The Asian Development Bank recently inked a $92.6 million funding arrangement with PT Supreme Energy Muara Laboh for the harnessing of Indonesia’s geothermal energy resources in Muara Laboh, Sumatra. Under this deal, it will design, construct and operate an 83 MW of a new power plant in the west coast province. This can enable the nation to achieve its clean energy target and maintain its long-run energy security.

Financing Package for Geothermal Expansion

This consists of a blend of financing under a package with $38.8 million provided through ADB’s ordinary capital resources, $38.8 million syndicated ADB B loan from Sumitomo Mitsui Banking Corporation, and $15 million in a concessional loan from the Australian Climate Finance Partnership (ACFP). It is the first project that ADB has mobilized private commercial capital for an Indonesian greenfield geothermal Independent Power Producer project and also offers coverage of uncovered project risks.

ADB remains committed to the geothermal sector in Indonesia.

As the structuring bank lead on this deal, ADB continues to have a significant role to play in the geothermal industry in Indonesia. Since 2013, ADB has been financing several geothermal projects across the country including Muara Laboh Stage 1 and Rantau Dedap to the Sarulla geothermal power project. This new finance underlines ADB’s commitment to developing the world’s largest and biggest share of geothermal potential, 23.1 gigawatts, in Indonesia.

The Muara Laboh geothermal project will reduce greenhouse gas emissions and help Indonesia transition to cleaner, sustainable energy sources. ADB’s support, in addition to the Australian government’s backing, is critical in reducing risks and ensuring the project’s success. This project is vital for helping Indonesia achieve clean energy goals while ensuring affordable electricity for its population.

Apart from environmental benefits, the project will boost the local economy. The project will create jobs, give a boost to community development, and aid in economic growth while shifting the region towards renewable energy.

Also read: ADB Commits $1 Billion Annually to Boost Bangladesh’s Climate Resilience and Sustainability

ACFP’s Role in Risk Mitigation and Project Financing

This high-impact geothermal project would entail significant derisking by the Australian Climate Finance Partnership under the ADB’s management. This facility, made available by Australia, is also a means to boost private sector investments into climate adaptation and mitigation projects in Southeast Asia.

Indonesia has vast, almost untouched geothermal resources. While Indonesia has already harnessed just a fragment of its potential 23.1 gigawatt, it can be crucial to the pursuit of long-term energy and sustainability for the country through projects such as Muara Laboh.

The UK Government has invested $63.2 million (£51.9 million) into 25 businesses through the Industrial Energy Transformation Fund (IETF). The funding is set to contribute to the country’s goal of reaching net-zero emissions by 2050. The funding initiative will spur economic development, among other roles, while focusing on cutting carbon emissions. The Department for Energy Security and Net Zero unveiled the funding last week.

Funding Across Key Industries

The IETF funding will support a variety of industries, including food manufacturing, cement production, and glass processing. Key recipients include Essar Oil UK, Nestlé’s Staffordshire coffee site, Heinz’s Wigan baked bean factory, and Hanson Cement in North Wales. These businesses will use the funding to implement projects that cut carbon emissions and improve energy efficiency.

Also read: Uniper to Build Low-Carbon Power Station in Humber to Boost UK Energy Security

Essar Oil UK’s Decarbonization Efforts

Essar Oil UK will invest part of the raised funds, namely $2.2 million, to advance decarbonization at the Stanlow Refinery. The oil refineries plan to install a Carbon Dioxide Capture Unit (CDCU). The CDCU will capture 95% of CO2 emissions from the fluid catalytic cracking unit.

This project is expected to reduce emissions by 0.86 million tons per year. Essar Oil UK will retrofit over 30 heaters to burn low-carbon hydrogen, further reducing emissions by 0.56 million tons annually.

Other Projects

Several other businesses are also benefiting from the IETF funding. Ultra Tough has received $189,000 to study how furnace waste heat can be converted into electricity, reducing gas usage and emissions. Novelis in Warrington, which has been awarded nearly $17 million, will expand its recycling capacity. This expansion will help reduce 350,000 tons of carbon emissions.

Hanson Cement will receive $6.8 million to implement a carbon capture and storage (CCS) project in North Wales. Hanson Cement is a part of Heidelberg Materials. The new facility will help the company seize 800,000 tons of CO2 annually. Additionally, the development will create hundreds of construction jobs for local people.

Emissions Reduction Technologies

In total, these projects are an investment of $187.8 million in emissions-reduction technologies. Businesses are paying two thirds of the costs. The UK Government has also finalized contracts for the country’s first carbon capture project in Teesside. This project is part of the government’s commitment to reducing the nation’s carbon footprint and revitalizing industrial regions.

The allocation of the funds represents the UK’s dedication to reducing carbon emissions and meeting the 2050 net zero target.