Indonesia Faces Financial Challenges in JETP: Uncertainties and Pressures

Indonesia must manage ambitious climate commitments while maintaining energy stability. The Just Energy Transition Partnership (JETP), aimed at mobilizing $20 billion, faces financial obstacles and uncertainties regarding international funding.

Partagez:

Launched in 2022, the Just Energy Transition Partnership (JETP) for Indonesia aims to finance the country’s energy transition with $20 billion in public and private funds. This program relies on international financing, but several obstacles are slowing down its implementation.

International Funding Under Pressure

One of the main challenges of the JETP concerns the origin and stability of funds allocated to Indonesia. The country has repeatedly expressed, particularly through the Ministry of Energy and Mineral Resources, the necessity of receiving low-interest loans and concessional financing. These elements are crucial to prevent excessive financial strain on the state-owned electricity company PLN (Perusahaan Listrik Negara), which manages most of the country’s energy infrastructure.

The Asian Development Bank (ADB) has introduced an “Energy Transition Mechanism” (ETM) aimed at buying out and shutting down certain coal-fired power plants earlier than planned. However, the feasibility of this mechanism depends on developed countries’ ability to uphold their financial commitments.

Uncertainties Over U.S. Funding

The involvement of the United States, a key player in the JETP, has faced challenges after the country withdrew from the Paris Agreement under the Trump administration. Although the Biden administration has rejoined the agreement, Indonesia remains cautious about the continuity of U.S. financial support. This caution stems from the history of U.S. policy decisions and the political uncertainty surrounding environmental commitments in the country.

According to Indonesian officials, the lack of guarantees on American funding hinders long-term planning for energy transition. Additionally, disbursement complexities, often tied to administrative and technical requirements, slow down access to capital.

The Challenge of Closing Coal-Fired Power Plants

Indonesia remains highly dependent on coal to maintain the stability of its power grid. The early closure of power plants, without solid financial support, could lead to increased electricity prices or higher debt for PLN.

Analyses from local organizations and international NGOs highlight that the country must balance energy transition with supply security. Shutting down coal-fired power plants too quickly could pose economic and social risks, particularly for regions reliant on the coal industry.

A Redefinition of Priorities?

Given financial uncertainties, Indonesia may reconsider its energy transition priorities. Aligning climate goals with economic realities remains a major challenge, especially since the stability of international funding remains uncertain.

While the JETP symbolizes an ambitious international cooperation effort, achieving its objectives will depend on the actual financial commitments of partner countries. For Indonesia, the challenge is twofold: ensuring a gradual energy transition while avoiding excessive fiscal pressure on its economy.

According to the 2025 report on global energy access, despite notable progress in renewable energy, insufficient targeted financing continues to hinder electricity and clean cooking access, particularly in sub-Saharan Africa.
While advanced economies maintain global energy leadership, China and the United States have significantly progressed in the security and sustainability of their energy systems, according to the World Economic Forum's annual report.
On the sidelines of the US–Africa summit in Luanda, Algiers and Luanda consolidate their energy collaboration to better exploit their oil, gas, and mining potential, targeting a common strategy in regional and international markets.
The UK's Climate Change Committee is urging the government to quickly reduce electricity costs to facilitate the adoption of heat pumps and electric vehicles, judged too slow to achieve the set climate targets.
The European Commission will extend until the end of 2030 an expanded state-aid framework, allowing capitals to fund low-carbon technologies and nuclear power to preserve competitiveness against China and the United States.
Japan's grid operator forecasts an energy shortfall of up to 89 GW by 2050 due to rising demand from semiconductor manufacturing, electric vehicles, and artificial intelligence technologies.
Energy-intensive European industries will be eligible for temporary state aid to mitigate high electricity prices, according to a new regulatory framework proposed by the European Commission under the "Clean Industrial Deal."
Mauritius seeks international investors to swiftly build a floating power plant of around 100 MW, aiming to secure the national energy supply by January 2026 and address current production shortfalls.
Madrid announces immediate energy storage measures while Lisbon secures its electrical grid, responding to the historic outage that affected the entire Iberian Peninsula in late April.
Indonesia has unveiled its new national energy plan, projecting an increase of 69.5 GW in electricity capacity over ten years, largely funded by independent producers, to address rapidly rising domestic demand.
French Minister Agnès Pannier-Runacher condemns the parliamentary moratorium on new renewable energy installations, warning of the potential loss of 150,000 industrial jobs and increased energy dependence on foreign countries.
The European battery regulation, fully effective from August 18, significantly alters industrial requirements related to electric cars and bicycles, imposing strict rules on recycling, supply chains, and transparency for companies.
The European Parliament calls on the Commission to strengthen energy infrastructure and accelerate the implementation of the Clean Industrial Deal to enhance the continent's energy flexibility and security amid increased market volatility.
The European Commission unveils an ambitious plan to modernize electricity grids and introduces the Clean Industrial Deal, mobilizing hundreds of billions of euros to strengthen the continent's industrial and energy autonomy.
In the United States, regulated electric grid operators hold a decisive advantage in connecting new data centres to the grid, now representing 134 GW of projects, according to a Wood Mackenzie report published on June 19.
The French National Assembly approves a specific target of 200 TWh renewable electricity production by 2030 within a legislative text extensively debated about the future national energy mix.
In 2024, US CO₂ emissions remain stable at 5.1bn tonnes, as the Trump administration prepares hydrocarbon-friendly energy policies, raising questions about the future evolution of the American market.
The early publication of France's energy decree triggers strong parliamentary reactions, as the government aims to rapidly secure investments in nuclear and other energy sectors.
Seven weeks after the major Iberian power outage, Spain identifies technical network failures, while the European Investment Bank approves major funding to strengthen the interconnection with France.
The European Union has announced a detailed schedule aiming to definitively halt Russian gas imports by the end of 2027, anticipating internal legal and commercial challenges to overcome.