spend their money on renewable energy projects listed in the JETP,” he added. “There’s still limited financing going to renewable energy projects right now.”
Indonesia’s JETP secretariat said banks had so far raised just $60m of the $10bn they promised to the scheme. Paul Butarbutar, head of the secretariat, said he did not blame the banks for that: “JETP is about financing projects, not about giving the money to the government. So, because the projects are not there, then of course the financing from the banks is very limited.”
A glaring omission
In 2022, Widodo’s government banned the construction of new coal-fired power connected to Indonesia’s national grid, but the law continues to allow so-called captive stations – which are off-grid and used directly by industry. In Indonesia, captive coal is booming.
Indonesia had almost 14GW of captive coal-fired power stations, according to a 2023 report by the Asian Development Bank, with a further 20GW planned or under construction.
At the time of Widodo’s ban, Weda Bay Industrial Park, home to the world’s largest nickel mine, was being built on Halmahera island, with its own 4.5GW coal-fired power station. HSBC and other banks were helping to fund the companies operating there.
Through a sustainability-linked bond, HSBC helped raise €500m ($582m) for one of the nickel mining companies in the area, a French firm called Eramet. The terms of the deal mean Eramet pays higher interest rates on the debt if it does not meet certain targets to cut emissions from its overall operations. Crucially, however, the substantial emissions from Weda Bay mining operations are excluded from the calculation.
Eramet said it does not have sole decision-making power in the Weda Bay nickel mine but “strives to promote best environmental practices to its partner”. It said it was important to distinguish between the nickel mine and the wider industrial park, which processes the metal using coal-fired power. Eramet is not a shareholder in the Weda Bay industrial park.
It added that the sustainability-linked bond complies with international standards, which do not require emissions from companies in which it is a minority shareholder to be included.
Nickel Industries, an Australian mining company that also operates at Weda Bay, has a majority stake in two of the new coal-fired units on the site and raised $400m with the help of Bank of America Securities in 2023. At the time of publication, Nickel Industries had not responded to a request for comment.
Bhima Yudhistira, executive director of the Center of Economic and Law Studies, an Indonesia-based think-tank, said banks justify financing captive coal-fired power in the industrial park by insisting that nickel-producing companies have a transition plan for using renewable energy later. “This is a very ridiculous argument because if you build the coal-fired power station and it has a lifetime of 15-20 years, I don’t think they will use renewable energy,” he argued.
He added that funds flowing from foreign banks have a knock-on effect: “This also triggers actions from the domestic banks in Indonesia to finance many of the new coal plants because they are inspired by the double standards of the [international banks].”
Workers ride motorbikes on damaged roads around the nickel industrial area owned by Indonesia Weda Bay Industrial Park (IWIP) in Weda Bay, on Halmahera Island, North Maluku, Indonesia, on August 15, 2024. (Photo by Muhammad Fauzy/NurPhoto)
Early-closure test case
Around $3bn in JETP financing has been approved in Indonesia since the programme was launched, surviving a change of government in Indonesia and several of the donor countries.
Some analysts say it has encouraged Indonesia’s new president to double down on climate commitments. “Despite the complexity of the situation, the JETP is still promising to accelerate renewable energy deployment,” Tumiwa said.
The proposed early closure of a coal-fired power station in west Java is seen as a test case for the scheme.
Cirebon Electric Power (CEP) agreed to close the 660-megawatt coal-fired power station in 2035, seven years ahead of schedule. In return, the company would receive $325m in loans channelled by the Asian Development Bank. Negotiations to finalise the deal are ongoing – and their outcome could set an important precedent.
Yet, even as CEP was negotiating the closure of Cirebon-1, it was preparing to open a new coal-fired power station, Cirebon-2, on the same site. Yudhistira said that was a missed opportunity as CEP could have been forced to stop building the new power station as part of the negotiations. Cirebon-2 went online in May 2023, with an expected life of at least 25 years.
JETP banks Standard Chartered and Deutsche Bank raised $455m for CEP’s parent company Indika Energy, which campaigners said highlights the contradictions in the programme.
“No one can ignore the potential moral hazard of using public funds to compensate CEP for the proposed early retirement of Cirebon-1, even while private companies are still investing in and lending to the coal sector,” a report from Friends of the Earth and a network of other civil society organisations argued.
Like KEPCO, Indika said the funds would not be used for any coal-related business, although documentation for the deal shows that it will shore up the company’s finances.
Deutsche Bank told us it had not participated in any “direct loan” supporting coal expansion in Indonesia and that it has “excluded direct financing of new coal-fired power plants and coal mines” since 2016. But this policy does not seem to have prevented it helping raise money for Indika.
It said: “We reject any suggestion that our activities breach our policies or undermine Indonesia’s Just Energy Transition Partnership.”
Standard Chartered also said its activities had not undermined the JETP. A spokesperson said: “We do not provide new financial services to support the expansion of coal. The transformation of energy systems in high-growth economies like Indonesia via the JETP is central to achieving this goal and Standard Chartered will continue to support that transition with a view to do so responsibly, transparently, and at scale.”
The other banks declined to comment.
Freeze on captive coal?
Four years since the first JETP for South Africa was announced at COP26 in Glasgow, academics at the University of Sussex concluded after in-depth research that the model has faltered due to conflicting mandates between donor and recipient countries.
Two years after Indonesia’s agreement was struck in Bali, meanwhile, the country’s new president, Prabowo Subianto, outlined a vision for Indonesia to phase out all fossil-fuelled power stations over the next 15 years at the G20 summit in Rio de Janeiro.
The country’s recently published climate plan says the government is “preparing policy on just transition” that would seek to ensure “a decent future for workers affected by the transition”. The document also highlights Indonesia’s ambitions to develop “self-sufficient, competitive and green industry”, including raw materials like nickel.
Yudhistira said it is not yet clear whether phasing out captive coal is part of Indonesia’s energy transition plan. “The least that we hope to get from the JETP is to have a moratorium, to freeze the permits for new captive coal power plants,” he added.
He urged the JETP banks to stop funding companies involved in building new coal facilities in Indonesia. “[They] need to collaborate with domestic banks, ensuring both have the same goals to decarbonise the power sector – including in industrial parks.”
This story was published in partnership with The Bureau of Investigative Journalism (TBIJ).
Main image: A smelter emits smoke from burning coal to refine nickel at Indonesia’s Weda Bay Industrial Park, on Halmahera Island, North Maluku, Indonesia, on August 14, 2024. (Photo: Muhammad Fauzy/NurPhoto via Reuters Connect)
The post Big banks’ lending to coal backers undermines Indonesia’s green plans appeared first on Climate Home News.
From Climate Home News via this RSS feed