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首页文档碳中和资料研究报告全球发展中心-南非和印度尼西亚的JETP：远离煤炭的蓝图？(英版)

全球发展中心-南非和印度尼西亚的JETP：远离煤炭的蓝图？(英版)VIP专享VIP免费

Abstract
The Just Energy Transition Partnerships (JETPs) are a novel approach to intensifying
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The JETPs of South Africa
and Indonesia
A Blueprint for the Move Away from Coal?
ANNIKA SEILER · HANNAH BROWN · SAMUEL MATTHEWS
POLICY PAPER 302 • JULY 2023
The Center for Global Development works to reduce global
poverty and improve lives through innovative economic
research that drives better policy and practice by the world’s
top decision makers. Use and dissemination of this Policy Paper
is encouraged; however, reproduced copies may not be used
for commercial purposes. Further usage is permitted under the
terms of the Creative Commons License.
The views expressed in CGD Policy Papers are those of the
authors and should not be attributed to the board of directors,
funders of the Center for Global Development, or the authors’
respective organizations.
CENTER FOR GLOBAL DEVELOPMENT
2055 L Street, NW Fifth Floor
Washington, DC 20036
1 Abbey Gardens
Great College Street
London
SW1P 3SE
www.cgdev.org
Center for Global Development. 2023.
The JETPs of South Africa and Indonesia: A Blueprint for the Move
Away from Coal?
Annika Seiler,* Hannah Brown, and Samuel Matthews
Center for Global Development
*On secondment from the Asian Development Bank

2

Contents
Executive summary ............................................................................................................................1
Abbreviations .......................................................................................................................................3
Introduction ..........................................................................................................................................4
Unique country contexts of the JETP plans .............................................................................6
Macro-economic background ........................................................................................... 6
Recent climate and just energy policies ....................................................................... 10
Sector governance challenges to the renewable energy deployment ........... 13
Just transition challenges.................................................................................................... 16
Opportunities for just energy transition through value addition
and value chain development ..........................................................................................22
Potential co-benefits from a phasedown of coal .................................................... 24
Progress toward universal access to reliable and aordable electricity ...... 24
Discussions and key takeaways of JETP features .............................................................. 25
Governance and climate action ..................................................................................... 25
Investment strategy ............................................................................................................. 28
Just transition components ................................................................................................32
Financing components ....................................................................................................... 35
Technology cooperation and value chain development ...................................... 43
Conclusions and recommendations ....................................................................................... 45
Appendix 1: Key features and salient points of the JETPs for Indonesia
and South Africa .............................................................................................................................. 49
References ......................................................................................................................................... 55
/65
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AbstractTheJustEnergyTransitionPartnerships(JETPs)areanovelapproachtointensifyingongoingeffortstowardcarbonneutrality,combiningcountry-ledstrategiestodecarbonizetheenergysectorandaddressingdevelopmentprioritiesresultingfromtheensuingstructuraltransformationwithfocused,long-term,andplurilateralpartnerships.Thelaunchesofthe$8.5billionJETPforSouthAfricain2021andthe$20.0billionJETPforIndonesiain2022providemomentumforthiseffort.However,thelegaciesofcoal-basedpowerandmodestrenewableenergydeploymentinbothcountriespresentkeychallengesintheareasofpoliticaleconomy,policyalignment,finance,andsupplychaindevelopment.ThispaperconsolidatesavailableinformationaboutthesetwoJETPsandanalyzestheapproachestakenbySouthAfricaandIndonesia,withtheaimofprovidingathoughtframeworkfortheseJETPs.ItseekstoidentifyrisksandgapsthatcouldobstructtheseJETPs’advancementandtoassesswhethertheseJETPscanserveasblueprintsforothercountrieslookingtoacceleratetheirmoveawayfromcoal.Further,thispaperhighlightscomplementaryactionthatcouldenhancetheeffectivenessoftheseJETPsandguidethedevelopmentofsimilarpartnershipsinthefuture.ThepaperfindsthatwhiletheJETPsforSouthAfricaandIndonesiaappeartodeliverablueprintformovingawayfromcoalintheirrespectivecontexts,barriers,risks,andgapscallintoquestionwhetherthetargetscanbedeliveredattheplannedpaceandscale.TheJETPsofSouthAfricaandIndonesiaABlueprintfortheMoveAwayfromCoal?ANNIKASEILER·HANNAHBROWN·SAMUELMATTHEWSPOLICYPAPER302•JULY2023TheCenterforGlobalDevelopmentworkstoreduceglobalpovertyandimprovelivesthroughinnovativeeconomicresearchthatdrivesbetterpolicyandpracticebytheworld’stopdecisionmakers.UseanddisseminationofthisPolicyPaperisencouraged;however,reproducedcopiesmaynotbeusedforcommercialpurposes.FurtherusageispermittedunderthetermsoftheCreativeCommonsLicense.TheviewsexpressedinCGDPolicyPapersarethoseoftheauthorsandshouldnotbeattributedtotheboardofdirectors,fundersoftheCenterforGlobalDevelopment,ortheauthors’respectiveorganizations.CENTERFORGLOBALDEVELOPMENT2055LStreet,NWFifthFloorWashington,DC200361AbbeyGardensGreatCollegeStreetLondonSW1P3SEwww.cgdev.orgCenterforGlobalDevelopment.2023.TheJETPsofSouthAfricaandIndonesia:ABlueprintfortheMoveAwayfromCoal?AnnikaSeiler,HannahBrown,andSamuelMatthewsCenterforGlobalDevelopmentOnsecondmentfromtheAsianDevelopmentBankAnnikaSeiler,HannahBrown,andSamuelMatthews.2023.“TheJETPsofSouthAfricaandIndonesia:ABlueprintfortheMoveAwayfromCoal?”CGDPolicyPaper302.Washington,DC:CenterforGlobalDevelopment.https://www.cgdev.org/publication/jetps-south-africa-and-indonesia-blueprint-move-away-coalContentsExecutivesummary.............................................................................................................................1Abbreviations........................................................................................................................................3Introduction...........................................................................................................................................4UniquecountrycontextsoftheJETPplans..............................................................................6Macro-economicbackground............................................................................................6Recentclimateandjustenergypolicies........................................................................10Sectorgovernancechallengestotherenewableenergydeployment............13Justtransitionchallenges....................................................................................................16Opportunitiesforjustenergytransitionthroughvalueadditionandvaluechaindevelopment...........................................................................................22Potentialco-benefitsfromaphasedownofcoal.....................................................24Progresstowarduniversalaccesstoreliableandaffordableelectricity.......24DiscussionsandkeytakeawaysofJETPfeatures...............................................................25Governanceandclimateaction......................................................................................25Investmentstrategy..............................................................................................................28Justtransitioncomponents.................................................................................................32Financingcomponents........................................................................................................35Technologycooperationandvaluechaindevelopment.......................................43Conclusionsandrecommendations........................................................................................45Appendix1:KeyfeaturesandsalientpointsoftheJETPsforIndonesiaandSouthAfrica...............................................................................................................................49References..........................................................................................................................................55ListofFigures1.RealGDP(US$billions),realGDPgrowth(%),andgovernmentdebt-to-GDP(%ofGDP)............................................................................................................................72.GHGemissionprofile,2019.......................................................................................................................83.Powersectorgenerationmix,2000–2020,andtargetedrenewablesshareby2030.................................................................................................................................................94.Installedcapacity,target,andpotentialrenewableenergycapacity(GW)........................95a.Recentenergyandclimatepolicyaction—Indonesia...................................................................115b.Recentenergyandclimatepolicyaction—SouthAfrica.............................................................126.Energyproductionbytypeofproducer,2021..................................................................................147.DebtratiosforPLNandEskom,2022..................................................................................................158.Geographicaldistributionofcoalplants,2022...............................................................................179.Unemploymentrate,2000–2020..........................................................................................................1810.Incomeinequality—Giniindex,2000–2020......................................................................................1811.Employmentinrenewablessector,2022versus2030..................................................................1912.PVpotentialinIndonesiaandSouthAfrica,2022.........................................................................2013aand13b.WindPowerpotentialatmeanwindspeedsandat100metersinIndonesiaandSouthAfrica,2022.........................................................2114aand14b.ElectricitytariffsandcostoflivingdevelopmentinIndonesiaandSouthAfrica,2001–2021.................................................................................2115.ProductionandreservesofmineralsrelatedtorenewableenergytechnologyforIndonesia,2022.................................................................2316.ProductionandreservesofmineralsrelatedtorenewableenergytechnologyforSouthAfrica,2022............................................................2317.Electrificationratio,2000and2020....................................................................................................2518.StructureofJETPInvestmentforSouthAfrica,2023–2017in$billion...................................2919.Indonesiaenergytransitionmechanism(ETM)countryplatform..........................................41ListofTables1.EmissionslevelsandtargetsinfirstandenhancedNDC............................................................102.Potentialco-benefitsofaphasedownofcoal...............................................................................24THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?1ExecutivesummaryThejustenergytransitionpartnershipsareanovelapproachtointensifyingongoingclimatechangeactionstowardcarbonneutralitycombiningcountry-ledstrategiestodecarbonizingtheenergysectorandaddressingdevelopmentprioritiesresultingfromtheensuingstructuraltransformationwithfocused,long-term,andplurilateralpartnerships.Thelaunchesofthe$8.5billionJustEnergyTransitionPartnership(JETP)forSouthAfricain2021andthe$20.0billionJETPforIndonesiain2022providemomentumforthiseffort.However,thelegaciesofcoal-basedpowerandmodestrenewableenergydeploymentinboththesecountriestodate,presentkeychallengesintheareasofpoliticaleconomy,policyalignment,finance,andsupplychaindevelopment.ThispaperconsolidatesavailableinformationaboutthesetwoJETPsandanalyzestheapproachestakenbySouthAfricaandIndonesia,withanendviewofprovidingathoughtframeworkfortheseJETPs.ItseekstoidentifyrisksandgapsthatcouldobstructtheseJETPs’advancementandassesswhethertheseJETPscanserveasblueprintsforothercountrieslookingtoacceleratetheirmoveawayfromcoal.Further,thispaperhighlightscomplementaryactionthatcouldenhancetheeffectivenessoftheseJETPsandguidethedevelopmentofsimilarpartnershipsinthefuture.ThispaperfindsthatwhiletheJETPsforSouthAfricaandIndonesiaappeartodeliverablueprintformovingawayfromcoalintheirrespectivecontexts,barriers,risks,andgapsputintoquestionwhetherthetargetscanbedeliveredattheplannedpaceandscale.TheeffectivenessofJETPsdependsonconsistentandcoherentpoliciesacrossallsectorsandlevelsofgovernmentandalong-termpoliticalcommitmenttothereformagenda.TheearlysuccessoftheJETPshingesonreadinessforthetransition,forexample,removingregulatoryconstraints,gettingpricesignalsright,anddeployingnewbusinessmodels.Acost-effectivetransitionfromcoalrequiresacomprehensivestrategyfordecarbonizingtheenergysectorandthewholeoftheeconomy.ThestrengthofJETPsistheirintegratedapproachtopowersectordecarbonization.Maintainingreliabilityandqualityofservicethroughoutandbeyondthetransitionrequirescomplementarygridinvestments.Forthetransitiontobecost-effective,itmustbebackedbyacomprehensivestrategyforshiftingtoadecentralizedsystembasedprimarilyonrenewableenergy,enhancingenergyconservationandenergyefficiency,electrifyingthetransportsector,decarbonizinghard-to-abatesectors,andabatingemissions.Whilepursuinglong-termdecarbonizationefforts,theJETPsalsomustsupportshort-tomedium-term,low-cost,high-impactmitigationinvestments.GoodgovernancealsorequiresthedisclosureofJETPs’fullcostsandbenefits.Withhigherelectricityratesresultingfromthenetzerotransition,JETPsshouldfollowbestpracticesinpowersectorandsubsidyreforms.Appropriatesequencingoftransitionplansisneededtocushionsocialimpactsattheasset,regional,andnationallevels.Economicdiversificationmeasuresshouldbecoupledwithinfrastructureinvestments,businessdevelopmentservices,andsystematicupskillingandreskillingprograms.