In an unprecedented move, Indonesia, in collaboration with the Asian Development Bank (ADB) and the plant's owners, has initiated the early closure of a significant coal-fired power plant in Java, slated to retire seven years earlier than planned. The provisional agreement, announced during the United Nations COP28 climate talks in Dubai, marks a crucial step in preventing around 15 million tonnes of greenhouse gas emissions.

Under the Energy Transition Mechanism (ETM) by ADB, this landmark deal aims to expedite the transition away from coal in developing nations and channelize investments into renewable energy sources. The pact involves the closure of the 660-megawatt Cirebon-1 power plant by 2035, a strategic move to curb emissions and accelerate the shift to cleaner energy.

The agreement entails refinancing the project at a reduced cost of capital, approximating between US$250 million and US$300 million, enabling the closure ahead of schedule. ADB and ETM partners will provide financial mechanisms using market-based and concessional funds to facilitate the early plant closure.

Key conditions include refraining from new coal investments with the refinancing funds and stipulating that any repurposing of the Cirebon 1 plant must contribute solely to renewable or low-carbon power generation.

This initiative is pivotal for Asian regions, considering the heavy reliance on coal-generated power. The move aligns with global efforts to mitigate climate risks, emphasizing the need for a transition to renewable energy while ensuring uninterrupted power supplies and aligning with commercial viability for plant owners.

The progress of the Cirebon 1 deal, conceived during COP27 and developed further during discussions in 2023, signifies a substantial stride towards accelerating the transition from coal to cleaner energy sources. This pioneering agreement serves as a foundational step in fostering similar transitions globally, anticipating essential lessons for future initiatives.