Just Energy Transition Partnerships

This joint blog post by E3G, RIFS Potsdam, and Germanwatch was published by E3G on 25 April 2024.

To uphold the ambition of limiting global warming to 1.5 degrees Celsius, urgent action is needed to decarbonise the energy systems of key emerging economies. The Just Energy Transition Partnerships (JETP) model aims to combine the finance, high level political momentum, and institutional framework needed to accelerate the energy transition in emerging economies relevant for global climate action. However, existing JETPs are facing roadblocks. Despite these challenges, the consequences of inaction are much greater. E3G, in collaboration with civil society experts, has developed joint recommendations for the International Partners Group (IPG) of donor countries. 

The initial political ambition for the four existing JETPs (South Africa, Indonesia, Vietnam, and Senegal) set high benchmarks, but they have fallen short of delivering the finance needed to achieve their aims. Additionally, inefficient allocation of responsibilities, lack of co-ordination, and insufficient emphasis on the 'just' aspects have hindered progress and diminished support.  

Why are JETPs so important?  

2024 is a decisive year for JETPs to demonstrate pathways to successful implementation. Amid elections in numerous IPG and partner countries, there is a risk that new administrations may let the JETPs dissipate. 

JETPs are crucial for fostering both geopolitical stability and climate protection. Amidst strained North-South relations, they demonstrate to partner countries that the Global North is a reliable partner for energy transition and development. Failure could drive partner countries towards infrastructure deals elsewhere, potentially lacking the whole-economy transition or close partnership model pursued by JETPs. Such a scenario would compromise not only climate targets but also the Global North’s diplomatic and economic relations in these countries. This is why action must be taken now to ensure the fulfillment of the JETPs’ objectives.  

Furthermore, there is much to learn from the experiences of JETPs to date. There is a growing interest in country platforms, which were a focal point of discussion at the IMF and World Bank Spring Meetings. Many lessons learnt from JETPs, as well as solutions to their challenges, can also inform the design of such platforms.

Recommendations

Providing more and better finance

The finance allocated to the JETPs falls significantly short of the necessary support for the transition. Furthermore, a significant amount consists of loans at market rates. Accessing capital also entails administrative burdens, as partner countries must often negotiate with each IPG country separately.  

• Delivering on investment plans will require increased provision of finance on better terms, i.e. additional grant and concessional loan financing. The IPG must consider avenues to increase contributions, including through innovative sources, and how to use diplomatic leverage to attract additional donors. The IPG must recognise that philanthropic and private capital are complementary to, rather than a substitute for, essential public finance. 
• To facilitate accessibility, a greater and more clearly defined role for Multilateral Development Banks (MDBs) should be jointly considered by IPG and partner countries. This can streamline processes and alleviate the administrative burden on governments. MDBs have the technical capacity to mobilise, pool, and distribute capital effectively. Any future role for MDBs should ensure high-level political ownership by the IPG is preserved. 
• Financial provision must align with partner country needs as specified in JETP investment plans. It must also align with the Paris Agreement goals and enable ambitious updates to Nationally Determined Contributions (NDC) in 2024–25.  The NDC Partnership should be considered to support this objective. The IPG should urgently channel finance into pilot projects identified within investment plans by the end of 2024 to demonstrate progress. 
• The IPG must combine infrastructure investment with institutional development. Elements such as building and strengthening institutions, supporting local value chains, and supporting a just transition must be adequately financed.

Defining roles and responsibilities

The IPG currently plays a significant role in the financial and operational management of JETPs, imposing a substantial resource burden on governments. In some JETP structures, organisations and institutions fail to fulfill their allocated roles. Within governments, responsibilities and cross-ministry co-ordination are not consistently optimal. 

• The IPG should commission an assessment of the roles and responsibilities of all stakeholders involved in JETPs and propose improvements to the division of labour. This should include optimal structures on a country-specific basis. The assessment should proceed concurrently with the disbursement of funds to avoid delays in JETP progress. 
• The IPG should advocate for meaningful participation from civil society organisations, including the provision of analysis, expertise, independent scrutiny, and evaluation. 

Maintaining high level political momentum

Given the challenges facing the JETPs as well as emerging crises facing governments more widely, the political momentum behind JETPs has faded. It is crucial for IPG governments to persist in leveraging their political capital to propel substantial JETP reforms and garner support. 