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?2ThesuccessoftheJETPsalsohingesontheinternationalpartnergroups’deliveryoftheirfinancialcommitmentsandthebeneficiarycountries’abilitytomobilizecapital.MultilateraldevelopmentbankscanplayakeyroleinmobilizingstakeholdersandfacilitatingfundingfortheJETPs.Internationalpartnergroups’supportmustbecomplementedwithtechnologytransferandcoherenteffortstodeveloplocalvaluechainstoensurealong-term,sustainablejusttransition.Giventhesebarriers,risks,andgaps,itisimperativetocloselytrackandmeasuretheprogressinboththedevelopmentandtherolloutofimplementingplansfortheJETPsandtoputstakeholderstotaskfordeliveringontheirrespectivecommitments.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?3AbbreviationsADBAsianDevelopmentBankCCUScarboncapture,utilization,andstorageCFPPcoal-firedpowerplantCIFClimateInvestmentFundsCO2perkWhcarbondioxideperkilowatthourCOP262021UnitedNationsClimateChangeConferenceDFIdevelopmentfinanceinstitutionETMenergytransitionmechanismGFANZGlasgowFinancialAllianceforNetZeroGHGgreenhousegasGWgigawattG20Groupof20IEAInternationalEnergyAgencyIPGinternationalpartnersgroupIPPindependentpowerproducerIRENAInternationalRenewableEnergyAgencyJETPJustEnergyTransitionPartnershipMDBmultilateraldevelopmentbankMEMRMinistryofEnergyandMineralResourcesMSMEmicro,small,andmediumenterpriseMtCO2metrictonsofcarbondioxideMtCO2emetrictonsofcarbondioxideequivalentNDCnationallydeterminedcontributionPLNIndonesianNationalElectricityCompanyPVphotovoltaicTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?4IntroductionThejustenergytransitionisanovelapproachtointensifyingongoingclimatechangeactionstowardcarbonneutrality.Bycomprehensivelyaddressingtheissuesandrisksaccompanyingtheaccelerateddecommissioningofcoal-basedpowerplantsinacountry,thetransitionhelpscreateenablingconditionsandpracticalsolutionsformovingawayfromcoalinadependenteconomy.JusttransitionwasanunderlyingprincipleoftheParisAgreement,whichisgainingwiderrecognitionandacceptanceasacrucialinstrumenttoaddressthesocialandeconomicdownsidesofenergytransition.TheGlasgowClimatePactrecognizedthataphasedownfromunabatedcoalneedstoensurejusttransitionsthatpromotesustainabledevelopmentanderadicationofpovertyandthecreationofdecentworkandqualityjobs.Thelaunchofthe$8.5billionJustEnergyTransitionPartnership(JETP)forSouthAfricain2021signifiedthisfact.Thefurtherannouncementofa$20billionJETPforIndonesiain2022attheGroupof20(G20)Leaders’SummitinBali,Indonesia,providedmuch-neededmomentumforjustenergytransition.Bothpartnershipswerelaunchedwithsupportfromtheinternationalpartnersgroup(IPG),1whichcommittedtoacceleratefinancialandtechnicalresourcesthroughappropriateinstrumentsincollaborationwithmultilateraldevelopmentbanks(MDBs)andotherdevelopmentfinanceorgreenfinanceinstitutions,theprivatesector,andotherpartners.JETPsrecognizethatsomelow-andmiddle-incomecountrieshaveextraordinarypotentialtoleapfrogintoacost-competitive,renewableenergy-driven,decarbonizedgrowthpathgiventheirhighcarbonintensityandhighdemandgrowthand/orpent-updemand,whileatthesametimebeingathighriskofcarbonlock-inandapotentiallylargefuturecarbonfootprint;however,achievingthisrequiresastructuraltransformationnecessitatinglong-termandwhole-of-economysupporttomanagethisprocessandtheaccompanyingrisksandchallenges.Whileinthelongrun,thestructuraltransformationisexpectedtodrivethecreationofdecentjobsandgreengrowth,workersandcommunitiesdependentoncoalwillbenegativelyimpacted.TheJETPsofferanalternativetoasingularfocusonproject-orprogram-based,renewables-dominated,climatemitigationsupport.Instead,theyofferacountry-led,plurilateralandlong-termpartnershipinsupportofthetransitionanddulyfactorintransitionrisksandotherdevelopmentprioritiesofdevelopingcountries,whichhaveminimallycontributedtoclimatechange.TheIPGsupportselectedcountriesdecarbonizingtheircoal-basedpowersectorswiththeaimtohelpthemachievetheirenhancedgreenhousegas(GHG)emissionsreductionsambitions,setoutintheirupdatedNationallyDeterminedContribution(NDC),whilesupportingajusttransitionwith(1)thecreationofalternativeemploymentforworkersacrossthecoalvaluechainwhoaredrivenoutofworkand(2)economicopportunitiesthatpromotesustainabledevelopmentanderadicationofpovertyforcommunitiesthatareadverselyaffected1ThecountriescollectivelyreferredtoasIPGincludemembersoftheGroupofSeven(G7),theEU,andsomesignatoriesoftheGovernmentDeclarationonJustTransition,butthecompositiondiffersforeachJETP.Ineachpartnership,oneortwocountriestaketheleadinnegotiatingonbehalfoftheIPG.InthecaseofSouthAfrica,theUnitedKingdomisrepresentingtheIPG,andinthecaseofIndonesia,JapanandtheUnitedStatesarerepresenting.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?5duetothistransformation.Thus,JETPsaimtoreducerisksandimproveacceptanceatthelocalandnationallevelsforacceleratingenergytransitionandcarbonneutrality.TheJETPsforIndonesiaandSouthAfricaareintheirinitialstagesofimplementation.Nonetheless,alotofpreparatoryworkhasbeenundertakenaheadoftheirlaunch,andastheymoveforward,theypromisetoofferrareinsightsintothiscomplexandambitiousendeavortoentirelymoveawayfromcoalinlargeeconomies.Coalisabedrockofbotheconomies,withIndonesiarankedgloballyasthefirstandSouthAfricaasthefifthlargestseaborneexportersofcoal.Theirpowersectorsareheavilyreliantondomesticcoal,withmorethan60percentand90percentofelectricitygeneratedfromcoal.WiththesupportoftheIPG,SouthAfricaaimstodecommissionnearly60percentofitsinstalledcoal-firedpowerplants(CFPPs)by2035andreplacethemwiththeequivalentrenewableenergycapacity.2Indonesiaaimstoachievea34percentshareinrenewablepowergenerationby2030,upfrom19percentin2020,andcompletelyphaseoutcoal-basedpowerby2050—orpotentially2045withadditionalsupportfrominternationalpartners.Giventhelegacyofcoal-basedpowerandthemodestcapacityofrenewableenergydeploymentsofarinbothIndonesiaandSouthAfrica,therearekeyunderlyingchallengesinareasofpoliticaleconomy,policyalignment,finance,andsupplychaindevelopment.Thispaperprovidesathoughtframeworkforassessingjustenergytransition.ItshinesalightontheapproachestakenbySouthAfricaandIndonesiaintheirrespectiveJETPs’governanceandleadership,investmentstrategy,justtransitioncomponents,financing,andtechnologytransfer.ItcapturesidentifiedrisksandpotentialgapsatthisearlystageofdevelopmentoftheJETPsthatcouldslowdownorstallthepartnerships’advancementtowardtheirgoals.ThepaperalsodiscussestheroleofMDBsandassesseswhethertheJETPsforboththesecountriescanserveasblueprintsforothercountriesthatarelookingtoacceleratetheirmoveawayfromcoal.Further,thispaperseekstohighlightcomplementaryactionrequiredtoimprovetheeffectivenessoftheseJETPsandguidethedevelopmentofsimilarjusttransitionpartnershipssuchasthosebeingexploredbytheG7countrieswithIndia,Senegal,Vietnam,andpotentiallyothers.Thispaperisorganizedasfollows.FollowingthisIntroduction,thesecondsectionwilltakestockofIndonesia’sandSouthAfrica’senergyandeconomiccontextsfortheirJETPs,thethirdsectionwilldiscusskeyelementsandsalientapproachesoftheJETPs,andthefourthsectionwillproviderecommendationsandimplicationsforfutureJETPs.2SouthAfricaneedstoaddasmuchrenewablecapacityeveryyearasitaddedduringthepast10years.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?6UniquecountrycontextsoftheJETPplansThejustenergytransitionsinIndonesiaandSouthAfricacompriseawhole-of-countrytransitionandareimplementedbeforetwosignificantlydiverginganduniquecontexts.BeforediscussingthevariousaspectsoftheJETPs,thissectionprovidesabriefbackgroundagainstwhichthetransitioninthetwocountriesisbeingexecuted.Macro-economicbackgroundIndonesia,anarchipelagic,lower-middle-incomecountrywithapopulationof277.5million,grewatanaverageof5percentduringthepasttwodecades.AfteraprotractedrecoveryfromtheCOVID-19pandemic,thecountryisprojectedtoreturntoitslong-termaveragegrowthratefrom2022.SouthAfrica,anupper-middle-incomecountrywithapopulationof60.4million,hassufferedfromsluggisheconomicgrowthofa2percentaverageduringthepasttwodecades.AccordingtotheInternationalMonetaryFund,theunprecedentedandprotractedenergycrisis,climateshocks,andlogisticalbottlenecksseverelyaffectthecountry’sgrowthprospects.Countercyclicalpolicymeasurestoaverttheworstimpactofthepandemicleftthemwithconstrainedfiscalspace.Afteradecadeoffiscaltighteninginthe2000s,Indonesia’sdebt-to-GDPratioincreasedby10percentagepoints.SouthAfrica’spublicdebtjumpedto70percentafterithadalreadybeenonasteadyupwardslopeinthewakeoftheglobalfinancialcrisis.SouthAfrica’sgovernmentbudgetedtotakeonthestate-ownedutilityEskom’sdebtinastaggeredmannerbetweenFYs2023and2026andforecastthedebt-to-GDPratiotoriseto74percentbyFYs2025and2026beforeitfallsbacktothecurrentlevelbyFYs2027and2028.Asaresult,thefiscalspaceforfurtheractivegovernmentsupportfortheclimateadaptation,ajusttransition,anditsunfinishedSustainableDevelopmentGoalagendaareconstrainedbypublicdebtinbothcountries,butmuchmoresointhecaseofSouthAfrica.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?7FIGURE1.RealGDP(US$billions),realGDPgrowth(%),andgovernmentdebt-to-GDP(%ofGDP)–10%0%10%20%30%40%50%60%70%80%90%100%$0$200$400$600$800$1,000$1,200$1,40020002002200420062008201020122014201620182020GDP,growth,anddebt:Indonesia–10%0%10%20%30%40%50%60%70%80%90%100%$0$200$400$600$800$1,000$1,200$1,40020002002200420062008201020122014201620182020GDP,growth,anddebt:SouthAfricaRealGDP(US$billions)RealGDPGrowth(annual%change)GovernmentDebt-to-GDP(%ofGDP)Source:InternationalMonetaryFund.HighVulnerability,LimitedReadinesstoAdapttotheEffectsofClimateChange,andHighTransitionRisksasaCommonDenominator.IndonesiaandSouthAfricaarehighlyvulnerabletotheimpactsofclimatechange.Theyareranked100thand96th,respectively,outof182countriesintheNotreDameGlobalAdaptationIndex,whichmeasuresthevulnerabilityofacountrytotheeffectsofclimatechangeontheonehandanditsreadinesstoadaptontheotherhand.Accordingtothisassessment,Indonesiaisprogressinginitseffortstoeffectivelyprepareforadverseimpactsfromclimatechange,buttheneedsduetoitshighvulnerabilityareimmense.Incontrast,SouthAfrica’svulnerabilityisconsideredmanageable,butthecountrylagsintermsofreadiness.Bothcountriesareatthesametimeimportantcarbonemitters.In2021,IndonesiaandSouthAfricaweretheworld’s10thand15thlargestcarbondioxide(CO2)emitters,respectivelyTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?8(EDGAR,2022).3In2019,Indonesia’sGHGemissionsexceeded1billionmetrictonsofcarbondioxideequivalent(tCO2e)forthefirsttime.SouthAfrica’sGHGemissionsreached0.55billiontCO2e.Thepowersectorsrepresent29.9percentand49.9percentofIndonesia’sandSouthAfrica’sGHGemissions,respectively(Figure2).Duetotheirheavyrelianceoncoal,bothcountries’powersectorsarehighlycarbonintensive,withIndonesiain2021hittinganaveragecarbonintensityof785gramsofCO2perkilowatthour(gofCO2perkWh)andSouthAfrica867gofCO2perkWh;comparedto445gofCO2perkWhastheaveragecarbonintensityofpowersectorsamongG20countriesforthesameyear.SouthAfrica’spercapitaemissionsof7.34MtCO2earehigherthanthoseoftheEU.Incontrast,Indonesia’semissionspercapitaof2.19MtCO2earefarbelowtheworldaverageof4.81MtCO2epercapita.FIGURE2.GHGemissionprofile,201949.99.49.415.810.65.029.916.33.321.014.715.0PowerTransportBuildingsIndustryAgricultureWaste1,002.4MtCO2555.4MtCO2SouthAfricaIndonesiaNote:MtCO2=millionmetrictonsofcarbondioxide.Sources:ClimateTransparency;WorldBank,WorldDevelopmentIndicators.Drivenbyrapideconomicgrowth,urbanization,industrialization,andamassiveprogramtoprovide100millionpeoplewithaccesstoelectricity,Indonesia’selectricitydemandhasincreasedbymorethan200percentduringthepasttwodecades;muchofthisgrowthwasfueledbycoal,particularlyafter2010.Thecountryswitchedfromimportedoiltodomesticcoaltostopthedrainofforeigncurrency,toelectrifyitsrapidlygrowingeconomy.Becausetheexpansionofgenerationcapacitywasfasterthanrealizeddemandgrowth,thearchipelago’smaingrid,theJawa-Baligrid,isinasituationofovercapacitywithareservemarginof50–60percent.Indonesia’sthirstforpowerisprojectedtoincreasebyanadditional50percentby2030.Inabusiness-as-usualscenario,thiswouldcontinuetobefueledbycoal.3Inthisranking,internationalshippingandtheEUareconsideredasonecountry.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?9MeanwhileSouthAfrica’sgenerationduringthesameperiodgrewbyonly13percent.Itsgenerationpeakedin2011beforeitdeclined,dueinlargeparttolackofsectorgovernance,underinvestment,andinfrastructurefragilitiesinthepowersystem.Coal-basedpowerassetswerebuiltinthe1970sand1980sandhavedominatedthegenerationmixeversince(Figure3).Giventheirhighgrowth(Indonesia),andpent-updemand(SouthAfrica),bothcountriesareatanelevatedriskofcarbonlock-in.FIGURE3.Powersectorgenerationmix,2000–2020,andtargetedrenewablesshareby2030Energyproduction(GWh)Year050,000100,000150,000200,000250,000300,000200020052010201520202030CoalNuclearHydroBiofuelsSolarPVSolarthermalOilWindRenewablesNon-renewablesCoalNaturalgasOilHydroGeothermalBiofuelsWindSolarPVWasteRenewablesNon-renewablesEnergyproduction(GWh)Year050,000100,000150,000200,000250,000300,000350,000400,000450,000500,000200020052010201520202030SouthAfricaIndonesiaNote:GWh=gigawatt-hours;PV=photovoltaic.Sources:InternationalEnergyAgency,ClimateInvestmentFunds;InternationalEnergyAgency,Eskom,IntegratedResourcePlan.FIGURE4.Installedcapacity,target,andpotentialrenewableenergycapacity(GW)6.26.018.830.0443.2316.3050100150200250300350400450500IndonesiaCountrySouthAfricaInstalledcapacity(GW)CurrentTargetPotentialNote:TherenewableenergypotentialofSouthAfricaisaproportionalestimatederivedfromIRENA’sfigureforthepotentialoftheSouthernAfricaregion;Indonesia’srenewableenergytargetwillincreaseoncetheEnergySupplyBusinessPlanisupdatedtoreflecttheincreasedambitionenabledbytheJETP.Sources:ClimateInvestmentFunds;IntegratedResourcePlan;IRENA;IndonesianNationalElectricityCompany.