November 16, 2022

Indonesia announces Just Energy Transition Partnership (JETP) with United States, Japan at G20 Summit in Bali – response

Bali, Indonesia – Leaders of the world’s richest nations gathered today at the Heads of State and Governments Summit, part of the ongoing G20 Summit in Bali, Indonesia.

G20 member countries represent those most responsible for the climate crisis: currently enabling disastrous fossil fuel projects such as the East African Crude Oil Pipeline, the Matarbari coal plant in Bangladesh, and Java 9 and 10 in Indonesia. This year, climate activists across Asia are calling on the G20 to live up to this year’s theme of “Recover Together, Recover Stronger” and prioritize a just transition to sustainable energy.

Indonesia is the world’s largest coal exporter, and currently uses coal for around 60% of its energy. Today Indonesia’s Just Energy Transition Partnership (JETP) was announced – a US $20 billion funding commitment from the United States and Japan, with help from Germany, to assist in Indonesia’s transition away from fossil fuels.

A US treasury official has described the deal as “the single largest climate finance transaction or partnership ever”. The finance aims to help Indonesia shut coal fired power plants and bring forward the sector’s emissions peak seven years to 2030. In return for the deal Indonesia has committed to cap power sector emissions at 290 million tonnes by 2030.

Indonesia’s Coordinating Minister of Maritime and Investment Affairs Luhut Pandjaitan has previously stated Indonesia “does not want any policy on climate change [that] disturbs our economic growth”.

Indonesia’s JETP deal doesn’t allow financing for natural gas projects. This is a positive development amid the global energy crisis, exacerbated by Russia’s invasion of Ukraine and during the final week of the COP27 climate conference in Egypt, where energy transition conversations have been heavily fueled by proponents of the fossil gas industry and its allies.

Indonesian civil society has set out principles and red lines for climate finance and JETP deals. To truly usher in a Just Energy Transition, it is critical Indonesia’s JETP deal includes meaningful steps to accelerate decarbonisation, and that it is democratic and accessible to impacted communities – including workers, people living in coal-producing areas, and young people. 

Indonesia is only the second country to announce a JETP deal. The first with South Africa was announced at UN Climate Talks in Glasgow in 2021 and has been subject to numerous issues, including a lack of transparency around its financing. Last week saw some developments on the South Africa JETP at the UN Climate Talks in Egypt (UNFCCC COP27) which are now in their second week, coinciding with the G20 Summit.

As the Indonesia JETP is announced, and there is more information available about the South Africa deal, countries and civil society organisations around the world are looking at these as potential models for catalysing and packaging climate finance. 

Together with allies in civil society and affected communities across Indonesia and South Africa, has identified a number of principles that need to be in place for JETPs to live up to their names, and act as a stepping stone towards a ‘Climate Solidarity Pact’, as called for by UN Secretary General António Guterres, to ensure independence from fossil fuels and universal, affordable sustainable energy for all.

For more see a background briefing document and a discussion, on Instagram Live between campaigners from Indonesia and South Africa, and Japan, at 12:30 Egypt/17:30 Indonesia time on Tuesday 15 Nov. 

Sisilia Nurmala Dewi, Asia Managing Director says,

“Leaders attending the G20 in Indonesia and UN climate talks in Egypt this week are expected to tout increasing investment in and exploration of oil and gas resources. These are not in line with the goals of the Paris Agreement, and definitely not part of a just energy transition. We are imploring world leaders, particularly the economic giants of the G20, to ensure funding mechanisms for an energy transition don’t include false solutions that will lock us further into climate chaos. 

We regret that the implementation of the G20 in Bali was coloured by the silencing of civil society voices urging the acceleration of the energy transition. A government that represses its people will only produce false solutions that benefit a few elites. We, therefore, demand a just energy transition that is accountable, transparent, and driven by meaningful participation by civil society and affected communities.”

Firdaus Cahyadi, Indonesia Team Lead says,

Indonesia’s energy transition will affect the lives of many people and communities. All discussions on the JETP deal should be transparent and involve all levels, particularly those communities most affected by the climate crisis. So far in Indonesia, these decisions have lacked transparency and if this conversation only involves the elite, it will become a space for false solutions to transitional energy. We cannot leave any room for the wealthy corporations that look to pursue coal and gas for Indonesia under greenwashed labels. 

Alia Kajee, South Africa Public Finance Campaigner says,

“Members of civil society in South Africa have predominantly focussed on transparency of the JETP deal and it’s the plan around accountability and governance mechanisms since the pledge was announced. The release of the investment plan, the guiding implementation plan for the JETP, days ahead of COP27 have shown the need for the public to be more firm against loans (especially commercial) on offer by developed countries and guarantees. In addition to assessing the type of finance on offer, the market-centric narrative of deals and the prioritisation of the private sector involved must be scrutinised. Fair climate finance would enable local value chains and opportunities for social ownership of alternative energy sources in the Just Transition in order to bring about socially beneficial outcomes.”