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JAKARTA, Sept 15 (Reuters) – Indonesia has issued regulations to encourage the use of renewable energy in one of the world’s biggest carbon emitters, including a plan to phase out some coal-fired power plants early, announced a presidential decree.

The world’s largest coal exporter aims to increase the share of renewables in its energy mix to 23% by 2025, but has only reached around 12% so far. Coal currently covers about 60% of the country’s electricity needs.

Indonesia set itself a goal last year of reaching net-zero emissions by 2060 and has pledged, alongside dozens of other countries, to gradually reduce the use of coal to help limit global warming to less than 1.5 degrees Celsius above pre-industrial levels.

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Authorities have been instructed to create a plan for the early retirement of some coal-fired power plants and the government could help absorb the losses incurred, according to the regulations published on Wednesday evening.

Southeast Asia’s largest economy said in the regulations that no new coal-fired power plants could be built, but those already in the pipeline and those integrated into the natural resources processing industry will be allowed to proceed as planned.

However, emissions from new coal-fired power plants must be reduced by 35% within 10 years of operation compared to the average emissions from coal-fired power plants in 2021, the document says, and could only be operated until 2050.

The government has also established a new pricing system for each type of renewable energy source – geothermal, hydroelectric and solar – to encourage investment. Developers previously had to go through a lengthy negotiation process with the utility company to reach an agreement on pricing.

To stimulate investment in renewable energy, the government will also provide tax incentives including financing facilities and the facility for licensing forest areas for renewable energy development.

The International Energy Agency (IEA) said earlier this month that Indonesia must ensure policy reforms, including introducing transparent and competitive tariffs and predictable project pipelines to pave the way for the renewable energy and reduce dependence on coal. Read more

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Reporting by Bernadette Christina Editing by Fransiska Nangoy and Kanupriya Kapoor

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