During the G20 Summit held in Bali on November 15, 2022, the President of Indonesia at the time, Joko Widodo, and the International Partners Group (IPG) signed the landmark Indonesia Just Energy Transition Partnership (JETP) agreement which was aimed at mobilising $20bn in public and private funding to support Indonesia's green energy transition. 

Led by the United States and Japan, with countries in Europe and Scandinavia in supporting roles, Indonesia was required to develop an investment plan within the first six months, with strategies to cap power sector emissions at 260mn tonnes of CO2 equivalent from a baseline of 357mn tonnes of CO2, increase the share of renewable energy in the power sector to at least 34%, and to set a goal for net-zero emissions in the power sector by 2050.

At that time, Indonesia moved swiftly, establishing the JETP Secretariat with the main task of developing the Indonesia JETP Country Investment and Policy Plan (CIPP) in the form of a dynamic document that should have been updated annually. 

The Secretariat was supported by four independent working groups: the Technical Working Group (led by the International Energy Agency, IEA), the Policy Working Group (led by the World Bank, WB), the Financial Working Group (led by the Asian Development Bank, ADB), and the Just Transition Working Group (led by the United Nations Development Programme, UNDP). 

Slow progress

As the government was then set to officially release the Comprehensive Investment and Policy Plan (CIPP) for the Just Energy Transition Partnership (JETP) in early 2023, the launch was delayed due to financing negotiations and technical challenges involving the coal to renewable transition; Indonesia had expressed their wish to maintain new coal power plants, which clashed with the funding purposes. 

In March 2023, as negotiations continued, Indonesia requested more favourable terms such as a higher share of grants, citing their concern that the proposed $20bn in funding would not be sufficient to meet the decarbonisation targets. 

Mongabay released a study that stated that the money would allow Indonesia to retire 5.2GW of existing coal power in the initial phase of the project. Together with other funding commitments though, Indonesia was believed to be able to retire in the region of 9GW of coal power capacity.

In May 2023, the US Trade and Development Agency (USTDA) awarded $1.04mn to PT Medco Power Indonesia for a feasibility study on a 111MW-wind power plant in West Sumbawa, part of Indonesia's clean energy transition under the Just Energy Transition Partnership (JETP). 

The funding sought to replace high-polluting power sources with renewable energy. The grant thus supported a comprehensive study, including wind resource assessments, geotechnical analysis, and environmental impact evaluations. 

Then, with the deadline for the investment plan coming to a close, Indonesia released an update in June 2023 saying that it has received just $160mn in grants from the $20bn climate finance pact under the Just Energy Transition Partnership (JETP), with the majority expected to come from commercial loans. With the grants making up just 0.8% of the total funding, and around $10bn anticipated from commercial loans, the terms now remain unclear. 

With this obvious roadblock in place, a public consultation was held for the CIPP in November of the same year, allowing various stakeholders, including investors, business entities, and community representatives, to provide feedback on the document in its final version.

This agreed-upon draft focused on efforts to decarbonise the electricity sector, as detailed by Institute for Essential Service Reform (IESR). It was then reviewed by the Indonesian government and international partners to achieve a technically credible pathway for the energy transition.

The nickel paradox 

In an exclusive interview with Mongabay, Bhima Yudhistira Adhinegara, executive director of the Center of Economic and Law Studies (CELIOS), highlighted the Indonesian government's focus on enhancing the value of its mineral resources, particularly through downstream processing. 

Nickel as Indonesia’s key mineral for electric vehicle (EV) batteries and energy storage systems has recently pushed the government to solidify the country’s position as a global leader in EV production, with its output surging by 60% in 2022. This led to the construction of numerous smelters, with 15 new nickel smelters, with plans at the time in place to build at least six more by the end of 2022. 

These smelters require substantial energy, fueling the demand for captive coal plants, which are used to supply power for nickel and steel processing industries.

Paradoxically, this nickel production reliance on coal raises concerns about the environmental impact, particularly as EV production is more carbon-intensive than conventional vehicle production, with much of that footprint linked to battery production. 

In a questionable move thereafter, the Indonesian government issued a regulation in 2022 to allow for the continued construction of coal plants despite the pledge in 2021 to halt new coal-fired power plants after 2023. This new regulation permits new coal plants to be built if they are integrated with industries that add value to natural resources or contribute significantly to job creation and economic growth.

Moreover, the construction of new coal plants is also allowed if operators commit to reducing their greenhouse gas emissions by 35% within ten years. This loophole extends to the Just Energy Transition Partnership (JETP), which supports a moratorium on new coal power generation but allows exceptions for captive coal plants under the 2022 regulation. The JETP agreement also permits exemptions for plants identified in the government's most recent electricity procurement plan (RUPTL). 

US steps down, Germany steps up

Fast-forward then to 2025, and with President Trump’s return to office, the US decided to withdraw from its leadership role in the JETP funding, following its exit from the Paris Climate Agreement - for the second time. The US ‘exit’ raised concerns regarding the $20bn funding disbursement and its impact on the renewable energy transition. 

Earlier in February 2025, it was reported that Germany would now take over the US leadership role in the JETP with Japan remaining as co-lead. France expressed support for Germany's leadership, emphasising the ongoing commitment of the international community, particularly the EU, to Indonesia's energy transition. While the US exits as co-lead, it intends to stay engaged, with the EU backing Germany's new leadership. 

Meanwhile, the EU and France announced a €14.7mn grant for Indonesia's renewable energy transition through the launch of Indonesia Energy Transition Facility (IETF), as reported by Tempo. The IETF is a five-year technical assistance programme with €10.6mn from the EU and €4.1mn from the French Development Agency (AFD). The IETF will focus on enhancing Indonesia’s energy policies and helping state-owned enterprises (SOEs) develop renewable energy projects.  Indonesia’s state electricity company, PLN, will receive €6.5mn for feasibility studies and technology development for energy projects under this programme.

Despite these commitments, concerns are rising in Indonesia over the lack of disbursement of JETP funds, with some officials like new Indonesian President Prabowo Subianto’s brother Hashim Djojohadikusumo criticising the partnership as ineffective and a “failure”.

A meeting is expected later in February or March to address the impact of the US exit and ensure continued funding for energy transition programmes in Indonesia, Vietnam and South Africa, which together amount to over $45bn.