AFP

Rich nations pledged Tuesday to raise at least $20 billion to help wean Indonesia off coal and reach carbon neutrality by 2050, a decade earlier than planned, the White House said.

The United States, Japan, Canada and six European countries signed the accord with Jakarta on the sidelines of the G20 summit in Bali to ensure a “just power sector transition” away from Indonesia’s coal-dependent economy, they said in a statement released by the White House.

Under the deal, Indonesia, home to the world’s third-largest rainforest, pledges to be carbon-neutral by 2050, — 10 years earlier than previously planned — and to almost double its renewable energy generation by 2030.

Indonesian President Joko Widodo hailed the deal, which follows a similar agreement for South Africa last year, as a model that could be replicated in other countries to meet the world’s climate goals.

“Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development,” he said, pledging the deal would help “accelerate this transition”.

Sponsors of the agreement said Jakarta had committed to an ambitious shift to clean energy in return for $10 billion in public sector finance and $10 billion in private funding over three to five years.

The financing included “grants, concessional loans, market-rate loans, guarantees and private investments” for the country, which has one of the largest coal reserves in the world.

US President Joe Biden said the deal showed “countries can dramatically cut emissions and increase renewable energy while… creating quality jobs and protecting livelihoods and communities.”

– ‘Work in progress’ –

Indonesia has at times questioned climate deals, including a 2021 agreement to end deforestation by 2030 it signed, warning it could hinder the country’s economic development.

But despite the new incentives, experts cautioned that a lot of work remained for Indonesia to meet the demands of the partnership.

“It’s a work in progress. But Indonesia has gotten to enough comfort level with the scale of finance that they want to go ahead with it. There will be a lot of follow up work,” said Friederike Roder, senior director for EU and G20 at NGO Global Citizen.

But he warned: “There is concern that the finance is not adequate for the total transformation that is needed”.

Indonesian officials welcomed the pact despite the worries.

The deal shows “we can create a more sustainable world for our grandchildren, our citizens, and the future generation,” Indonesia’s coordinating minister of maritime and investment affairs Luhut Binsar Pandjaitan told a press conference.

The donor pledge announced on Tuesday was part of a slew of projects announced under an infrastructure partnership — aimed as a counter-balance to China’s Belt and Road Initiative — to provide support to developing nations.

They ranged from funding for digital projects in the Pacific to investment in the sustainable mining of nickel and cobalt in Brazil and powering solar projects in Honduras.

Britain will Thursday hike taxes and slash public spending in a government budget that signals a return to austerity despite a cost-of-living crisis and recession headwinds.

Conservative Prime Minister Rishi Sunak, who took office just three weeks ago, has vowed to fix the economic havoc created by his short-lived predecessor Liz Truss.

Even though he is mindful of soaring energy bills and food prices with UK inflation at a 40-year high and interest rates ballooning, the budget is widely seen as triggering a new era of austerity, similar to the one that followed the 2008 global financial crisis.

Finance minister Jeremy Hunt will present his crucial budget in parliament, alongside official growth and inflation forecasts unlikely to bring joy to an economy battered also by Brexit and costly government help during the Covid pandemic.

“Tackling inflation is my absolute priority and that guides the difficult decisions on tax and spending we will make,” Hunt said Tuesday. 

“Restoring stability and getting debt falling is our only option to reduce inflation and limit interest rate rises,” he added after official data showed UK unemployment creeping up.

Chancellor of the Exchequer Hunt is expected to unveil tax hikes and spending cuts of up to £60 billion ($70.5 billion) to bring down debt, media reports suggested.

Heading into the budget, he has likened himself to the penny-pinching miser Ebenezer Scrooge in Charles Dickens’ festive favourite “A Christmas Carol”.

– Recession –

Britain is likely already in recession after its economy shrank in the third quarter and is set to do so again in the final three months of the year, according to the Bank of England.

The BoE, which is raising interest rates to combat sky-high inflation, has warned the UK economy may experience a record-long recession until mid-2024.

It comes after the central bank went on an emergency buying spree of UK government bonds after Truss’s unfunded tax-slashing budget sparked a collapse in the pound and an explosion in state borrowing costs during her 49-day tenure.

That cost her the leadership, but not before Truss had fired her finance minister Kwasi Kwarteng, replacing him with Hunt.

The new chancellor has set about reversing the much-criticised budget by curtailing a freeze in domestic fuel bills that have surged largely owing to the invasion of Ukraine by major energy producer Russia. 

