PLN’s transmission business puts Indonesia’s energy transition needs at risk unless reformation occurs to change the company’s reliance on national budgets.
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How restructuring PLN’s transmission business could lower financing costs: IEEFA | News | Eco-Business | Asia Pacific
Abatify Summary
Nature & Climate Perspective
**Accelerating the restructuring of PLN's transmission grid is critical to unlocking renewable energy integration and preventing massive locked-in coal emissions across Indonesia. **
- Grid modernization facilitates the rapid displacement of fossil fuels, directly mitigating localized air and water pollution that threatens Indonesia's mega-diverse terrestrial and marine ecosystems.
- Improved transmission capacity enables the phase-out of high-emitting coal plants, indirectly protecting surrounding forests and LULUCF carbon sinks from degradation associated with coal mining expansion.
- Establishing a resilient, renewable-ready grid is foundational to stabilizing regional microclimates and protecting Indonesia's vulnerable coastal ecosystems from severe climate-induced sea-level rise.
Market & Policy Outlook
**Transitioning PLN's grid financing model from public budgets to private capital markets is essential to lower capital costs and scale the issuance of high-integrity market instruments. **
- Unbundling PLN's transmission business paves the way for transparent energy accounting, allowing Indonesia to generate verifiable I-RECs and transfer ITMOs under Article 6.2 frameworks with reduced double-counting risks.
- Securing private investment for transmission infrastructure ensures that future grid-connected offset projects meet the additionality and permanence requirements of the ICVCM Core Carbon Principles (CCPs).
- A decarbonized and restructured grid enables multinational corporations operating in Indonesia to credibly claim Scope 3 emissions reductions and meet stringent Science Based Targets initiative (SBTi) criteria.
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