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?10IndonesiaandSouthAfricahavelargeuntappedpotentialandarewellplacedtotransitiontocleanenergy.Lessthan3percentand7percentoftheestimatedrenewableenergypotentialisdevelopedtodate.ThegovernmentofIndonesiain2017estimatedatotalpotentialof443GW,comprising208GWfromsolarand61GWfromwind.AmorerecentassessmentbytheInternationalRenewableEnergyAgency(IRENA)estimatesthatthesolarPVpotentialcouldbe15timeslargerthanthegovernmentestimate.IRENAalsoforecastsalargeoffshorewindpotentialforIndonesia,whichisnotincludedinthegovernmentestimate.TABLE1.EmissionslevelsandtargetsinfirstandenhancedNDCOld2030Targets(MtCO2e)New2030Targets(MtCO2e)NetZeroByUnconditionalConditionalUnconditionalConditionalIndonesia2,0341,7871,9531,6322060SouthAfrica6143984203502050Sources:WorldBank,WorldDevelopmentIndicators;ClimateActionTracker;NDC.ThroughthesuccessfulimplementationoftheirenhancedNDCs,IndonesiaandSouthAfricaaimtoachieveanearlierpeakingandcarbonneutralityby2060and2050.AssumingthesuccessfulimplementationofitsJETP,SouthAfricashouldachieveitsmostambitiousemissionreductionlevel.IndonesiaupdateditsNDCinSeptember2022,increasingitsunconditionalemissionreductiontargetfrom29percentto32percentbelowitsbusiness-as-usualscenarioanditsconditionaltargetfrom41percentto43percentbelowitsbusiness-as-usualscenario,includingemissionsfromlanduse,landusechange,andforestry.TheJETPforIndonesiaacceleratesIndonesia’stransitiontowardacleanerenergyfuture.Inadditiontoincreasingtheshareofrenewablesinthepowermix,thepartnershipalsoincludesatargetforthefirsttime—a2030peakingdateforIndonesia’spowersectoremissionsincludingemissionsfromon-grid,off-grid,andcaptivepowersystems—shiftingtheprojectedpeaksevenyearsearlier.Thecountrycommittedtolimitingpowersectoremissionstonomorethan290megatonsby2030andtobringingforwarditscommitmenttonetzerointhepowersectorby2050.YettheGHGemissiontrajectoryforIndonesiacontinuestobeinconsistentwiththe1.5degreesParisClimateGoalaccordingtoClimateActionTracker.ItratesSouthAfrica’sreductiontargetsasbeingnearlyinlinewiththegoal.RecentclimateandjustenergypoliciesIndonesia.TheenergyandclimatepolicymakinglandscapeinIndonesiaismadeupofarangeofdiversestakeholders,includingministerialdepartments,theExecutiveOfficeofthePresidentoftheRepublicofIndonesia,thenationalparliament,severalregulatoryagencies,andnon-governmentalorganizations.KeypolicymakingministriesaretheMinistryofEnergyandMineralResourceswhichgovernsrenewableenergysupportmechanisms;theMinistryofFinancewhichsetsthesizeTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?11ofrenewableenergysubsidies,fiscalincentives,andotherfinancialmeasures;theCoordinatingMinistryofMaritimeAffairsandInvestments,whichisinchargeofcoordinatinginvestments;theMinistryofIndustryandMinistryofVillages,DisadvantagedRegions,andTransmigrationwhichhasthepowertoestablishlocalgrantsandrenewableenergyrequirements;andtheMinistryofEnvironmentandForestryismandatedtocoordinatetheoverallimplementationofIndonesia’s(NDC)andcarbonpricingmechanism.FIGURE5a.Recentenergyandclimatepolicyaction—IndonesiaOct.2022:CIFACTInvestmentPlanNov.2021:Committophaseoutcoalpowerby2040Apr.2021:FIREprogramforcoalplantdecommissioningSept.2022:EnhancedNDCNovember2022:JETPannouncedOct.2021:LegalframeworkforcarbonpricingandtaxNov.2017:EmissionstradingschememandatedNotes:FIRE=FriendsofIndonesiaRenewableEnergy;CIFACT=ClimateInvestmentFundsAcceleratingCoalTransition.Inthelead-uptothe2021UnitedNationsClimateChangeConference(COP26),thegovernmentofIndonesiasubmitteditsLong-TermStrategyforLowCarbonandClimateResilience2050totheUnitedNationsFrameworkConventiononClimateChange,whichoutlinesitsplanstopeakemissionsby2030andestablishesanetzeroGHGemissionsgoalof2060orsooner.IndonesiaalsosubmitteditsEnhancedNDC,whichincreasedsectoraltargetsandreconfirmsa41%GHGreductiontargetby2030‘subjecttoavailabilityofinternationalsupportforfinance’(Table1),toachieveanelectrificationratioof99.7%by2025,andtoreduceenergyintensityby1%peryearupto2025.Indonesiahasnumerouscommitmentsandpoliciesintransitioningoutofcoal,includingtheFriendsofIndonesiaRenewableEnergyprogram,whichannouncedplanstodecommission9.2GWofcoalcapacityby2030.IndonesiaalsosignedtheGlobalCoaltoCleanPowerTransitionStatementatCOP26,whichwouldphaseoutcoalpowerby2040withadditionalsupportfromtheinternationalcommunity.Recentchangesinenergypoliciesandregulationshaveaimedtoacceleratedeploymentofrenewables,increaseenergyjustice,andtoalignthemwithamoreambitiousfuturedecarbonizationtrajectory.Notablelawsandregulationsinclude•InOctober2021,thestate-owned,verticallyintegratedpowerutilityIndonesianNationalElectricityCompany(PLN)andthegovernmentofIndonesiareleasedtheElectricitySupplyBusinessPlan(RencanaUsahaPenyediaanTenagaListrik)2021–2030,whichlaysouta10-yeardevelopmentplanforelectricitygeneration,transmission,anddistributionassetsinIndonesia.Forthefirsttimesetarenewable-energytargetof51.6percent(or21GW)oftotalpowercapacityadditionby2030.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?12•MinistryofVillages,DisadvantagedRegions,andTransmigrationRegulationNo.11of2019—createsregionalfinancialsupportforoff-gridrenewableenergyprojects.•PresidentialRegulationNo.10of2021onInvestmentBusinessSector—createsarangeoffiscalincentivesforrenewableenergygeneration,includingcorporateincometaxreduction.•PresidentialRegulation112/2022onAccelerationoftheDevelopmentofRenewableEnergyforElectricalGeneration,issuedinSeptember2022iscentraltothecountry’senergytransition.Itestablishesanenhancedregulatoryframeworkandpricingregimeforrenewableenergysources.Itfurthersetsa2050phaseoutdateforcoalpower,prohibitsthedevelopmentofnewCFPPs,andmandatesthatPLNterminateearlytheoperationofitsCFPPsand/orpowerpurchaseagreementswithCFPPsdevelopedbyindependentpowerproducers(IPPs).EarlyretirementofCFPPsistobeimplementedwithconsiderationofthereliabilityandaffordabilityofthesupplyofelectricityinIndonesia.Theregulation,however,allowsthedevelopmentofnewCFPPsintwoexceptionalcircumstances.ThefirstisifCFPPshavebeenincludedinthelatestElectricitySupplyBusinessPlan(RencanaUsahaPenyediaanTenagaListrik)2021–2030.ThesecondisifCFPPs(1)areintegratedinindustrialdevelopmentplanstoaddvaluetonaturalresourcesorincludedasNationalStrategicProjectsthatdrivejobcreationand/oreconomicgrowth,(2)arecommittedtoreducingcarbonemissionsbyatleast35percentagainstthe2021averagein-countryCFPPemissionswithin10yearsfromthecommercialoperationsdate,and(3)willremaininoperationonlyuntil2050.ThegovernmentwithPresidentialRegulationNo.98of2021ontheImplementationofEconomicValueofCarbonforAchievingNDCTargetsandControlofGHGEmissionsinNationalDevelopmentalsocreatedalegalframeworkfordomesticcarbonpricing,agroundworkforcarbontax,andanemissionstradingschemetobeimplementedby2024.Boththeemissionstradingschemeandthecarbontaxremainindevelopment.ThegovernmentreleasedtheNationalActionPlanonClimateChangeAdaptation,whichestablishesIndonesia’sstrategicplanforadaptation,firstin2014and(updated)in2019.FIGURE5b.Recentenergyandclimatepolicyaction—SouthAfricaOct.2019:IntegratedResourcePlanMay2022:JustTransitionFrameworkNov.2022:JETPInvestmentPlanFeb.2022:ClimateChangeBill;CarbontaxrateincreaseMar.2022:GreenTaxonomyNov.2021:JETPannouncedatCOP26Sept.2021:EnhancedNDCSept.2020:LowEmissionsDevelopmentStrategyMar.2011:REIPPPestablishedSources:JETPInvestmentPlan;ClimateActionTracker.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?13InJune2019,SouthAfricaintroducedacarbontaxwiththegoalofprogressivelyincreasingthein-countrycostofcarbon.SouthAfricahasaLowEmissionDevelopmentStrategythatwasapprovedbytheUnitedNationsFrameworkConventiononClimateChangeinSeptember2020.ItssuccesshingesontheimplementationofitsIntegratedResourcePlan2019,whichisbeingrevised.In2021,SouthAfricasubmittedanEnhancedNDC—approvedbythecountry’scabinet,whichprovidesadditionalcredibilitytoitscommitments—withmoreambitiousemissionmitigationtargets.TheseeffortslaidthefoundationfortheannouncementoftheJETPbetweenSouthAfricaandtheIPGatCOP26.ThecountrycarriedoutseveralreformswhiletheJETPInvestmentPlanwasbeingdrafted.InFebruary2022,theDepartmentofForestry,Fisheries,andEnvironmentintroducedClimateChangeBillB9-2022toparliament.ItprovidesalegalframeworkforSouthAfrica’sclimateaction,establishesmunicipalintergovernmentalforumstocoordinatelocalresponses,andmandatestheformulationofanationalGHGemissiontrajectorywithsectoraltargets.Atthesametime,theNationalBudgetSpeechindicatedthatthecountry’scarbontaxwouldincreaseby$1ayearuntilreaching$20pertonin2026,withmorerapidincreasestofollow.Currentcarbontaxlevelsareabovetheglobalaverageof$6pertonbutsignificantlybelow,forexample,theEuropeanUnion,wherecarbonispricedat$90perton.Twomonthslater,theNationalTreasuryreleasedaGreenFinanceTaxonomythatcreatedavoluntaryframeworkfordefininggreeninvestments.Laterthatyear,inJune2022,thePresidentialClimateCommissionreleasedareportcalled“AFrameworkforaJustTransitioninSouthAfrica.”Basedonaconsultativeprocess,itsetsoutadefinitionforthejusttransitionofSouthAfrica.AyearaftertheannouncementofSouthAfrica’sJETP,thecountry’sJETPInvestmentPlanwasreleasedbytheofficeofthepresident.Itoutlinesthefinancingneedsofthedifferentsectorsoftheenergytransitionandidentifiesfundinggaps.SectorgovernancechallengestotherenewableenergydeploymentTherapidscaleupofrenewablepowerinbothcountrieswillhavetocometoalargepartfromprivatesectorinvestments.Indonesia’sRUPTLsetsatargetof56percent.Butlackofcompetitionandthedominanceofthestate-ownedutilities—PLNinIndonesiaandEskominSouthAfrica—createhighentrybarriersandhampertherapiddeploymentofrenewables.TheshareofgenerationfromIPPs,renewables,andfossilfuel-based,inSouthAfricaisparticularlylowat7.1percent.WhiletheshareofIPPsishigherinIndonesia,withIPPs’representing34.3percentoftotalgenerationin2021,thesearepredominantlyfossilfuel-basedplants;theshareofrenewablesisnegligible.Privatepowerisdominatedbyinternationallyfinanced,coal-basedIPPs.4InIndonesia,coal-basedIPPs’take-or-payclauseprovidesthealreadyfinanciallystrugglingofftakerPLNlittleincentivetodeprioritizethedispatchofCFPPs.4AccordingtoestimatesoftheInstituteforEnergyEconomicsandFinancialAnalysis,asof2021,12.9GWwasfinancedbyChineseinvestors,eitherfullyorpartially,whileJapanesebanksbackedabout5.5GW.Asforthe13.8GWinthepipelineatthattime,atleast7.3GWreceivedfinancingfromJapanorChinaand2.0GWfromSouthKorea.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?14FIGURE6.Energyproductionbytypeofproducer,202159.0%89.1%34.3%7.1%6.3%0.3%3.8%310,049223,727050,000100,000150,000200,000250,000300,000IndonesiaSouthAfricaGWhCountrySOEIPPO-gridImportNote:GWh=gigawatthour,SOE=state-ownedenterprise.Sources:Eskom(2022);MinistryofEnergyandMineralResources(2021).Indonesia’soperatingcoalplantshaveanaverageageof12years.CoupledwithasituationofovercapacityinitsmainJava-Baligridaroundmainloadcenters,thisleaveslittleornoroomforrenewableIPPsintheimmediatetoshortrun.5Theenhancedbusinessecosystemforrenewables,withanimprovedpricingregimeandmust-runobligationsforrenewablesthroughthepromulgationofPresidentialRegulation112/2022inSeptember2022(seeabove),remainsuntested.Moreover,inbothcountries,regulatoryredtapeanduncertaintyintheprojectdevelopmentprocessaswellasdelaysinlicensingandprojectapprovalconstituteadditionalimportantimpedimentstoalarge-scaledeploymentofrenewables.ThegovernmentofSouthAfricaintheJETPInvestmentPlancommitstointroducingcompetitionintothemarketbyrestructuringEskomandmovingtowardasingle-buyermodelunderwhichthetransmissionoperatorhasbeencarvedouttoreduceregulatoryredtapeandpolicyuncertaintychangestounlockprivateinvestmentsinthesector.Thereisnoprogressontheunbundlingtodate.Amajorimpedimenttotherapidscale-upofrenewablesandthetransitionawayfromcoalistheillfinancialhealthofthepowersectorandthestate-ownedutilitiesinbothcountries.Intheircapacityasstateutilitycompanies,EskomandPLNhavepublicserviceobligationsacrossSouthAfricaandIndonesia.Fordecades,asubstantialpartoftheelectricitysoldtoendconsumershasbeensubsidized.Asaresult,theverticallyintegratedutilitiesarestructurallyinaloss-makingposition5ThereisinconsistencybetweensourcesregardingtheinstalledandoperatingcapacityofCFPPsinIndonesia.WhilethegovernmentofIndonesia’sprojectinformationdocumenttotheClimateInvestmentFundhighlightsacapacityof34.5GWofCFPPinoperation,theGlobalEnergyMonitordatabasedocumentsacapacityof45.3GWinoperation.Thedifferenceincapacitiesisassessedduetoinclusionofcaptivepowerinthedatabase.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?15andrelyongovernmentsupportfortheiroperations.Thisplacestheminadifficultsituationtosupportrenewabledevelopment.FIGURE7.DebtratiosforPLNandEskom,20220.390.730.220.170.680.3700.10.20.30.40.50.60.70.8Debt/AssetsDebtservice/RevenueDebtservicecoverageRatioFinancialratioPLNEskomNote:Eskomfigureisfrom2022whilePLNfigureisfrom2021duetodatarestrictions.Sources:Eskom(2022);PLN(2021).Decadesofoperationalinefficienciesandbelow-cost,recovery-leveltariffsledtoafinanciallyunsustainableprofileofEskom,underinvestmentinnewandmaintenanceofexistinginfrastructure,andprogressivelydeterioratingservicequality.In2022,SouthAfricasufferedfromthegreatestnumberofdayswithrollingloadshedding.Thetransmissionanddistributiongridsareinnostatetoabsorblarge-scalerenewablepower.Still,Eskombenefitsfromgovernmentsupport.Theutilityreceivedmorethan80percentofallgovernmentsupporttofinanciallydistressed,state-ownedcompaniesduringthepastdecade,andthegovernmentbudgetprovidesforexplicitsupporttoEskomuntilthefinancialyearendingMarch2026(FY2026)throughequityinjectionsanduntilFY2023throughtheGuaranteeFrameworkAgreement.PLNisalsoreliantonstatesupporttosustainitsoperations.Statesupportinrecentyearshasreportedlybeentimely,andcompensationpaymentsweremadeinfull.Theutilityalsobenefitsfromatariffsystemthatrecoversitsrecurringcosts,financesexpenditures,andinpartcoversinvestmentcosts.Withalackoffinancialsustainabilityinthesectors,offtakerrisks,includingcurtailmentrisks,partial,and/ordelayedpaymentsofIPPsremainhighinbothcountries.SuchriskshavesubstantialnegativeimpactsoncreditworthinessandtheirrealizationreducetheeffectiverateofreturnofrenewableIPPs.Asaresult,theriskpremiumsofborrowingsandequityreturnexpectationsremainhigh.Duetothiscomparativelyunfavorableinvestmentframeworktodate,IndonesiahasseenthehighesttariffsforrenewableIPPsinSoutheastAsia(InternationalEnergyAgency[IEA]2022).THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?16JusttransitionchallengesThecoalindustriesinIndonesiaandSouthAfricaareimportantemployers.Whilethecountries’energytransitionsareprojectedtohavenetpositivejoboutcomes,theworkersinthecoalvaluechainstandtoloseout.Toensurethattheirtransitionisjustandgenderequitable,eachcountryneedstoaddressuniquechallenges.InIndonesia,CFPPsarewidelydistributedacrossthecountry,withsomeconcentrationintheinterconnectednetworkofJavaandBali.Thus,throughcarefulselectionandavoidinggeographicconcentrationofcoalplantretirement,thenegativesocialimpactsfromdecommissioningofplantspotentiallycouldbemitigatedintheshortterm.Whiledevelopmentofpipeline-captiveandon-gridCFPPswillberestrictedandfrozen,respectively,anadditional19GWofnewCFPPcapacityiscurrentlyunderconstruction.Atotalof250,000areemployedinminingoperations,withtheshareofwomenemployedinthesectorbeingbelow10percent.SouthAfricahasanoldercoalfleetof45.9GWandanaverageof42years,with74percentofinstalledoperatingcapacitylocatedinMpumalangaProvince.Anadditional1.7GWofnewcapacityisunderconstruction,andanother1.5GWisintheplanningphase.Thecoalvaluechainemploys200,000workers,19percentofwhomarewomen.Thegeographicalconcentrationofcoalplantsandminesinonesingleregioncouldresultinnegativemultiplierimpactsfromthedecommissioningofplants.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?17FIGURE8.Geographicaldistributionofcoalplants,2022Installed:40.6GWConstruction:18.8GWPlanned:2.8GWEmployment:250,000(miningoperations),<10%womenDataasofJanuary2023Installed:45.9GWClosing:9.5GWby2030Planned:1.5GWConstruction:1.7GWEmployment:200,000(valuechain),19%womenDataasofJanuary2023Source:GlobalEnergyMonitor,createdwithDatawrapper.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?18FIGURE9.Unemploymentrate,2000–20200%5%10%15%20%25%30%35%40%20002002200420062008201020122014201620182020IndonesiaSouthAfricaSource:InternationalMonetaryFund.LabormarketrecoveryinthewakeoftheCOVID-19pandemicinthetwocountrieshasbeenasynchronous.InIndonesiain2022,theunemploymentratedroppedtoitslevelbeforethepandemicof5.5percent.MeanwhileinSouthAfrica,economicrecoveryhasnotbeenaccompaniedbyadecreaseinunemploymentratelevels;thesteadyincreaseintheunemploymentratesince2010acceleratedin2020andreached35.6percent.Moreover,thequalityofthesecountrieseducationsystemsislowtomedium.TheWorldPopulationReviewranksthequalityofIndonesia’sandSouthAfrica’seducationsystems54and33,respectively,outof72countries.FIGURE10.Incomeinequality—Giniindex,2000–202001020304050607020002002200420062008201020122014201620182020IndonesiaSouthAfricaSource:WorldBank.