Reports suggest that Hunt will now go further, freezing income tax rate thresholds, meaning more people are dragged into higher tax brackets.

To help the poorest with rocketing energy bills, the government is expected to ramp up a windfall tax on oil and gas giants, whose profits have surged on fallout from the Ukraine war.

The Financial Times on Tuesday added that Hunt is preparing a windfall tax on firms generating electricity, whose profits have also soared this year. 

– ‘Devastating consequences’ –

The pound and bond markets have regained somewhat of an even keel after Sunak took the helm and political turmoil subsided, but retail lenders’ mortgage rates remain elevated.

“I would really want people to be reassured that… all the decisions we make will have fairness and compassion at their heart,” Sunak said this week.

Hoping that Sunak sticks to his word, chief executives of Britain’s biggest supermarkets published an open letter Tuesday urging the government to offer free school meals to far more children than the very poorest.

“We are committed to doing all we can to support (children)…, with several actions set to be implemented in the coming months, but we cannot do this alone,” said the letter co-signed by bosses of supermarkets including Britain’s biggest retailer Tesco.

“We strongly urge you to consider the scale of children’s food insecurity across the UK and act without delay to prevent its devastating consequences.”

– ‘Austerity 2.0’ –

Britain’s main opposition Labour party has slammed Sunak, arguing that a second wave of austerity is not the answer.

“I don’t believe that austerity 2.0, after the austerity that we have gone through… is the right approach,” said Labour’s finance spokeswoman Rachel Reeves.

“Public services are already on their knees,” added Reeves, calling it a “badge of shame” that nurses were planning to strike this winter.

Tens of thousands of staff in various industries have already gone on strike across Britain this year as inflation erodes wages.

British Prime Minister Rishi Sunak called Tuesday for efforts to stabilise oil markets in talks with Saudi Arabia’s crown prince, who was shunned by US President Joe Biden over an output cut.

The new British prime minister met separately with Crown Prince Mohammed bin Salman, the oil-rich kingdom’s effective ruler, as they gathered for the Group of 20 summit on the Indonesian resort island of Bali.

“In light of the global increase in energy prices sparked by Russia’s invasion of Ukraine, the prime minister said he hoped the UK and Saudi Arabia could continue to work together to stabilise energy markets,” a Downing Street spokesperson said.

The engagement contrasts with the cold shoulder by Biden, with US officials saying they were not planning any meeting with the prince, known by his initials MBS, even on a lower level.

Biden was outraged after the Saudi-led OPEC+ oil cartel decided to cut production by two million barrels a day from November, adding pressure to global prices and potentially boosting revenue for energy exporter Russia, counteracting the US-led campaign to isolate Moscow over its invasion of Ukraine.

Biden warned Saudi Arabia of consequences over the move, which some of his aides saw as an effort to boost the rival Republican Party days ahead of US congressional elections in which inflation was a top issue.

Saudi Arabia insisted it was only considering economic factors but the move infuriated Biden as he had taken political risks in June by visiting the kingdom on a mission to ensure the flow of oil.

Biden as a candidate had vowed to make Prince Mohammed, a close ally of former US president Donald Trump, a pariah over human rights.

Declassified US intelligence said that the prince ordered the killing and dismemberment of US-based Saudi journalist Jamal Khashoggi.

The Downing Street spokesperson said Sunak raised with Prince Mohammed “the importance of further progress on social reforms, including on women’s rights and freedoms” in the ultra-conservative kingdom.

They also discussed the “destabilising activity” of Iran, Saudi Arabia’s regional rival, the spokesperson said.

Rich nations pledged Tuesday to raise at least $20 billion to help wean Indonesia off coal and reach carbon neutrality by 2050, a decade earlier than planned, the White House said.

The United States, Japan, Canada and six European countries signed the accord with Jakarta on the sidelines of the G20 summit in Bali to ensure a “just power sector transition” away from Indonesia’s coal-dependent economy, they said in a statement released by the White House.

Under the deal, Indonesia, home to the world’s third-largest rainforest, pledges to be carbon-neutral by 2050, 10 years earlier than previously planned, and to almost double its renewable energy generation by 2030.

Indonesian President Joko Widodo hailed the deal as a model that could be replicated in other countries to meet the world’s climate goals.

“Indonesia is committed to using our energy transition to achieve a green economy and drive sustainable development,” he said in a statement.

