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Analysis

Making the Just Energy Transition Project Just

Erica Matsui, G20 Research Group
December 12, 2022

In the spirit of the G20 Bali Summit's slogan "Recover Together, Recover Stronger," on November 15, 2022, at a press conference with Luhut Binsar Pandjaitan Indonesia's Minister of Maritime and Investment Affairs, and John Morton, U.S. Treasury Department climate counsellor, issued a joint statement and launched the Just Energy Transition Project (JETP) with Indonesia. The JETP is a partnership between the International Partners Group (Japan, United States, Canada, Denmark, the European Union, Germany, France, Norway, Italy and the United Kingdom) and Indonesia to help phase out coal power that works toward Indonesia's goal of zero emissions. With few logistic details known, it is cause for both hope and doubt.

The intentions and high spirits of the leaders were evident, and the project shows promise of a new start as the summit theme of "recovery" suggests. However, the current point is far from achieving goals and ideals. Based on the 2021 Rome Summit Final Compliance Report, G20 compliance with its commitment to end public financing of unabated coal power was only 33%, a far cry from what is needed to reduce carbon dioxide emissions in the evermore present danger of climate change. The JETP plans to mobilize $20 billion within the next three to five years for diverting from coal power. This means possible further compliance for the commitment, but with little information available, the world will have to track and keep accountable the initiatives that are being funded. As Sisilia Nurmala Dewi notes, funding with the intention to move further away from coal consumption could also encourage gas consumption, which also produces high carbon emission levels. With the 2015 Paris Agreement and ongoing work toward renewable and green energy, there must be transparency about the details of the JETP. This requirement does not come only from pure caution, but also from precedent. In 2021, a JETP was launched for South Africa. Although there were funds allocated for change, there has been minimal public information about what has been done. To avoid repeating this opacity regarding funding, when implementing these measures, the International Partners Group should work to report in a timely manner.

"Recover Together, Recover Stronger" can only happen if the implementation and financing are also just. When asked about the origins of funding, Minister Pandjaitan and Mr. Morton answered that over the next six months they will be finalizing a plan of mixed private and public grants and loans. Given the current state of the global economy, with a looming recession, is framing loans with a high-interest rate as a generous JETP just? Indeed, a financial plan that relies mostly on may result in an accrual of unwanted debt, diminishing any incentive to remove coal power. Especially in Indonesia, this is economically unfavourable. When asked about plans and economic incentives for coal businesses to phase out their operations, neither speaker gave a clear answer. This is not to say that the JETP is a bad direction or initiative, but the public has a duty to closely monitor the progression of the plan and keep the International Partnership Group accountable. With the climate crisis becoming more grave by the minute and the only solution being collective action, the JETP at minimum is a step in the right direction.