• Ministers and Heads of State must embed diplomatic objectives into wider political and diplomatic engagements, occasions and fora. Within the G7 or G20, discussions should ensure regarding JETP outcomes, approaches, and strategies, accompanied by a demonstration of commitment to supporting partner country investment plans.  
• The IPG should undertake a co-ordinated campaign aimed at reshaping the international and domestic narrative surrounding JETPs by clarifying objectives, demonstrating progress against milestones, and highlighting mutual benefits of accelerated transition to governments and communities, all while avoiding exaggeration. Acknowledging challenges and areas needing improvement is a good step towards rebuilding trust.

Ensuring bilateral relationships support JETP goals

Within each IPG government system, ministries and agencies have various bilateral relationships with partner country ministries and institutions. However, the different elements of these relationships often lack coherence with JETP goals. 

• The IPG should align bilateral co-operation strategies and ODA expenditure in partner countries with JETP targets. 
• Efforts should be made to ensure country representations such as embassies are better equipped to support the co-ordination and implementation of JETPs in a locally appropriate way and through closer collaboration with partner governments. 
• The IPG should support the strengthening of institutional capacities in partner country governments, for example by providing more regulatory and technical expertise to facilitate a just transition.  
• The IPG should explore methods to strengthen bilateral partnerships to promote a joint transition towards a clean economy. Specific value chains can offer opportunities for economic cooperation among countries and facilitate cross-border public-private projects.     
• Where appropriate and relevant, bilateral activities should be communicated with other stakeholders to ensure complementarity and coherence.  

Streamlining knowledge sharing within and between governments

Information regarding the JETPs and related aspects is not systematically shared within IPG and partner country governments, nor between them, or with wider stakeholders. This has resulted in sub-optimal management, co-ordination and lack of transparency.  

• Individual governments should consider implementing an internal co-ordination and knowledge-sharing system or platform to enable better co-ordination between their own ministries, embassies, agencies, and other missions. 
• The IPG could also commission the establishment of a common platform for knowledge sharing between IPG and partner countries. The involvement of the NDC Partnership could serve as a means for capacity building and as a mechanism to establish the platform. 
• The IPG should assess how to improve public transparency, for example in collaboration with CSOs to publish annual evaluation reports, financial disclosure, and progress against established milestones. 

Making better use of existing initiatives

There are several existing institutions or initiatives with expertise, resources or objectives aligned with JETPs, yet they currently operate in isolation. Improving coherence would support objectives on both sides. 

• The IPG could initiate a review of energy initiatives with a political mandate and explore how they can better align with JETP objectives. Examples include the Breakthrough Agenda, Energy Transition Council, the Powering Past Coal Alliance, the Coal Transition Accelerator, Clean Energy Transition Partnership, and Beyond Oil and Gas Alliance, among others. This review should explicitly focus on how JETPs can be directly linked to UNFCCC targets. 
• The IPG should explore potential links between JETPs and initiatives such as the Climate Club to support a just transition and incentivise the development of low carbon industries. This could include assistance with technology transfer where feasible. 

Enabling a Just Transition

There is disparity in how partner countries have prioritised justice dimensions within their transition plans.  If the deals are not delivered in a meaningful social, economic, and ecologically just manner, JETPs will contribute to rising inequality within partner countries, undermining their – and the IPG’s – credibility. 

• The IPG should commission research to enhance more local understanding of mitigating the negative effects of the energy transition – especially on workers – and create viable low-carbon alternative livelihoods for communities. 
• The IPG could support the development of self-sustaining local value chains, for example, by fostering a deeper understanding of all available practical policy options. They must ensure communities affected by the energy transition own and benefit from the emerging renewable/ clean tech industries.  
• The World Bank has a conceptual framework for undertaking poverty and social impact analysis. Through co-operation with local CSOs, this framework could be utilised to analyse impacts and determine suitable measures to support the just element. 
• Working group exchanges on the justice dimensions should be supported in all countries. These groups should consider decarbonisation, socio-economic justice, human rights, energy security, and economic development. Cross-border connections between these groups could facilitate peer-to-peer learning.  
• The IPG should consider innovative bilateral support for a just transition, such as sharing case studies through region-to-region exchanges, supporting new sectors/value chains and assisting small businesses in socio-economic transitions. 
• Long-term support planning and provision are essential. Ensuring justice will require more time than the JETP itself, even with sufficient starting finance. This must be considered for the JETPs are to achieve their long-term goals.