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?19SouthAfricaisamongthecountrieswiththehighestincomeinequalityworldwide,andtheincomedividehasbecomeworseovertheyears.Tenpercentofthecountry’spopulationtakehome65percentofallincome,andtheremaining90percentofSouthAfricanearnerstakehomeonly35percentofallincome.IncomesinSouthAfricaremainracialized,gendered,andspatializedmeaningthatwhitepeoplearemorelikelytofindwork(andworkthatpaysbetter)thantheirblackcounterparts,femaleworkersearnabout30percentlessthanmaleworkers,andurbanworkersearnaboutdoublethatofthoseinthecountryside.TheabsorptionofmanyworkersfromthecoalvaluechainwillbemoredifficultinSouthAfricathanintheIndonesiancontext.FIGURE11.Employmentinrenewablessector,2022versus2030587,16355,2171,318,600806,7830200,000400,000600,000800,0001,000,0001,200,0001,400,0001,600,0001,800,0002,000,000IndonesiaSouthAfricaCurrentPotentialby2030underjusttransitionSources:InternationalLaborOrganization,IRENA,PriceWaterhouseCoopers.TherenewableenergysubsectorisprojectedtobecomeamotorforjobcreationinbothIndonesiaandSouthAfricaunderajusttransitionscenario.AccordingtoresearchbyIRENA,Indonesiain2021hadarenewableenergyworkforceofnearly587,163andcouldaddmorethantwiceasmanyemployeesby2030undera1.5degreescenario,whichisdrivenlargelybygainsinthebioenergyandsolarsectors.Undertheplannedenergyscenario,gainsaremoremodest,with158,600additionaljobsinrenewablesby2030.Asof2020,directemploymentinSouthAfrica’srenewableenergysubsectorisatabout55,000,anditcouldadd265,000directemployeesinconstruction,operation,andmaintenanceand596,000inindirectandinducedjobs:20timesthecurrentemploymentlevels(Figure11).Unlockingthedeploymentofthecountries’abundantresourcesnecessitateslargeinvestmentsinexpandingIndonesia’sandSouthAfrica’stransmissioninfrastructures.First,asregionswiththehighestsolarandwindresourcepotentialinbothIndonesiaandSouthAfricaarenotlocatedinthesameregionsascurrentcoalvaluechaincentersandarenotclosetothecountries’mainloadTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?20centers,thetransmissionnetworkcapacityneedstobeexpandedinthoseresource-richregions.Second,thenetworkdoesnothavethenecessaryflexibilityandcomplementarystoragecapacitytoabsorblarge-scalevariablerenewableresources.Giventhelongleadtimeforgridinfrastructuredevelopment,gridcapacityratherthanresourcepotentialwilldrivedeploymentofrenewablesintheshorttomediumterm.Regionswherecoalassetsaretobephasedouttendtohaveadequategridcapacity.Therefore,thoseregionsthatstandtobeaffectedfromthecoalphaseoutalsopossessanopportunitytoreapfullco-benefitsintermsofcreationofqualitygreenjobsfromthedeploymentofrenewablesforjusttransition.Intheshorttomediumterm,thereisatradeoffbetweendeploymentofmostcost-effectiverenewablesinregionswiththehighestpotential,potentialspeed,andscaleofdeploymentandco-benefitsfromjobcreationandabsorptionoflostjobsintherenewablesvaluechain.FIGURE12.PVpotentialinIndonesiaandSouthAfrica,2022Sources:Solargis/EnergySectorManagementAssistanceProgram;Solargis/EnergySectorManagementAssistanceProgram.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?21FIGURES13aand13b.Windpowerpotentialatmeanwindspeedsandat100metersinIndonesiaandSouthAfrica,2022Source:WorldBank,EnergySectorManagementAssistanceProgram,andVortex.FIGURES14aand14b.ElectricitytariffsandcostoflivingdevelopmentinIndonesiaandSouthAfrica,2001–2021201120122013201420152016201720182019202020210.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%00.020.040.060.080.10.12SouthAfrica’selectricitytarisandcostoflivingHousehold(US$/kWh)Industrial(US$/kWh)Commercial(US$/kWh)Inflation,consumerprices(annual%)0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%$–$0.02$0.04$0.06$0.08$0.10$0.1220112012201320142015201620172018201920202021Indonesia’selectricitytarisandcostoflivingNotes:ElectricitypriceswereconvertedfromSouthAfricanrandintoUSdollarsusingaverageannualexchangerates.kWh=kilowatthour.Sources:MinistryofEnergyandMineralResources,WorldBank;Eskom,ExchangeRates,WorldBank.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?22TheJETPsaretobeimplementedbeforethebackground-heightenedinflationandincreasingfoodinsecurity.InIndonesia,afteraperiodofdecliningconsumerprices,headlineinflationrose5.4percentyear-on-yearin2022.Between2011and2021,electricitytariffsindomesticcurrencyforresidential,commercial,andindustrialhouseholdsincreasedbyaverageannualgrowthratesof5.0percent,2.4percent,and4.1percent,respectively,whiletheaverageannualdepreciationrateoftherupiahagainsttheUSdollarwas6.0percent.InSouthAfrica,theaverageannualtariffincreasesinrandforresidential,commercial,andindustrialhouseholdsincreasedbyaverageannualgrowthratesof8.0percent,9.8percent,and9.2percent,respectively,whiletheaverageannualdepreciationrateoftherandagainsttheUSdollarwas6.3percent.Inflationaveraged6.9percentin2022,upfrom4.5percentinthepreviousyear,statisticsofficedatashow—thehighestlevelsince2009,whenrisingelectricitycostsaddedtopricepressures.Risingelectricitytariffshappenagainstthebackgroundofdeterioratingservicequality.Duringthepastdecade,SouthAfricanshavesufferedfromrollingloadshedding,whichhasbecomeincreasinglyworse.In2022,numerousprotestsandcomplaintswerelodgedaboutrisingratesandheightenedlevelsofpowercuts.Asurveyoftheprevalenceoffoodinsecurityinthecountryin2021foundthat20.4percentofSouthAfricanswerefoodinsecure.Themostvulnerablewerefemales,peoplelivinginruralareas,thosewithlowsocioeconomicstatus,peoplewithouthighschoolcertificates,andadultsolderthan45.OpportunitiesforjustenergytransitionthroughvalueadditionandvaluechaindevelopmentIndonesiaandSouthAfricahaveaparticularaptitudeforchampioningtheclean-energyrevolutionandachievingajusttransition.Beyondtheaforementionedlargelyuntappedpotentialforrenewableenergydeployment,thecountriesarerichlyendowedwithreservesofmineralsandpreciousmetalssuchasnickel,cobalt,copper,andplatinumthatareessentialforthemanufacturingofcleanenergytechnologies.Thiscreatesnewopportunitiesforbothcountriestointegratethemselvesintoglobalvaluechainsandexport-ledgrowth.Indonesiahasadominantpositioninnickelproductiongloballyandhassubstantialamountsofcobaltreserves,bothessentialforthemanufacturingofbatteries.AccordingtoIEA,globaldemandforthesemineralswouldgrowbyabout20timesby2040iftheworldweretoshifttoapathwayconsistentwithanetzeroemissionsfutureby2050.Followingitsnickelstrategy,IndonesiaaimstoproducedownstreammaterialsandproductsinthenickelandEVbatterysupplychain,replicatingitssuccessinonshoringforeigndirectinvestmentsandbecomingthesecond-largestproducerofstainlesssteelintheworldwithinlessthanadecade.Thecountryisadvancedinexpandingitsonshoringstrategytoothermetalsessentialfortheenergytransition,includingbauxiteandcopper,whichareessentialforgridinfrastructure.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?23FIGURE15.ProductionandreservesofmineralsrelatedtorenewableenergytechnologyforIndonesia,20225.34.248.57.22.721.00102030405060CobaltCopperNickelProportionofworldsupply(percent)MineralActiveProduction600,000metrictonsinreserves24millionmetrictonsinreserves21millionmetrictonsinreservesActiveProductionActiveProductionProductionReservesSource:UnitedStatesGeologicalSurvey.SouthAfricahasadominantpositioninmanganeseandplatinumproductionglobally,whichareessentialforthemanufacturingofbatteriesandelectrolyzermembranes.AccordingtotheIEA,globaldemandformanganeseforcleanenergywouldgrowbyabout8timesby2040iftheworldweretoshifttoapathwayconsistentwithanetzeroemissionsfutureby2050.FIGURE16.ProductionandreservesofmineralsrelatedtorenewableenergytechnologyforSouthAfrica,20223655037.6900.60102030405060708090100ManganesePGMRareearthmetalsMineral640millionmetrictonsinreserves63millionmetrictonsinreserves790,000metrictonsinreservesProportionofworldsupply(percent)ActiveProductionActiveProductionActiveProductionProductionReservesSource:UnitedStatesGeologicalSurvey.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?24SouthAfrica’srareearthelementsreservesarenotdevelopedtodate.In2022,Chinaheldadominantholdonthemarket—with70percentofglobalproduction,downfromadominanceofcloseto90percentofproductionadecadeago.SouthAfrica’sSteenkampskraalMinehasoneofthehighestgradesofrareearthelementsintheworld.Itcontains15elementsand86,900tonsofrareearthoxides,withlargedepositsofneodymiumandpraseodymium.Todate,thereisoneAngolansubsidiaryofPensanaRareEarths,aBritishfirmthatreceivedexclusiveminingrightstotheLongonjoMine,arareearthsoperation,fora35-yearperiod.Potentialco-benefitsfromaphasedownofcoalWhilethephasedownofcoalandeffortstopeakearlyareprojectedtocomeathighcosts,theco-benefitsintermsofimprovementofpublichealthandoutdoorairaswellassoilandwaterbodypollutionreductionoutweighthecosts.InSouthAfrica,inaddition,therepoweringofthesystembearsthepromiseofovercomingthecurrentpowercrisisandgrowthimpasse.For2023,SouthAfrica’sReserveBankprojectsthecostofloadsheddingintermsofforegonegrowthat1percentofGDPforthecountry.Duetoloadshedding,thecostofdoingbusinessiselevatedasbusinessesareforcedtooperateexpensivedieselgeneratorsandcutoperatinghoursshort.AccordingtotheClimateInvestmentFund(CIF),Indonesiaisoneoftheworld’slargestcoalexportersandexportsmostofitscoaloutput,accountingforabout40percentofglobalinternationalcoal—avalueofaround$40billioninatypicalyear.Together,coalmining,domestictransshipment,andexportsrepresentabout$80billionperyearineconomicactivity—8percentofGDP.TABLE2.Potentialco-benefitsofaphasedownofcoalSouthAfricaAnnualavoidedcostsassociatedwithairpollutionandGHGemissionsfromfossilfuelsUS$33billionAnnualdeathsfromcoal-firedplants2,239Totalhealthcostsofcoal-firedplantsUS$2.4billionIndonesiaAnnualavoidedcostofairpollutionandclimatechangeexternalities,1.5degreescenarioUS$20–38billionDeathsrelatedtooutdooorairpollution(2019)168,300ProgresstowarduniversalaccesstoreliableandaffordableelectricityBothIndonesiaandSouthAfricahaveseenelectrificationincreasesignificantlyinthepast20years.Indonesia’saccesstoelectricityincreasedby11percentagepointsto97percentfrom86percentin2020,whileSouthAfrica’sincreasedby12percentagepointsto84percentfrom72percent.However,duetoloadshedding,electricityaccessisfrequentlydisruptedinSouthAfrica;in2022,SouthAfricanshadmorethan200daysofpowercutsandthesituationisprojectedtoworsenTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?25in2023.Indonesia’sruralelectrificationisslightlylowerthanurban,risingfrom79.6percentin2000to93.5percentin2020versus95.5percentto99.6percent.SouthAfrica’sruralpopulationhasseenconsiderableprogressinthepast20years,risingfrom54.6percentto75.3percent,whileurbanelectrificationsawamoremodestincreasefrom85.7percentto88.8percent.IndonesiaandSouthAfricaalsohaveseengreatprogressinaccesstocleancooking,growingfrom6.1percentand55.7percentin2000to82.4percentand86.3percentin2019,respectively.FIGURE17.Electrificationratio,2000and202086%97%72%84%0%10%20%30%40%50%60%70%80%90%100%20002020IndonesiaSouthAfricaSource:WorldBankDataBank.DiscussionsandkeytakeawaysofJETPfeaturesThissectiondiscussesanddrawstakeawaysfromsomekeydesignfeaturesthatwilldeterminetheeffectivenessoftheJETPs.ThefeaturesdiscussedincludeGovernanceandClimateAction,theInvestmentPlan,theJustTransitionApproach,andFinancingPlan.6GovernanceandclimateactionKeyTakeaways:1.PartnershipsestablishedthroughthelaunchoftheJETPswereconducivetogeneratingtop-levelleadershipandraisedambitionsinclimateaction.2.TheeffectivenessoftheJETPsandtheimplementationofthetransitioncriticallydependsontherapidcompletionofreformsinthepowersector.6ThediscussionmainlydrawsfrominformationcontainedintheSouthAfrica’sJETPInvestmentPlanandforIndonesia’sJETPontheJointStatementoftheGovernmentofIndonesiaandtheIPGandtheDraftClimateInvestmentFund-AcceleratingCoalTransition:IndonesiaCountryInvestmentProposal.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?263.InstitutionalsetupoftheJETPswillbevitaltofosterawhole-in-economytransformationandpolicyalignmentacrosssectorsandlevelsofgovernment,influencingcost-effectivenessandspeedofthetransition.4.Overcomingpowerfulvestedinterestandmaintaininglong-termpoliticalcommitmenttothereformagenda,iscrucialtoreachingJETPtargets.ThepartnershipsestablishedthroughthelaunchoftheJETPswereconducivetogeneratingtop-levelleadershipandraisedenergytransitiontobecomeatoppoliticalpriorityinbothSouthAfricaandIndonesia.Thiseffectivelyraisedclimateambitionsandfast-trackedthepreparationofkeyplansandjusttransitionstrategiesandtheirrapidadoption.TheeffectivenessoftheJETPsandtheimplementationofthetransitioncriticallydependsontherapidcompletionofreformsinthepowersector.Bothgovernmentsadvancedthereformprocessofpoliciesandregulationsthataddressclimateriskandacceleratethedeploymentofrenewables;yetthereadinessforthetransitionislimited.Fossilfuelsubsidieshadalreadybeenscaledbacksignificantlyinbothcountries;subsidieswerereintroducedduringtheCOVID-19pandemic.Carbonpricingisstillinitspreliminarystages.Thoughtheoveralllevelremainslow,SouthAfrica’scarbontaxregimeisexpectedtoprogressivelyincrease.Incontrast,Indonesia’semissionstradingschemeandcarbontaxregimeremainattrialstages.Therecentlyimprovedinvestmentframeworkforrenewablesremainsuntestedundcontinuestobeweak.Reformsintheelectricitysectorthatlieattheheartofasuccessfultransitionareintheearlystages.Thereisnoprogressonunbundlingtheverticallyintegratedutilities.Regulatoryuncertaintiesandgapsinsectorgovernanceremainandimpedeanaccelerateddeploymentofrenewableandcleanenergyinvestments.Indonesia’simprovedpricingandprocurementregimeforrenewableIPPsremainsuntested;theregulationtophaseoutcoalhasimportantloopholes.Giventhelimitedreadiness,theJETPsneedtoemphasizecompletionofpolicyandregulatoryreforminthepowersectorduringtheinitialphaseofthepartnership.Consistentandcoherentpolicyalignmentacrosssectors—notonlyenvironmentandenergybutalsofiscal,transport,industry,infrastructure,financialsector,innovation,educationandskillsdevelopment,internationaltradeandinvestment,urbandevelopment,andagriculture,amongothersisessential.Byaligningpoliciesacrossallsectorsandgeneratingsynergies,notonlycanthetransitionbeaccelerated,butitscostcanbesignificantlyreduced.InSouthAfrica,twospecialtaskteamsweresetupinthepresidentialoffice.Theteamsreportedtoabroad-basedinterministerialcommitteechairedbythepresident.ThePresidentialClimateChangeCommitteepreparedtheJustTransitionFrameworkforSouthAfricainaconsultativeprocessthatincludedrepresentativesofyouth,affectedworkforces,businesses,localgovernment,andcivilsocietyintheaffectedarea.ThePresidentialClimateFinanceTaskTeampreparedtheInvestmentPlaninalignmentwiththeJustTransitionFramework.Itisresponsibleforcoordinatingwithrelevantgovernmentdepartments;negotiatingfinancingwithcounterpartsfromtheIPG,developmentfinanceinstitutions(DFIs)andMDBs,andtheprivatesector;andfinally,overseeingTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?27thedevelopmentofrelevantfinancingmechanismsandfacilitiestoenabletheflowofinternationalclimatefinancetosupportSouthAfrica’sjustenergytransition.InIndonesia,theMinistryofFinancewasinstrumentalindrivingthecountry’sjustenergytransition.Asthenodalministryfordeliveringthejustenergytransitioncountryplatform,itconvenedaninterministerialsteeringcommitteetooverseejusttransitioneffortsandisusingitsleadershiproletoholddiscussionswithkeystakeholders.Thesecretariat,whichwillserveasthecoordinatorforinternalandexternalstakeholders,isplacedintheMinistryofEnergyandMineralResources(MEMR)andsupportedbytheAsianDevelopmentBank(ADB)(USTreasuryDepartment2023).MEMRistheprimarygovernmentinstitutioninchargeofpolicy-makinganddecisionmakingtosuperviseIndonesia’senergysourcesandassets.Itisresponsiblefornationalenergypolicies’designandimplementation.MEMRalsofunctionsasaregulatorforrenewableenergy,fossilfuel-basedplants,andotherpowersources.Inaddition,undertheministry’ssupervisionarethegeologicalsurveyagencyandtheHumanResourcesDevelopmentAgencyforEnergyandMineralResources.Thelatterisresponsibleforformulatinghumanresourcesdevelopmentpoliciesandprogramsinenergysectors.Thetwoinstitutionalsetupsforpolicydesign,coordination,andimplementationoftheJETPshaveimportantimplicationsforpolicyalignment.TheOrganisationforEconomicCo-operationandDevelopment’sresearchoneffectivecoordinationmechanismsforatransitiontoalow-carboneconomyimpliesthatinterministerialcommitteessituatedatthecenterofgovernmentthataresupportedbyinterministerialcommitteeandspecializedtaskteams,asinthecaseofSouthAfrica,canbeeffectiveindrivingcoherentpolicyalignmentforwholein-economy,low-carbontransformationprocesses.TheinterministerialcommitteethatsupervisesthePresidentialClimateCommissionandimplementsthecommission’spolicyrecommendationscomprisesallrelevantministriesforpolicyalignmentaswellasotherkeystakeholdersfromcivilsocietyandacademia.YetbynotincludingrepresentativesfromlocalgovernmentauthoritiesandMpumalangaProvince,whereCFPPsandminingareconcentrated,thecoordinationmechanismmaynotaddresslocalvestedinterestsagainstthetransition.InIndonesia,ontheotherhand,wherethelineministryresponsibleforcoordinatingJETPmeasureshasbeenchosen,internalsiloscreateahighlikelihoodthatinformationsharingandcoordinationacrossotherpolicyareasandatdifferentlevelsofgovernmentwillbechallengingandevenmayinhibiteffectivepolicyalignment.Giventheovercapacityinthepowersystem,abigpolicypushtowardelectrificationoftransportandindirectelectrificationofindustryandmaritimeshippingthroughgreenhydrogenandgreenammoniacould,forexample,supportanaccelerateddeploymentofrenewables.Butmisalignmentofenergy,transport,industrialpolicy,andtradeprioritiesanddifficultiesininformationsharingacrossministriesandsectorregulatorscanhinderprogress.Also,intermsofajusttransitioninabroadersensethatisaboutensuringsocialequityandinclusionaswellasminimizingthenegativeimpactsoncommunitiesandcreatingdiversificationstrategies,thereisariskofinsufficientcoordinationwithotherlineministries.Onapositivenote,MEMR,withTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?28itsbroadpolicyandregulatorymandateintheenergysector,includingrenewablestofossilenergyinthemineralsector,andincludinghumanresourcespolicyanddevelopmentfortheenergysector,canbehighlyeffectiveindrivingthecompletionofreformsinthepowersector,deploymentofrenewables,coalphasedown,andvaluechaindevelopmentundertheJETPprogram.Overall,theinstitutionalsetupmakestheSouthAfricanJETPmoreconducivetocross-sectoralpolicyalignment,includingeconomicdiversificationandindustrialdevelopment.TheinstitutionalarrangementforIndonesia,incontrast,placesmorefocusontheenergysector.GiventheearlystageofrenewablesdeploymentinIndonesia,theinstitutionalstructureoftheJETPinIndonesiacanbeconducivetoeffectivelydrivingreformsandestablishingasupportivebusinessecosysteminthissector.Concernsremainforbothcountriesthattheinstitutionalsetupdoesnoteffectivelysupportajusttransitioninaholisticway,withnoinvolvementoflocalgovernmentinSouthAfricaandapurefocusonhumanresourcesdevelopmentintheenergysectorinthecaseofIndonesia.Giventheemphasisonjusttransitionunderthispartnership,itwillbeimportanttoknowhowthislostopportunityisovercomeinitsimplementation.Moreover,IndonesiaandSouthAfricawillneedtoovercomepowerfulvestedintereststoadvancethecoalphaseout.Coalinbothcountriesisanimportantsourceofforeigncurrencyandstateandprovincialrevenues.MinesinIndonesiaareapprovedbylocalauthoritiesandarecontrolledbyafewfamilieswhohavesignificantpoliticalcloudandwhohaveexperiencedwindfallgainsintheirfortunesbecauseofunprecedentedpricespikesincoalsince2021.InIndonesia,theindustryisanimportantspenderonpoliticalcampaigns.UnlesstheJETPseffectivelyaddressthepoliticaleconomyoftheprocess,itriskstoderailprogress.Strongpoliticalleadershipiscrucialtoovercomevestedinterestsinbothpublicandprivatesectorswhichbenefitfromthestatusquoandresistbeneficialchange.Morerecentresearchfoundthateconomicchangeoftenhappensnotwhenvestedinterestsaredefeated,butwhendifferentstrategiesareusedtopursuethoseinterests.Thereisevidencethatchangingtheelites’ideasregardingnewwaysofadvancingtheeconomicinterestsoftheircountriesiscrucial.Strategiesthatencourageeconomicdevelopmentwhilediversifyingthecountries’economicbaseorfosterindustrializationcanaffectchange(Rodrik,2013).Hence,economicdiversificationstrategiesandalternativeinvestmentopportunity,forexample,throughabigpushtowardagreenhydrogeneconomyandcleanenergyvaluechaindevelopment,couldbeoneeffectivewayofgainingtheelite’ssupport.Someoftheelitearealreadyshiftingtowardrenewables.Thismovementwillneedtobefurtheraccelerated.InvestmentstrategyKeyTakeaway:Toachieveacost-effectivetransitionawayfromcoal,theJETPsshouldbroadentheirfocusandaimtorealizesynergieswithparallelongoingdecarbonizationprocessesintheeconomy.ThenarrowfocusoftheJETPinitiativeonphasingoutCFPPinthefirstphaseofthepartnershipneedsTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?29tobeappropriatelyprioritized.RecipientcountrieswithIPG’ssupportneedtoensurethattheeffortsunderthepartnershipareseamlesslyintegratedintoaneconomywidedecarbonizationstrategy.TheJETPhasagreaterchanceforsuccessifitadoptsabroaderspectrum.SouthAfrica’sJETPInvestmentPlan,inlinewiththepoliticaldeclaration,emphasizesdecarbonizingthepowersector,avertingtheworstimpactsonworkersandaffectedcommunitiesofrapidtransition,andlayingthefoundationsfordecarbonizedeconomicdiversification,includingbuildingagreenhydrogenbusinessecosystem;layingfoundationsfordecarbonizedurbantransport;transitioningtheexistingautomotiveindustrytothemanufacturingofnewenergyvehicles;andmicro,small,andmediumenterprises(MSMEs)—contributingtothegoalsofdecentworkforall,socialinclusion,andtheeradicationofpoverty.Onceimplemented,thisplancanachievethemostambitioustargetofSouthAfrica’senhancedNDC,anemissionlevelof420to350MtCO2eby2030.Transitioncostsforthepowersectoraloneareestimatedat$145billionbetween2023and2035.Identifiedneedsforphase1(2023–2027)oftheJETPInvestmentPlanareestimatedat$99billion,allocatedasshowninFigure18below.FIGURE18.StructureofJETPinvestmentforSouthAfrica,2023–2017in$billionNote:NEV=NewEnergyVehicles];H2=Hydrogen;T&D=transmissionanddistribution.Source:SouthAfrica’sJETPInvestmentPlan.TheJETPInvestmentPlanunderscoresSouthAfrica’suniqueopportunitytomakesignificantshort-termprogresstowardearlypeakingofemissionsandlong-termdecarbonizationofitseconomy.Prolongedunderinvestmentandinsufficientmaintenanceinthepowersectorrenderedmuchoftheaginginfrastructureunreliable,leadingtochronicpowerdeficits,rollingloadshedding,andblackoutsthatcosttheeconomybetween1percentand2percentofGDPandledtoslow,joblessrecoveryfromtheCOVID-19pandemic.Moreover,withthesteepdeclineinthelevelizedcostofTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?30electricityfromrenewableenergysources(inparticularsolarphotovoltaic[PV]andonshorewind)duringthepastdecade,coal-firedpowerisnolongertheleast-costoptiontosupportthegrowthoftheeconomy,creatinganeconomicrationalebeyondclimatemitigationtoshiftfromcoaltorenewablepower.AccordingtothePlan,aquarterofthecountry’scoalfleet’scapacity(9.5GW)shallbedecommissionedbytheendof2030,andanadditionalthirdoftheinstalledcapacity(12.5GW)before2040.Thegovernmentplanstorepowertheelectricitysystemtoovercomethecountry’spowershortagesusingthecountry’sabundantbutunderdevelopedrenewableenergyresourcesthattodategeneratelessthan7percentofannualelectricitysupplied.Accommodatingthetransitionandtoachieveanoutcomein2030towardsthelowerendoftheNDC,SouthAfricaestimatesthatthecountryneedstoadd50GWofrenewableelectricitycapacityby2030.Comparedtoitspastperformance,thisisaHerculeantask;itrequiresthatSouthAfricaadds6to7GWofrenewableelectricitycapacityperyear—equivalenttothecapacitythecountryinstalledoveraperiodofadecade—between2023and2030.Inaddition,insufficienttransmissioncapacityisfurtherexpectedtohampertheabilityofSouthAfricatorapidlytapintoitsabundantrenewableenergyresources.Thecountrywillnotbeabletoshutdownitscoalplantsandrapidlydeployitsrenewablepotentialunlessthetransmissionanddistributiongridisexpandedandequippedwithbatterystoragecapacity,especiallyinregionswithlargesolarandwindpotential.Toaccommodatethetransitionfromasystemwithpointsourcesandfacilitateasystemintegrationofdistributed,variable,renewableenergyresources,whicharelocatedindistantpartsofthecountryfarawayfromloadcentersandcurrentmaingenerationassets.TheJETPInvestmentPlanestimatesinvestmentsequivalentto80percentofinvestmentsinrenewablesforupgradingthedilapidatedtransmissionandmunicipaldistributionsystemsaswellasaddingsufficientbatteryenergystoragesystems.Notwithstandingtheeconomicandenvironmentalrationale,thePlanishighlyambitiousandrequiresachallengingandimmediaterampupininvestmentsandprojectdevelopmentscaleandspeed.NoteworthyisthattheJETPInvestmentPlanforSouthAfrica,oneoftheworld’smostenergy-intensivecountries,doesnotincludeinvestmentsanddoesnotincludeinsightsastohowthisprograminteractswithessentialdemand-sideenergyefficiencymeasures.Energyefficiencyisanindispensabletoolforacost-effectiveandjustenergytransition.Inthecontextofajustenergytransition,itisparticularlyimportanttounderlinethatenergyefficiencyisjobintensive.Governmentenergyefficiencyprogramshaveproveneffectiveinboostingeconomicactivityinkeylabor-intensivesectorsanddeliveringrapidpositiveoutcomesinpreservingexistingjobsandcreatingnewonesinadditiontodeliveringlonger-termbenefitssuchasincreasedcompetitiveness,fossilfuelconsumptionsavings,reducedemissionsofGHGandairpollutants,improvedenergyaffordability,andlowerbills.Forexample,governmentprogramstosupporttheenergyefficiencyindustryintheUnitedStatesandEuropecreatedmillionsofjobsthat,onaverage,payhigherwagesandtendtobemoreinclusivethantherestoftheenergysector.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?31Inaddition,whilehighlightedintheG7summaryonjoiningforcestoacceleratecleanandjusttransitiontowardclimateneutrality,itisnotevidentfromtheJETPInvestmentPlanforSouthAfricathattheJETPssupportcomplementary,low-costdecarbonizationinvestmentsintheshorttomediumterm,forexample,inwaste-to-energy,nature-basedsolutionsandinvestmentsinacirculareconomy.7Incontrast,Indonesia’seconomiccaseforarapidphaseoutofcoalandscaleddeploymentofrenewables—withoutconsideringsocioeconomic,environmental,andclimatechangebenefits—islesscompelling.GiventherelativelyyoungaverageageoftheCFPPsandtheovercapacityinthearchipelago’smaingrid,theJawa-Baligrid,withareservemarginof50–60percent,thecoalphaseoutwillresultinsignificantstrandedassets.Toachievetherapidincreaseinrenewablepowerby2030andtohitthecountry’smostambitioustargetofreducingcarbonemissionsby43.2percentby2030,PLNistograduallyretireitsownyoungcoalfleetandterminatepowerpurchaseagreementsofCFPPsdevelopedbyIPPswithanaverageageofabout12yearsbeforeplantsreachtheendofusefuleconomiclife.Withtheintentiontomaintainreliabilityofservicequalityandaffordabilityofthephaseoutprogram.PLNannouncedaplantodecommission1GWearlyby2030and9GWby2035andthencarryoutaseriesofretirementstophaseoutCFPPsby2055,startingwithlow-efficiency,high-emittingsubcriticalplantsandretiringthemostefficientplantslast.InthecaseofIndonesia,costsandbenefitsofanearlyretirementofcoalplantsshouldbeweighedagainstthoseofapotentialretrofittingofassetswithcarboncapture,utilization,andstorage(CCUS)technology.WhilemostcoalassetsinIndonesiaaresmall,withcapacitiesoflessthan600megawattsandoftheleastefficientsubcriticaltechnologyforwhichapotentialretrofitwithCCUSmaynotbeeconomical,someofthemostrecentunitshavesupercriticalandultrasupercriticaltechnology,inparticularunitsthatarestillgoingaheadandarebeingconstructed,couldbefittedwithCCUS.TheIEAprojectsthatacost-effectivedecarbonizationpathforIndonesiawouldincludethedeploymentofCCUS.TheJETPshouldincorporateinitsstrategytodecarbonizethepowersectorthedeploymentofthislow-emissiontechnologyandsupportthecompletionofaregulatoryframeworkandinvestmentframeworkforitsdeployment.Moreover,giventheovercapacityinthepowersectorofIndonesia,aneffectivestrategytoacceleratethedeploymentofrenewables,advancingtheelectrificationoftransportanddecarbonizationofitsindustry,couldopenspacefortheaccelerateddevelopmentofrenewable7Forexample,arecentstudybyIndonesia’sMinistryofNationalDevelopmentPlanning(Bappenas)inpartnershipwiththeUnitedNationsDevelopmentProgrammedemonstratedthattheimplementationofthecirculareconomyinIndonesiainfivesectors,namely,thefoodandbeverage,textiles,construction,wholesaleandretailtrade,andelectronicssectors,hasthepotentialtoincreaseGDPbyIDR593–638trillionby2030,creatingannualhouseholdsavingsofnearly9percentofthebudget,equivalenttoIDR4.9millionorUS$344peryear,andcreates4.4millionjobs,75percentofthemforwomen.TheimplementationofacirculareconomyinIndonesiaalsocanreduceCO2emissionsby126milliontonsandwaterusageby6.3billioncubicmetersin2030.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?32energy.Indonesiahasambitioustargetsforthetransformationofitstransportsector,includingthedeploymentof2.2millionelectricvehiclesand13millionelectrictwo-wheelersby2030.YetitislaggingitsSoutheastAsianpeers.Assuch,animportantfocusoftheJETP,nexttoitsemphasisonthecoalphaseoutofitsCFPPs,shouldbetosupportIndonesiainrealizingitsambitioustargetstodecarbonizeitstransportsector.JusttransitioncomponentsKeyTakeaways:1.Rapidstructuraltransformationprocesseswithsignificantscopeandalowlevelofpreparednessconcentratedinonecoal-dependentregion,likeinthecaseofSouthAfrica,inalllikelihoodleadtoasignificantlossofembeddedenergyintheregionandcarrysignificantrisksofopposition,whichcouldstallprogressinthetransition.2.Transparentandappropriatelysequencedtransitionplanscomplementedwithtargetedregionaldevelopmentandinvestmentincentives,inparticularforrenewablescancushionlarge-scalejoblosses.3.Meaningfulandsustainedparticipationofallaffectedgroupsandstakeholderswillbewhatisneededtohitjusttransitiongoals.Transparentandcontinuousawarenessraisingcampaignswillbeessentialtogarnerlong-termsupportfromthepublic.InSouthAfrica,poormacroeconomicperformancewithmutedrealGDPgrowth,veryhighlevelsofunemployment,andinequalityrendersajusttransitiondifficult.Thelossofasignificantshareofthe200,000high-valuedirectandindirectjobsasforecastintheJETPInvestmentPlanalongthevaluechainwithinashort15-yeartimeframe,concentratedinMpumalangaprovince,islikelytoinducenegativemultiplierimpactsontheprovince’slocaleconomy.Givenprevailinglabormarketconstraints,migrationoftypicallylow-skilledworkersoutofthecoalvaluechainwillalreadybechallenging.Thisisrenderedevenmoredifficultascoalworkerstendtohavebettersalarieswithlesseducationthantherestoftheformaleconomyandasalowlevelofpreparednessraisestheriskofadisorderlytransition.Theriskofbroad-basedopposition,ifnoadequatelivelihoodalternativesareofferedtoworkers,theirfamilies,andcommunities,couldstalltheenergytransition.TheJustTransitionFrameworkforSouthAfrica’sJETPwaspreparedthroughamultistakeholder,evidence-basedprocessandfollowedguidelinesforajusttransitionbytheInternationalLaborOrganization.ThePresidentialClimateCommissionheldpublicconsultationworkshopsonthedraftFramework,focusingongeographiclocationsexpectedtobemostimpacted,includingMpumalangaprovince,wheremostofthecountry’scoalproductiontakesplace.Observersoftheseconsultationworkshopsnotedthatwhileparticipantsintheseseemedtovaluetheopportunitytomaketheirvoicesheard,civilsocietygroups,however,flaggedinsufficienttransparencyregardingplannedjusttransitioninvestment(InternationalHumanRightsandBusiness2022).THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?33PlannedinvestmentsintheJETPInvestmentPlanaimtoachieveajust,equitable,andinclusivetransitionforworkersinthecoalvaluechainandaffectedcommunitiessothatallareprotectedagainsttherisksandbenefitfromtheopportunitiespresentedbythistransitionandnooneisleftbehind.PlannedinvestmentsinMpumalangaProvinceenhancethelocalinfrastructure,supporteconomicdiversificationandlocaleconomicdevelopmentthroughtargetedsupporttoMSMEs,improvetheemployabilityofworkersandyouththroughreskillingandupskillingprograms,andrepurposedecommissionedcoalplantandmininglandforrenewableenergydeployment.Inaddition,theJETPInvestmentPlanforeseestheestablishmentofskillsdevelopmentzonesacrossthecountrytofostergreenjobsdevelopment.ThemeasuresincludedintheJETPInvestmentPlanforSouthAfricaareinlinewithgoodpracticesandimportantelementsforusheringinajust,inclusive,andequitabletransitionbasedonprevioussuccessfulcoalphaseouttransitionprocesses,e.g.inGermany’sRuhrValley(WWF,2019).YetadvancedmeasurestofosterarapidabsorptionofcoalworkersbydevelopingrenewableenergyresourcesinMpumalangaProvincearenotincludedintheplan.Arecentstudyfoundthatrenewableenergydevelopmentintheprovincecouldcompensateforpredictedjoblossesby2030.ExperiencesinregionsthatmovedoutofcoalofferanimportantlessonforbothSouthAfricaandIndonesiaintermsofsequencing.ThecasesofPolandandtheRuhrValleyinGermanyshowthatregionsthatwentthroughrapidstructuraltransformationprocesseswithsignificantscopeandalowlevelofpreparednessexperiencedarapidreductionofdirectandindirectjobsalongthecoalvaluechainandasignificantlossofembeddedenergyinthecoal-dependentregionsthatresultedinregions’backslidingfrompreviouslyachieveddevelopmentgains.Withnotmanyjobalternatives,workersresortedtobroad-basedindustrialactionsthateventuallystalledprogressinthetransitionprocess.Thesecasesalsoshowedthathavingatransparentmedium-tolong-termplanfordecommissioningcarbon-intensiveplantsandcomplementingitwith(1)aproactiveindustrialdevelopmentapproachwithtargetedinvestmentincentivesinspecialeconomiczonesand(2)systematicandenhancedupskillingandreskillingprogramsprovedeffectiveinfacilitatingtheabsorptionofworkersintonewjobs.ForSouthAfricatheexamplesofGermanyandPolandimplythatbeyondinvestmentsinlocaleconomicdevelopment,localinfrastructure,andMSMEs,additionaltargetedinvestmentincentivesshouldbeprovidedforMpumalangaProvince,includingthecreationofspecialeconomiczones,toattractprivatesectorinvestmentstotheprovince.Whiletherenewableenergypotentialintheregionisinferiortothatinotherpartsofthecountry,theprovincebenefitsfromessentialgridinfrastructuresuchashigh-voltagesubstations,whichmakesitanattractiveregionforrenewableenergydevelopmentintheshorterterm,to2030,untilthegridintherestofthecountryisrehabilitated.InthecaseoftheJETPforIndonesia,thegovernmentexpressedcommitmenttothecountry’senergytransition’sbeingjust,anditsNDClaiddownthecreationofdecentworkandqualityjobsaspartoffoundationaleffortstoachieveaneffectiveandinclusivetransitiontoalow-carbonfuture.IncontrasttoSouthAfrica’s,Indonesia’seconomyisforecasttogrowrapidlyafteraprotractedrecoveryTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?34fromtheCOVID-19pandemic,andtheunemploymentrateisforecasttoreturntoitslong-termaverageof5.5percent.InIndonesia,asteeringcommitteeappointedbytheMinistryofFinancewilloverseejusttransitionefforts.ThecountryplatformmanagerwilldevelopandimplementtheJustTransitionFramework,andthrough2022,thegovernmentworkedwithMDBstoconductstrategicsocialimpactassessmentsanddevelopacomprehensiveapproachthatconsidersdirect,indirect,andinducedimpactsfromcoalassetretirementsatdifferentlevels.Thedevelopedmethodologyalsoconsiderstheneedforlocaleconomicdiversificationandtheneedtocompensateaffectedcommunitiesandregions.Indonesiacanavoidcumulativeandadversemultiplierimpactsonthelocaleconomybyincluding,inadditiontothetechnicalselectioncriteriaaimingtoensuresystemreliabilityandaffordabilityofearlyretirementofCFPP,carefullyselectedcriteriapreventingthegeographicalconcentrationoftheCFPPphaseout.Suchcriteriaare,however,notpartoftheselectioncriteriafortheplantstoberetired.ThecoalminingindustryinIndonesiahasbenefitedfromalargecommoditywindfallandcoalexportsin2021and2022triggeredbysupplychaindisruptionsinthewakeoftheCOVID-19pandemic,anincreaseindemandfrommajorimportersofIndonesiancoal,andtheenergycrisisinEurope.Thewindfallgainsfromcoalofferanextraordinaryopportunityforthegovernmenttomakelong-termprovisionsforitsjustenergytransition.ThepaceandscaleofthedecarbonizationplansbybothIndonesiaandSouthAfricaasenvisagedunderbothJETPsarehighlyambitious.Thisnecessitatesacomprehensiveapproachtobetteraddressthepotentialsocioeconomicimpactsofthetransformation.Thejusttransitionapproachestosubstitutingjoblossesinthecoalvaluechainintheshorttermmainlyfocusoncreatingjobsinconstructionofrenewableplantsandlayingfoundationsfordevelopingclean-energyvaluechains.IndonesiaandSouthAfricahaveauniqueopportunitytoboosteconomicgrowthandcreatejobsthroughtheexpansionoftheirproduction,processing,andvalueadditionofcriticalminerals.8Furthermore,theJETPswillrequirealong-termandsustainedcommitmenttothepartnershipandthenetzerogoalbyboththerecipientandtheIPGpartners.Thefive-yearcommitmentsunderthepartnershipsmakethemfragiletochangesinpoliticalprioritiesthatcouldpotentiallyshiftprioritiesawayfromtheJETPs,affectingthedevelopmentandexecutionofitslong-termimplementation.Substantialinvestmentsandearlyprogressandsuccessescanbuildconfidenceinthelong-termcommitmentofpartners.Long-termcommitment,however,canbegrantedonlyiftheprocesswillbesupportedbythepopulation.Transparencyandaccountabilityareessentialtoachievinglong-termcommitment.IndonesiaandSouthAfricaaswellasIPGgovernmentswillneedtoraiseawarenessandgarnersupportfromthepublicforthenetzerotransition.8Thecrucialmetalsandmineralsincludecopper,nickel,manganese,cobalt,chromium,molybdenum,zinc,rareearthminerals,andsilicon,amongothers.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?35Inaddition,powersectordecarbonizationprocesseswillgenerallyresultinanincreaseinelectricitytariffs,whichmightcreateoppositionagainstthetransitionamongthecountries’populations,especiallyifitisnotaccompaniedbyanincreaseinqualityofservice.9Againstthebackgroundofincreasinginflationandheightenedfoodinsecurity,SouthAfricainrecentmonthsalreadyexperiencedprotestsagainstpowertariffincreaseswhileservicequalitydeteriorated.TheJETPIPforSouthAfrica,however,doesnotincludecashtransferprogramsthatcushionthenegativeimpactsoftariffincreases,particularlytargetingpoorandlow-incomehouseholds,agoodpracticemeasuretogarnersupportfromthepublicforapowertarifforenergysubsidyreform.FinancingcomponentsKeyTakeaways:1.Theambitiousinvestmentandtransitionplansmayfailtolaunchgiventheunfinishedregulatoryreforms,governanceissues,andfragmentedclimatefinancelandscapes.TheJETPsmustgohandinhandwithpolicyandregulatoryreformsinthepowerandfinancialsectorstodeliverthefundingneededtosupportjustenergytransition.2.TheIPGfundingforSouthAfrica’sJETPwithproject-to-projectcofinancingapproachesisunlikelytodelivertheleverageneededtodeliverthescaleoffinancingrequired.Ascalablecountryplatformtocatalyze,aggregate,andblendfinancingfromalargegroupoftraditionalandnewfundingpartnersasadoptedbyIndonesiaisconsideredeffectivetocrowdinadditionalcommercialandconcessionalfundingforfinancingthetransition.Thelarge-scalefinancingpackagesofferedbytheIPGforSouthAfricaandIndonesia,with$8.5billionand$20billion,respectively,inreturnforpoliticalcommitmentandraisedambitionareunprecedented.Yettheyaredwarfedbytheforecastedinvestmentneedstoachieveajusttransitionawayfromcoal.Toachieveearlypeakingofthepowersector,SouthAfricawillneedtoinvest$145billionbetween2023and2035.TheJETPInvestmentPlanforthefirstphasealoneestimatesatotalcostof$98.7billion.Overall,SouthAfrica’sjustenergytransitionisestimatedtocost$250billionby2050withatleast$10billionallocatedto“climatejusticeoutcomes”tosupportworkersandcommunitiesinthetransition.Whileatthetimeofwriting,nfinalJETPInvestmentPlanhadbeenpublished,theState-OwnedEnterprisesMinisterofIndonesiawascitedthatIndonesiawillneedtoinvest$600billiontophaseout15GWofcoalgeneration,lessthanhalfofitscurrentcoal-firedcapacity(Bloomberg,2022).Consideringtheneedtobalancetheirjusttransitiontonetzeroemissionsambitionswiththecountries’needtogrowandachievetheirunfinishedSustainableDevelopmentGoalsagendawithout9Whiletodate,renewablesarecostcompetitivecomparedtocoal-basedplantsintermsoftheirlevelizedcostofelectricity,thetransitionwillnecessitatelarge-scale,complementaryinvestmentsinthecountries’transmissionanddistributionnetworks.Thegridswillneedtobedigitizedandmadefitforabsorbingvariablerenewableresources.Moreover,inthecaseofIndonesiaandothercountrieswithrelativelyyoungfossilfuel-basedplants,theearlyretirementofpowerplantassetswillresultinthecreationofstrandedassets.Thus,thejustenergytransitionisprojectedtodriveanincreaseinelectricitypricesuntiltheytendtofallsometimeafter2040(IEA2021).THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?36endangeringtheirdebtsustainability,SouthAfricaandIndonesiaunderscorethecrucialimportanceofthetransitiontobenotonlyjustandinclusivebutalso—especiallyimportant—affordable.FundingoftheJETPsshouldbelargelyconcessional,additional,anddeployedincatalyticinvestments.Itfollowsthattheavailabilityofgrantandconcessionalresourceswillhaveasignificanteffectonthesuccessofdecarbonizationeffortsinbothcountries.Therefore,theIPG’sdeliveryoftheirfinancialpromisetobothcountries—andhowmuchofthissupportwillcomeintheformofconcessionalfinance—iscrucialtothesuccessoftheJETPs.TheavailableinformationoffersinsightsintohowtheJETPsaimtosupportthefinancingofthejustenergytransitionsofSouthAfricaandIndonesia.WhilethesamelevelofdetailisnotyetavailablefortheJETPforIndonesia,significantdifferencesinthefinancingdesignsofthetwoJETPsarealreadyapparent.Noteworthydifferencesincludethedeliverymechanismsanddisbursementchannels,financingpartnercoordination,andcrowding-inapproaches.InthecaseofSouthAfrica,thefundingpartnersdelivertheirfundingthrougheithertheirbilateralDFIsoranMDBusingacombinationoftheDFIs’andMDBs’standardfinancialinstruments,acombinationofpolicy-based,results-based,andprojectloanscombinedwithtechnicalassistance,fromeithertheirpublic-sectorand/ortheirprivatesectorlendingwindows.Leveragingofprivatesectorfinanceisnotsystematicallytargetedandlikelytohappenonaproject-by-projectcofinancingbasisandbycrowding-inprivateinvestmentsinrenewables.Thus,actualfinancingapproachesdonotofferanyinnovationsapartfromthejointandcoordinatedlarge-scalecommitment.BOX1.IndicativefinancingplanandIPGfundingforSouthAfrica’sJETPinvestmentplanBasedontheFinancingPlanpresentedinSouthAfrica’sJETPInvestmentPlandocument,thisboxhighlightssalientfeaturesoftheFinancingPlanasagreedwithIPGpartner.•FourpercentoftheIPGfundingprovidedintheformofgrantswillbeallocatedforjusttransitionelementscomprisingskillsdevelopmentandsocialinclusionprograms,essentialanalyses,feasibilitystudies,policyadvisoryservices,technicalassistance,andcapacity-buildingeffortstosupportthesemeasures,whichwillbesupportedbygrantsrepresenting.•Upto85percentofthe$8.5billionwillbeprovidedbyIPGpartnersandCIFinconcessionalandloansfrommultilateralandbilateraldevelopmentfinanceinstitutions.•ConcessionalloansfromtheClimateInvestmentFundwillbeblendedwithparallelcofinancefromMDBs,notablytheWorldBankandtheAfricanDevelopmentBank.ThefundswillbedeployedintononcommercialpartsoftheInvestmentPlan,includingthedecommissioningofcoalplants,criticalgridinfrastructure,andjusttransitionmeasures.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?37•FundingfromFranceandGermanywillbeprovidedthroughtheFrenchDevelopmentAgencyandtheKfWDevelopmentBank;thatfromtheEuropeanUnionthroughtheEuropeanInvestmentBank.•TheUnitedKingdomwillprovideitspublicandprivatesectorfinanceintheformofguaranteestotheAfricanDevelopmentBankwiththeleverageratioofguaranteesremains1:1.Thedebtisprovidedinacombinationofpolicy-basedloansandprojectfinanceforcriticalinfrastructure.AccordingtotheJETPInvestmentPlan,“anydebt-relatedtermsforthesovereignshouldbemoreattractivethanSouthAfrica’sNationalTreasurycouldsecureinthecapitalmarketswithoutundulyonerousreporting.”•PublicfinancefromIPGpartnerswillbeallocatedtofundcatalyticinvestments,primarilyinthepowergridand,inpart,intheimprovementofthepolicyenvironment.•OfIPGfunds,upto15percentwillbeprovidedasprivatesectorfinanceintheformofloans,guarantees,politicalrisk,and/orequityinvestments.•TheUnitedStateswillprovideitsprivatesectorfundingthroughtheDevelopmentFinanceCorporation.•Atleast$300millionoffundingfromtheUKisforprivatesectorinvestments.•Privatesectorfundingwillbeallocatedforfirstmoverinfrastructureinvestments,mainlyinrenewables.Notes:AFD=FrenchDevelopmentAgency;AfDB=AfricanDevelopmentBank;BII=BritishInvestmentInternational;DFC=DevelopmentFinanceCorporation;EIB=EuropeanInvestmentBank;KFW=KfWDevelopmentBank;PIDG=PrivateInfrastructureDevelopmentGroup;PRI=politicalriskinsurance;SA=SouthAfrica.Source:AuthorsbasedonSouthAfrica’sJETPInvestmentPlan,2022.