“We are grateful for the cooperation and the support from our international partners to realise its full implementation that will accelerate this transition.”

Sponsors of the deal said Jakarta had committed to an ambitious shift to clean energy in return for $10 billion in public sector finance and $10 billion in private funding over three to five years.

The financing included “grants, concessional loans, market-rate loans, guarantees and private investments” for the country, which has one of the largest coal reserves in the world.

US President Joe Biden praised Jakarta’s “tremendous leadership” in sealing the partnership.

“The resulting new and accelerated targets demonstrate how countries can dramatically cut emissions and increase renewable energy while advancing a commitment to creating quality jobs and protecting livelihoods and communities,” he said.

Indonesia had questioned the terms of a 2021 deal to end deforestation by 2030 signed by over 100 countries, including the Southeast Asian archipelago, arguing it would hinder the country’s economic development.

The donor pledge announced on Tuesday was part of a slew of projects announced under an infrastructure partnership — aimed as a counter-balance to China’s Belt and Road Initiative — to provide support to poor and developing nations.

They ranged from funding for digital projects in the Pacific, to investment in the sustainable mining of nickel and cobalt in Brazil and powering solar projects in Honduras.

Asian markets rose Tuesday as investors brushed off a reverse on Wall Street and focused on signs of slowing inflation and China’s moves to shore up its economy.

A largely positive meeting between US President Joe Biden and Chinese counterpart Xi Jinping indicated an easing of tensions between the powers and added to the upbeat mood on trading floors.

Still, there remains a lot of trepidation that central bank interest rate hikes aimed at taming inflation will eventually send economies into a recession.

And since Thursday’s forecast-beating consumer prices data, Federal Reserve officials have warned there were more increases in the pipeline, though they are not expected to be as big as the previous four rises, of 75 basis points.

The latest was vice chair Lael Brainard, who said that while it would probably be right to slow down the rate hikes, “we have additional work to do both on raising rates and sustaining restraint to bring inflation down”.

The comments, along with profit-taking, helped push Wall Street’s three main indexes into the red and pushed the dollar up against its peers, having tumbled last week.

Stephen Innes at SPI Asset Management said: “With US growth yet to fall off a cliff, make no mistake, inflation is still at the fulcrum of market expectations as board members continue to push back a bit on market pricing.”

However, Asian traders were a little more upbeat, cheered by China’s move to ease some of its strict Covid-19 restrictions and provide much-needed support to its beleaguered property sector.

Hong Kong rose more than four percent and Shanghai also closed in positive territory.

Tokyo, Singapore, Seoul, Manila, Mumbai, Taipei, Jakarta, Bangkok and Wellington also gained, but Sydney dipped.

Paris and Frankfurt rose at the open though London was slightly down.

Optimism for a thawing in relations between Washington and Beijing was boosted after Biden and Xi’s extended talks on the sidelines of the G20 summit in Indonesia.

While there remain differences on hot-potato issues such as Taiwan, the two did find common ground on the Ukraine conflict, climate and the need to avoid another Cold War.

After the talks, Chinese Foreign Minister Wang Yi described it as a “new starting point”, adding that Beijing hoped “to stop the tumbling of bilateral ties and to stabilise the relationship”.

After a painful year for markets across the planet, dealers are hopeful that there is finally light at the end of the tunnel.

“It’s certainly a time to be thinking about a recovery regime unfolding for markets,” said Kristina Hooper of Invesco.

“But it’s going to take a little time before we know if this really is something of a turning point for inflation and the Fed can be a lot more comfortable about hastening the end of tightening,” she told Bloomberg Radio.

– Key figures around 0820 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 27,990.17 (close)

Hong Kong – Hang Seng Index: UP 4.1 percent at 18,343.12 (close)

Shanghai – Composite: UP 1.6 percent at 3,134.08 (close)

London – FTSE 100: DOWN 0.1 percent at 7,375.39

Euro/dollar: UP at $1.0410 from $1.0331 on Monday

Pound/dollar: UP at $1.1825 from $1.1751 

Dollar/yen: DOWN at 139.44 yen from 139.90 yen

Euro/pound: UP at 88.00 pence from 87.89 pence

West Texas Intermediate: DOWN 0.6 percent at $85.38 per barrel

Brent North Sea crude: DOWN 0.4 percent at $92.78 per barrel

New York – Dow: DOWN 0.6 percent at 33,536.70 (close)