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?38TheFinancingPlanoftheJETPInvestmentPlanestimatesthatinadditiontothe$8.5billionfromtheIPG,$10billionoffundingfromMDBsandDFIscanbemobilizedforcriticalgridinfrastructureinvestmentsandpolicyreformsbythegovernment.Theseinvestmentsingridinfrastructureandpolicyenvironmentareexpectedtocrowdin$32billioninprivatesectorinvestmentsinsolarandwindassetsby2027.TheFinancingPlannotesthatthecrowding-ineffectoftheprivatesectorfinancingwillbeonaproject-by-projectbasis.Thecurrentsolutionsmaynotadequatelybalanceriskandreturnforprivatesectorinvestorsinrenewablepowerplantstoachieveambitiouscrowd-intargets.Tosubstitutethepowergeneratedfromdecommissionedcoalplants,satisfyadditionaldemanddrivenbytheelectrificationoftransport,andeffectindirectelectrificationofindustry,SouthAfricawouldneedtoreplicateitsachievementduringthepastdecadeunderitsRenewableIndependentPowerProducersProcurementProgram—themainrouteforprivate-sector-ledrenewableenergydeploymentinthecountry—withinoneyear,everysingleyear,foratleastthenext10years.Despitethetargetedaccelerationinthemediumterm,noadditionalproactivefinancingsolutionisproposedtode-riskandenhancetheviabilityofprivatesectorinvestmentsthatcouldovercomeimpedimentsstemmingfromidentifiedweaknessesintheenablingenvironmentforrenewabledeploymentduetogapsintheregulatoryframeworkandafragmentedclimatefinancelandscapeaswellasfromsignificantofftakerrisksduetoEskom’sillfinancialhealth.Perceivedandrealrisksincludingdelaysinprojectapprovalsanduncertaintiesregardingpermitting,licensing,andcurtailmentrisksstemmingfromgapsintheregulatoryframeworkforrenewableenergyhinderthedevelopmentofapipelineofprojects.Information,capacity,coordination,andpolicybarriersintheclimatefinanceecosystemfurtherlimittheprovisionofthescaleofclimatefinancerequired.AmajorconcernaboutrapidrenewabledeploymentthroughprivatesectorinvestorsremainstheillfinancialhealthofEskom,representingsignificantofftakerrisksforrenewableIPPs.WhilethegovernmentofSouthAfricabudgetedadebt-reliefarrangementof254billionrandduringthenextthreeyears,plannedregulator-approvedtariffincreases,andannouncedplanstounbundlethestate-ownedutility,thesedeepsectorreformswilltaketime,andtherearehighrisksofdelays.Withtheseconcernsinmind,acomplementaryde-riskingmechanismcouldbeeffectivetosupporttheacceleratedscale-up.SouthAfrica,withfinancialsupport,shouldcomplementavailablefundingbysettingupafacilitytosupportpipelinedevelopmentandenhancethebankabilityofrenewableenergyandlow-carbonenergyprojects.Acatalyticfinancingfacilitythatcombinestechnicalassistanceforprojectdevelopmentsupportandcrowdsinpartnersbyofferingblendedfinancingsolutionswouldbenecessary.SuchacatalyticfinancingfacilitycouldbeinstitutionallysupportedbyoneoftheMDBssupportingtheprocess.TheIndonesianmodeldescribedbelowcouldprovideimportantlessonsforSouthAfrica.AnotherfittingexampleistheAssociationofSoutheastAsianTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?39NationsCatalyticGreenFinancingFacility,whichwasinnovatedandisadministeredbyADBandleveragesADBfundinguptosixtimes.Inaddition,fornearly$47billionofinvestmentsidentifiedundertheJETPInvestmentPlan,i.e.47percentoftotalinvestments,nofundinghasbeenidentifiedatthetimeoftheJETPInvestmentPlan’spublication.Inparticular,86percentofinvestmentsaimedatdiversifyingtheeconomyandcreatingemploymentbydevelopingthenewenergyvehicleandgreenhydrogenvaluechainswereunfundedatthetimeofpublicationoftheInvestmentPlan.ThisnotonlymanifeststhefocusoftheJETPonthepowersectorbutalsoaddstothefragilityofthelong-termpartnership.Unfulfilledaspirationscouldturnrapidlytodisillusionment.Incontrast,theJETPforIndonesiademonstratesaprogressiveandinnovativesolutionforfinancingearlyretirementofcoalpowerassets.First,theJETPofferinnovatesacombinedofferofpublicandprivatefunding.TheinnovationoftheJETPforIndonesiatoincludeas50percentofthe$20billionfundingpledgeacommitmentbyprivatesectorfinancialinstitutions,whichareallmembersoftheGlasgowFinancialAllianceforNetZero(GFANZ)Asiachapter,10andarestronglycommittedtoaligntheirfinancingwithanetzerofuture,bringsaprogressivedynamicintothepartnership.ByincludingpartnersfromGFANZinthepackage,financinginstitutionsbecomemorethanjustfinancingpartners;theybecomeknowledgepartnersanddelivertheirstructuringexpertise.Theirinclusionpartnershipcanbeharnessedtoengineersolutionstoderiskinvestments.Butstill,thispackageneedstodeliveragreaterleveragethanone-dollarprivatesectorfundingforone-dollarpublicfundingtoaddressthechallenge.Furthermore,inadditiontoworkingwithMDBsasprovidersaspolicy-basedloansandprojectloanstoadvancethejustenergytransition,likeinthecaseforSouthAfrica,theJETPforIndonesialeveragesthecentralroleofMDBsasmobilizersofothersourcesoffunding.WhiletodateitisnotfullyclearwhetheralloronlyashareofIPGfundingwillflowthoughthemechanism,theJETPfundingcanbuildonaleveragedmechanismestablishedthroughthegroundworkofIndonesiawithitspartnerADB.AtCOP26,Indonesia,thePhilippines,andADBlaunchedapartnershiptodesignandestablishanenergytransitionmechanism(ETM)toacceleratethetransitionfromcoaltocleanenergyinSoutheastAsia.ForitsJETP,Indonesiaisusingthismechanismtocatalyzeinvestmentsandcrowdinbothpublic-andprivatesectorinvestments.TheETMoffersascalablepublic-privatefinancingmechanismtofacilitatetheearlyretirementofcarbon-intensiveassets.Thisfundingplatformcreatesanewqualityofcollaborationamongstakeholders,includingsovereigns,subsovereigns,philanthropies,internationalanddomesticDFIs,10GFANZisaglobalcoalitionofleadingcommercialfinancialinstitutionscommittedtoacceleratingthedecarbonizationoftheeconomy.AchievingtheobjectiveoftheParisAgreementtolimitglobaltemperatureincreasesto1.5degreesCelsiusfrompreindustriallevelsrequiresawhole-economytransition.Eachcompany,bank,insurer,andinvestorwillneedtoadjustitsbusinessmodel;developcredibleplansforthetransitiontoalow-carbon,climate-resilientfuture;andthenimplementthoseplans.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?40andcommercialfinancialinstitutions,whilealsopromisingtodeliverefficiencyinthedeploymentofcapital.Inessence,themechanismconsistsoftwofunds:onetoinvestinthedeploymentofrenewablesandclean-energyinvestmentsandtheothertofundtheearlyretirementofcarbonassets.Ateachvehiclelevel,concessionalfinancefromdevelopmentbanksandothergreenfunds,commercialfinanceraisedfrominstitutionalandcommercialinvestors,andbudgetarytransfersfromgovernmentsareblendedtoenhancecommercialviabilityandde-riskinvestments.Directco-investmentsfromotherbilateralDFIsorMDBscanbearrangedifinvestorsprefernottoinvestthroughthefund.EarlyretirementofcoalplantsundertheETMshallbeachievedthrougheithertheacquisitionoftheCFPPs’equityortherefinancingofcommercialdebtheldbyCFPPswithamoreconcessionaldebt—inpartorinfull—againstthecommitmentofplantownerstoretiretheirplantsearlierinproportiontotheloweringoftheircostsoffinancing.TheeffectivenessoftheJETPforIndonesia,evenmorethanthatforSouthAfrica,willhingeontheavailabilityofhighlyconcessionalresources.Theamountofconcessionalresourcesdeterminesthescaleoftheretirementprogramandthespeedatwhichcoalplantsmayberetiredasthemechanismhingesonthecostcompetitivenessoftheblendeddebtfinancingpackagecomparedtotheoriginalcommercialfinancingstructure.Thechallengeofengineeringacompetitivefundingpackageforalarge-scaleretirementprogramisbecomingevenmoredaringbeforethebackgroundofarisinginterestrateenvironment.Onceimplemented,thecarbontaxwillgiveownersofcoalplantsanadditionalincentivetoengageandagreetoalessconcessionalearlyretirementfinancingpackage.Partnersalsoplantomobilizeadditionalfundsforthetransitionbysellingcarboncreditsandrecyclerevenuesintotheplatform.TheMinistryofFinanceofIndonesiaassignedastate-ownednonbankfinancialinstitutionundertheMinistryofFinanceasthecountryplatformmanager;theplatformmanagerwillhavetheresponsibilitytostructureblendedfinancingsolutionswithcommittedfinancialresourcesundertheplatformandmobilizefinancialresourcesfromthegovernmenttoachieveviabilityofproposedtransactions.Theappointedmanageralsowillberesponsiblefordeliveringajusttransitionsolutionforworkersandcommunitiesofeachearlyretirementtransactionandforensuringproperdocumentation,monitoring,andreportingduringitsimplementation.ThemanagerissupportedwithtransparentandunifiedprinciplesandguidelinespreparedbyADBandtheWorldBank.Apreconditionfortheeffectivenessisthatthededicatedfundmanagerbewellresourcedandequippedwithtrainedstaffinallareasofduediligence.Governmentrepresentativesonthesteeringcommitteeensuredueoversight(MinistryofFinance,RepublicofIndonesia,2022).THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?41FIGURE19.Indonesiaenergytransitionmechanism(ETM)countryplatformNotes:1)InvestmentflowsfromblendedfinancethroughPTSMI;2)ProgramprioritydirectionfromSteeringCommitteetoCountryPlatformManager;3)Countryplatformconductearlyretirementprocessaccordingtoroadmap;4)MinistryofFinancesupportsCountryPlatformwithdifferentformsoffinancingasneeded;5)CleanEnergyFundmobilizationaccordingtoRUPTL;6)carboncreditfromEnergyTransitionMechanism;7)tradingcarboncreditincarbonmarket;8)recyclingofrevenuesfromcarboncreditsaletotheplatformasNon-TaxStateRevenuefromtheGovernmentofIndonesia.Abbreviations:CEF=CleanEnergyFund,ETM=EnergyTransitionMechanism,IPP=IndependentPowerPlant,MEMR=MinistryofEnergyandMineralResources,MOEF=MinistryofEnvironmentandForestry,MOF=MinistryofFinance,MSOE=MinistryofState-OwnedEnterprises,PTPLN=nationalpowerutility,PTSMI=non-bankfinancialinstitutionassignedascountryplatformmanager,RE=renewableenergy,RUPTL=ElectricityBusinessPlan(RencanaUsahaPenyediaanTenagaListrik),SC=SteeringCommittee.Source:MinistryofFinanceRepublicofIndonesia,2022.Notwithstandingthepotentialeffectivenessoftheplatform,fundingtheearlyretirementofcoal-basedassetsalsoinvolveshighoperationalrisksforfinanciersbecausetheassetspotentiallycontinuetooperateforseveralyearsaftertheconclusionoftherefinancingtransaction.FinanciersinvolvedinthesetransactionsincludemembersoftheInternationalDevelopmentFinanceClub,MDBs,andmembersoftheGFANZwhichcommittedtostopfinancingunabatedcoalandaligntheirinvestmentportfoliowiththe1.5degreesCelsiusParisGoal.Unlesstherefinancingtransactionwillresultintheearlydecommissioningofthecoalassetsasagreed,financiersfacehighreputationalrisks.Moreover,todate,whilethereisanincreasingproliferationofstandards,thereisnogenerallyacceptedstandardfortransitionfinance,thatis,financingofhigh-emittingsectors,andexistingsustainablefinancesolutionsdonotapplytothefinancingofcarbon-intensiveassets.Commercialfinancialinstitutionsthatarecommittedtoaligningtheirfinancingwithanetzerofuturearehesitanttofund,forexample,theearlyretirementofcoalplantsforfearofbeingaccusedofgreenwashing.Forfinancialinstitutionstodeploytheirfinance,fundamentaltoolsincludingTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?42standards,taxonomies,anddisclosureframeworksareneeded.Moreover,financialinstitutionsandotherfinancialmarketparticipantswillneedaccesstotransparenttransitionpathwaysforthesectorandthecorporate,metricsandtargets,andeffectivedisclosuremechanismstoindependentlyevaluatethetransitionstrategiesofclientsandtheirassetstobefinanced.Asmentionedbefore,thespeedandscopeofthetransitionwilldependontheavailabilityofconcessionalfunding.TheETMfinancingplatformalsoisapttodevelopanddemonstratenovelformsofmobilizingconcessionalresourcesforfundingthejustenergytransition,e.g.,throughsalesofinternationallytransferredmitigationoutcomesunderArticle6oftheParisAgreement.TwonewlyproposedapproachesproposedbyHarvardUniversityappeartobesuitabletobepilotedbytheJETP.Underthesenovelapproaches,additionalityisinterpretedincrementallyratherthaninabinarywayasitiscurrentlydefinedunderArticle6.Donorcountriesunderthefirstapproachprovideconcessionalresourcestoinvestinprojectsthatareadditionalandnotavailableinthedomesticmarket.Inreturn,donorsreceiveaportionoftheassociatedemissionsreductionsrelativetothefinancialadditionalityoftheirinvestments,whichcouldbeade-riskingsolution,forexample.Asecondapproachisallowingprivateinvestorstobecompensatedfortheirduesunderacarbontaxregimebytransferringtheir“earned”internationallytransferredmitigationoutcomesfromaninvestmentinadevelopingcountrytothestate.MDBs,whichalreadyapplyaharmonizedframeworkformeasuringfinancialadditionalityandensuringminimalconcessionalityintheirprivatesectortransactions,couldsupporttheJETPsinestablishingthesuitablepolicyframeworkandappropriatemonitoringandverificationframeworkstodemonstrateanddeploythenewfundingmechanisms.IPGsrelyontheirpartnershipswithMDBsforsupportintheJETPinitiative.MDBsarewellplacedtosupportthedesignanddeliveryofthejustenergytransition.MDBshavealong-standingtrackrecordininfrastructurefinance,promotionoftheenergysector,andtariffreforms,havingworkedaslong-standingpartnersinSouthAfricaandIndonesia.MDBs—throughpolicy-andresults-basedlending—cansupporttheestablishmentofthepolicyandregulatoryreformsnecessarytoconsolidatetheprocessesinitiatedundertheJETPs.Theirbroadmandatealsogivesthemlong-standingexperiencesinsocial-sectorandfinancial-sectordevelopment.Giventheirpreferredcreditorstatusandtrustedpartnershiprelationshipwiththeirdevelopingmembercountries,MDBscansupportdemonstrationandearly-moverprojectstocreateinvestmenttrackrecordsandestablishgoodpracticestoultimatelycreatefunctioningmarketssothatprivatecapitalcanfollow.Withtheiraccesstoconcessionalandgrantresources,theycanstructureblendedfinancesolutionstocatalyzeprivatesectorcofinancingandsupportthedevelopmentofapipelineofprojects.MDBs,withtheirsolidsocialandenvironmentalsafeguardpoliciesandapproaches,canassistcountrieswithstrategicenvironmentalandsocialimpactassessment;supporttheestablishmentofenvironmentalandsocialmanagementstandardsforjusttransition,forexample,coaldecommissioningandsocialprogramsforaffectedworkers;andsupportdemonstrationoffirst-of-their-kinddecommissioningandretirementprojectsforcoalplantsandmines.MDBsareTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?43coordinatingtoexchangeanddeliverjusttransitionapproachesandknowledge;assuch,across-MDBworkinggrouponjusttransitioncanimpartgoodpracticeapproachesandfacilitateknowledgesharingacrossthedifferentJETPs.TheETMcountryplatformestablishedbyIndonesiawiththesupportofADBisanexampleofhowMDBscandelivervalueaddedinthejusttransitionprocess.MDBsdothisbycombiningtheirfinancialsupport,theirconveningpower,andtheirtrustedpartnerrelationshipsincrowdinginallformsofstakeholderstoco-createnewfinancingplatformsandplayacatalyticroletoscaleupandacceleratetheimplementationofthejustenergytransition,coordinateinterventions,anddevelopinnovativesupportapproaches.Withcomplementaryprogrammaticandresults-basedlending,MDBsalsocansupporttheestablishmentofaconduciveregulatoryenvironmentforthetransition.TechnologycooperationandvaluechaindevelopmentKeyTakeaway:IPGs’financialsupportshouldbecomplementedwithtechnologytransferandcoherenteffortstodeveloplocalvaluechainsforinnovative,future-orientedgreentechnologiestoensurethattheenergytransitionfacilitatesproductivitygrowthandalong-term,sustainablejusttransitioninpartnercountries.ThereisastrongcaseforincorporatingtechnologycooperationasanintegralpartoftheJETPsasalong-termpartnershipforcollectivelyachievingcarbonneutrality.Climbingthetechnologytransferstaircasecanhelppartnercountriesaccelerateproductivitygrowthandachievesustainablelow-carbongrowth.Acooperationthathelpspartnercountriesmovebeyondtechnologyadoptionanddeploymentandsupportthedevelopmentofmanufacturingsupplychainscansupportpartnercountries’targetedeconomicdiversification,innovation,jobcreation,andexport-ledgrowthforajusttransition.Italsowillbeimportanttosupporttheirenergysecurityinacleanenergysystem.TheJETPsarefoundedontherationalethattodaterenewablesarecostcompetitivecomparedtocoal.CountrieslikeSouthAfricaandIndonesiathatrelyonimportsoftechnologycomponentsfortheiraccelerated,large-scaledeploymentofrenewableenergytechnologiestoachievetheirnetzerotransitionarevulnerabletosupplychaindisruptions,priceincreasesintechnologycomponents,andspikesincriticalmineralsandmetalspricesthattodaterepresent50–70percentofclean-energytechnologycomponentcosts.Becauserenewablesarecapitalintensive,priceincreasesintechnologycomponentsaffectthelifecyclecostsofaplant.Forexample,inSouthAfricain2021–2022,increasesinshippingcosts,supplychaindisruptionsinthewakeoftheCOVID-19pandemiccoupledwithinflationarypressures,aweakrand,andasurgeinmineralpricesforrenewableenergyresultedinapriceincreaseforsolarPVprojectsofnearly40percent,renderingrenewableenergyIPPsthatparticipatedinSouthAfrica’sfifthroundofbiddingin2020commerciallyunviable.Therefore,supportingIndonesiaandSouthAfricatodevelopin-countrycriticalsupplychainsisanimportantpartofanenergysecuritystrategyandcanstrengthentheresilienceandlong-termaffordabilityoftheirenergytransition.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?44SouthAfrica’sandIndonesia’srichendowmentincriticalmineralsandmetalsforaclean-energytransition,includingcopper,nickel,andplatinum;theirlargedomesticmarkets;theirambitionstoparticipateintheglobalvaluechain;andtheirdesiretocreatedecentjobscreateadditionalstrongpullfactorsfortechnologytransferandcooperationwithpartnercountries.Becauseminingandextractiontodayaremainlycapitalintensive,thebenefitsofanexpandedproductionandexportoforeswouldbelimitedintermsofjobcreation.Investmentsinvalueadditionandprocessingareessentialtoachievetheirobjectives.Thecountriesarelackingtheskillbase,technology,standards,certification,andcapitaltoachievethedesiredeconomicdiversification,tocreatejobs,andtodriveajustenergytransition.Moreover,thecountriesmayholdundiscovereddeposits.AccordingtotheIEA,Africa’srevenuesfromcriticalmineralproductioncouldmorethandoubleby2030.However,investmentinmineralexplorationinAfricahasbeendeclininginrecentyears.Reversingthistrendhingesonimprovedgeologicalsurveys,robustgovernance,improvedtransportinfrastructure,andaparticularlystrongfocusonminimizingtheenvironmentalandsocialimpactsofminingoperations.ChangesintheenergylandscapefollowingtheCOVID-19pandemicandrenewedemphasisonenergysecuritybecauseofthewarinUkrainecreateanadditionalstrongpushforIPGcountriestoincorporatetechnologytransferintotheJETPs.Thecrunchforgreenhydrogen,particularlyinEurope;IPGcountryeffortstodiversifyglobalsupplychainsforrenewableenergytechnologycomponents;andtheglobalracetosecureessentialmetalsandmineralsneededfortheenergytransitioncreateimportantdriverstosupportcapacitydevelopmentandtransferoftechnologyinJETPsforSouthAfricaandIndonesia.Complementaryincentivesbypartnerstoremovebarriersandencouragepublic-privatetechnologytransferandcooperationcouldbeparticularlyimportantconsideringtheunfundedplansfordevelopingagreenhydrogeneconomyandfordecarbonizingthetransportsector.Yetwhilemeasurestoincreasetransfersofrelevantlow-carbontechnologiestodevelopingcountriescanreduceeconomicinequality,advanceemissionsreductions,andsupportthejusttransition,theinformationavailableintheJETPsforbothSouthAfricaandIndonesiadoesnotprovideaclearpictureofhowtechnologytransferwillbesupportedinthesepartnershipsandtowhatextent.Forexample,financingforinvestmentsinnewenergyvehiclesandthegreenhydrogenvaluechainsincludedintheJETPInvestmentPlanforSouthAfricaremainslargelyunidentified.Thisleavesquestionsaboutwhetherpartnerswillsupportincentivesforprivatesectorpartnershipsinmanufacturingtodelivernewscaled-upmanufacturingvaluechains.IPGcountriesindividuallyhaveintroducedincentivesforprivatesectorinvestmentsingreenhydrogenabroad.Forexample,innovativefinancingmechanismsofferedbytheGermangovernmentforadditionalgreenhydrogenproducedfromrenewablesinemergingeconomiescoulddrivetechnologytransferinrecipientcountries.ThesemechanismsareintendedtohelpreduceTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?45thefundinggapforlarge-scalegreenhydrogenprojects.Theywillprovidegrantsforinvestmentsalongtheentirevaluechain—fromgreenhydrogenproductiontoprocessingallthewaytostorageandhydrogenandPower-to-Xproducttransportinfrastructure.ThePower-to-Xproductscanbeusedlocallyinthepartnercountriesorcanbeexportedforpurposessuchasfertilizerproductionfromgreenammonia;replacementofnaturalgasforcarbon-freesteelandmetalproduction;ande-keroseneforaviation,shipping,andheavygoodsvehicles.Giventheidentifiedbarriers,risks,andgaps,itwillbeimportanttocloselytrackandmeasuretheprogressinboththedevelopmentandtherolloutofimplementingplansfortheJETPsandtoputstakeholderstotaskfordeliveringontheirrespectivecommitments.ConclusionsandrecommendationsOnemustcommendIndonesiaandSouthAfricafortheirboldsteptoengagewiththeIPGinthefirst-of-their-kindJETPs.Thediscussionhighlightedtherelevanceoftheprograminsupportingthephasingoutofcoalaswellasthecomplexityoftheprogram.WhileIndonesiaandSouthAfricasharesimilarcharacteristicsandtherearepositiveindicationsoftheirJETPs’potentialtoserveasablueprintfordevelopingcountriesandemergingeconomiestoacceleratetheirmoveawayfromcoal,thediscussionunderscoredthatbothcountriesfaceseveraluniquechallengestoachievingtheirjustenergytransitionobjectives.JETPs’designsneedtoaddressuniquetransitionrisks,carefullyconsiderreadinessforthetransition,andofferintegratedknowledgeandfinancesolutionsbasedonthespecificcountrycontext.ThefollowingconclusionsandrecommendationscanbederivedfromtheJETPs’keyelementsdiscussedinthispaper.First,thepaperunderlinedthattheJETPssetanewframeworkforpolicydesignandimplementationandthattheeffectivenessofJETPsdependsonconsistentandcoherentpoliciesincriticalpolicyareas—notonlyenvironmentandenergybutalsofiscal,transport,industry,infrastructure,financialsector,innovation,educationandskillsdevelopment,internationaltradeandinvestment,andurbandevelopment,amongothers.ItfoundthattheinstitutionalsetupofSouthAfrica’sJETPappearstobetterfacilitatecoordinationandalignmentacrossrelevantpolicyareas,diverselevelsofgovernment,andstakeholders.ThesetupinthecaseofIndonesiacouldmakeitdifficulttoreapfullbenefitsfrompolicyalignmentandrealizationofsynergiesbetweentheenergytransitionandongoingtransitioninsomesectors,includingthetransport,trade,andfinancialsectors.IndonesiaanditsIPGpartnerswillthereforeneedtoensurethealignmentofpoliciesacrossallsectorsandlevelsofgovernmenttoacceleratethetransition.Second,theJETPsmustbemaderesilienttopoliticalchangesinbothbeneficiaryandIPGcountriestomaintainlong-termcommitmenttothepartnership.MultistakeholderparticipationandtransparencyinthedevelopmentandimplementationoftheJETPplansandaccountabilityintheTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?46deliveryofpledgeswillbewhatmakesthedifferenceinthislong-termtransition.TheJustTransitionFrameworkforSouthAfricawaspreparedinamultistakeholderprocess.MechanismsforregularconsultationduringtheJETPs’implementationneedtobestrengthenedinrecipientandIPGcountries.Third,bycombiningactionstophaseoutcoalwithjusttransitionmeasuresaimedatmitigatingnegativeimpactsoncoalworkersandcommunities;providingsupportforcreatingqualitygreenjobs;anddevelopinginnovative,low-carbontechnologyindustriesaswellasthecompletionofthegovernments’expansionofenergyaccessagendas,theJETPscanstrengthengovernmentownershipandaddress,inpart,thepoliticaleconomyofthetransition.Thediscussioninthispaperalsopointedtoadditionalstrongvestedinterestsinthecoalvaluechaininrecipientcountries.BothJETPsdesignwillneedtoaddressthesevestedintereststoavoidderailingtheprogressofacoalphaseoutagenda.Fourth,thefocusoftheJETPprogramonthepowergenerationsideisimportant,thatis,theretirementanddecommissioningofcoal-basedgenerationassetsandlarge-scaledeploymentofrenewablestosubstitutecoal-basedgeneration.Butthedesignofthefirstphaseofthelong-termpartnershipwillbedeterminedbythereadinessofthesoftandhardinfrastructurefortheenergytransition.Tounlockprivateinvestmentinthetransition,theestablishmentofaconducivebusinessenvironment—removingregulatoryconstraints,gettingpricesignalsright,anddeployingnewbusinessmodels—needstobeprioritized.Toachieveprogressintheshorttomediumrun,subsidiarygovernmentguaranteemechanismswillneedtobridgeregulatorygapsanduncertainty.Fifth,transitionfromacoal-basedpowersystemtoarenewable-basedsystemwilllikelyresultinelectricitytariffincreases,giventheneedforcomplementarygridinvestments.Togarnersupportforthetransition,theJETPsshouldfollowgoodpracticesandlessonslearnedfrompowersectorandsubsidyreformsandincludeasaccompanyingmeasures(1)systematicandsustainedcommunicationandawareness-raisingcampaignsand(2)establishmentofcash-transferprogramsforvulnerable,poorandlow-incomehouseholdstocushionnegativeimpactsofpriceincreasesintheshortterm,particularlybeforethebackgroundofrisinginflationandheightenedfoodsecurity.Sixth,theimperativeofacost-effectiveandaffordabletransitionawayfromcoalandlong-termdecarbonizationofthepowersectorcannotneglecttoincorporateclimateinvestments,suchasinenergyefficiency,energyconservation,andcirculareconomy.Ithasbeenwellestablishedthatforanenergy-sectordecarbonizationstrategytobecost-effectiveandaffordable,itmustbebuttressedbyacomprehensivestrategythatisrootedinacountry’suniqueenergyeconomicrealitiesandcoversfivestrategicareas:(1)shiftingfromafossil-fuel-based,centralizedpowersectortoadecentralizedsystembasedonlow-carbonenergysources,primarilyrenewableenergy;(2)increasingenergyconservationandenhancedenergyefficiencyofhouseholds,industries,andbuildingsdrivenbysustainableconsumptionandproductionpatternsandtechnologyandprocessinnovations;(3)electrifyingthetransportsector;THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?47(4)decarbonizingso-called“hard-to-abate”industrialprocesses,shipping,andaviationthroughindirectelectrificationandlow-emissionandzero-carbonfuels;and(5)abatingemissionsthroughcarboncaptureandstorage.TheJETP’splanstoacceleratetheshiftawayfromcoal-basedpowershouldseamlesslyintegratewithacomprehensiveplanforawhole-of-economydecarbonization.TransparencywouldrequirethattheJETPplansclarifyhowthecoalphaseoutfitsintothepicture.Inaddition,goodgovernancerequiresacomprehensiveeconomiccost-benefitanalysisofalloftheJETPs’relevantcostsandbenefits,includingtheirenvironmentalco-benefits;reducedpublichealthcosts;jobcreation;andinthecaseofSouthAfrica,ensuingreductioninloadshedding.However,thecurrentavailabledocumentationforSouthAfricaisnotlayingthisout.Transparencyregardingthetransition’scomprehensivecostsandbenefitsalongwithanin-depthassessmentofrisksiscrucialinensuringvalueformoneyfromitsproponentsandimplementors.Moreimportant,itwouldallowamorecompleteassessmentofthedebtsustainabilityoftheinitiativeforthecountries.Seventh,structuralmeasures—asincludedinSouthAfrica’sJETPInvestmentPlancomprisinginfrastructureinvestments,MSMEbusinessdevelopmentservices,upskillingandreskillingprograms,andsocialsupportmeasurestomitigatetheadverseimpactsonworkersandcommunitiesareimportantandinlinewithgoodpractices.Yet,theymightbeinsufficienttofullyavoidalossinembeddedenergyintheMpumalangaregionandoppositionagainstthetransition,giventheveryambitioustimeframeandgeographicalconcentrationoftheplan.TheSouthAfrica’sJETP,andotherJETPstocome,shouldcombinemeasuresthatmitigateimpactsinregionsaffectedbythetransitionintheshortrunwithtargetedandpro-activeinvestmentincentivesfortheregion.Theimperativeofreliabilityandqualityofservicewillrequirecomplementarygridinvestmentstoaccommodatethetransitionfromacentralizedsystemwithlarge-scale,baseloadunitstodecentralized,variable,renewableenergysources.Giventhelongleadtimeofgridtransformation,thedeploymentofrenewableswillbedeterminedbyconstraintsinthegridratherthanresourcepotential.Hence,thereisatrade-offbetweentransitionprogressandestablishingthemostcost-efficientplants.However,thereisalsoanupsidetoit.ThedecommissioningofCFPPsfreeupgridassets,whichcanbeusedforearlydevelopmentofrenewablesandsupportajusttransition.Investmentincentives,suchaspaymentofcontractfordifferencesandotherincentives,couldattractinvestmentsinrenewableIPPsinMpumalangaregion.Ninth,thesuccessfulimplementationofJETPshingeslargelyontheIPGs’deliveryoftheirfinancialcommitmentsononehand;ontheotherhand,thepartners’abilitytomobilizeadditionalgrantandconcessionalresourcesandwithitleverageamultipleoftheirfundinginprivatecapitaltofullyfundtheseJETPs.WhiletheJETPsmustbelaudedfortheirinnovative,plurilateralcooperationtofinancingacountry-ledstrategy,individualpartnersoftheIPGcontinuetoapplytheirstandardfinancinginstrumentsintheirtoolboxinthecaseofSouthAfrica’sJETP.FinanciersneedtomoveawayfromtraditionalTHEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?48developmentfinancethatleveragescofinancingonaproject-by-projectbasisasdoestheJETPforSouthAfrica.Thiscannotdeliverthedegreeofleveragingofpublicfundingthatisrequiredfortheenergytransition.TheinnovationoftheJETPforIndonesiatoincludeas50percentofthefundingpledgeacommitmentbyprivatesectorfinancialinstitutions,whoarestronglycommittedtoaligntheirfinancingwithanetzerofuture,bringsaprogressivedynamicintothepartnership.Butstill,thispackageneedstodeliveragreaterleveragethanone-dollarprivatesectorfundingforone-dollarpublicfundingtoaddressthechallenge.ByincludingpartnersfromGFANZinthepackage,financinginstitutionsbecomemorethanjustfinancingpartners;theybecomeknowledgesolutionspartnersanddelivertheirstructuringexpertise,whichcouldcontributetodeliveringthenecessaryleverage.TheJETPforIndonesia,incontrasttothatforSouthAfrica,alsorecognizesthecentralroleofMDBsasmobilizersofothersourcesoffundingandmakesuseoftheircomparativeadvantages.IPGpartnerscontributetotheETMthatIndonesiaestablishedthroughitscollaborationwiththeADB,acatalyticfinancingplatformtoaggregatefundingfromvarioussourcesandpackagedifferentfundinginstrumentstodelivertailoredde-riskingandblendedfinancesolutions.Inanextstep,partnerssupportedbyMDBsshouldaimtoenhancethemobilizationofconcessionalresources,forexample,byconnectingtheETMwithclimatefinancemobilizedundermodifiedarrangementsprovidedbyArticle6oftheParisAgreement.Tenth,Indonesia’sandSouthAfrica’slong-termcommitmenttotheJETPwillalsodependonIPG’seffectivesupporttotheimplementationoftheirpartnercountries’economicdiversificationstrategyandtargetedestablishmentoflocalcleanenergyvaluechainsthatcancompensateforlostrevenuesfromcoalvaluechainsandcontributetothecreationofhigh-valuejobsanddeliverimpetusforgreenandsustainablegrowth.Proposedeconomicdiversificationmeasuresmustbebackedwithadequatefunding,whichtodateisnotthecaseforSouthAfrica.PartnersfromtheIPGshoulddemonstrateearnesteffortstodeveloplocalvaluechains.JETPpartnerscouldworktogetherindevelopingcomplementarypoliciesthatencourageinnovationandtechnologypartnerships.Inconclusion,whiletheJETPsforSouthAfricaandIndonesiaappeartodeliverblueprintsintheirspecificcontexts,somebarriers,risks,andgapsputintoquestionwhetherthegoalssetoutintheseJETPscanbedeliveredatthepaceandscaleplanned.GivenuncertaintiesrelatingtonumerouskeyissuesintheJETPsforbothSouthAfricaandIndonesia,itbecomesevenmoreimperativetocloselytrackandmeasuretheprogressofthedevelopmentoftheseJETPplansand,perhapsmoreimportant,theirimplementationontheground.Thesewillformthebasisforputtingstakeholderstotaskfordeliveringontheirrespectivecommitmentstoleadthewaytoajustenergytransition.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?49Appendix1:KeyfeaturesandsalientpointsoftheJETPsforIndonesiaandSouthAfricaThefollowingtableoutlinesthekeyfeaturesandsalientpointsoftheJETPsforSouthAfricaandIndonesia.GovernanceandClimateActionSouthAfricaLaunchedinNovember2021atCOP26,theJETPforSouthAfricaisfoundedonsupportfromCIF,theEuropeanUnion,Germany,France,theUnitedKingdom,andtheUnitedStates.Thissupportwasfirmedupbyaninitialpledgeof$8.5billionthatwouldfinancetheplantophaseoutcoalpowerplantsandtransitionthecountrytogreenenergy.SouthAfricaestablishedinthePresidentialOfficetwospecialtaskteamsreportingtoaninterministerialcommitteechairedbythepresident.Apartfromthepresident,itincludesaneminentpersonasdeputychair,ministers(10),representativesofcivilsociety,representativesofclimateorganizations,privatesectorrepresentatives,Eskomrepresentatives,aSasolrepresentative,representativesofacademia,representativesoforganizedlabor,andarepresentativeofformergovernment.Policyalignmentissupportedbyrepresentationofthefollowingministriesinthecommittee:–MinistryofForestryandFisheriesandEnvironmentalAffairs–MinistryofFinance–MinistryofPublicEnterprises–MinistryofMineralandEnergyResources–MinistryofTradeandIndustry–MinistryofHigherEducation,Science,andTechnology–MinistryofWaterandSanitation–MinistryofAgriculture,LandReform,andRuralDevelopmentThePresidentialClimateChangeTaskTeampreparedtheJustTransitionFrameworkwhilethePresidentialClimateFinanceTaskTeampreparedtheInvestmentPlan.TheJustTransitionFrameworkwasapprovedbySouthAfrica’sparliament,andtheInvestmentPlanbytheCabinetofMinisters.Seehttps://www.climatecommission.org.za/just-transition-framework.IndonesiaInthecaseofIndonesia,the$20billionJETPsignedbythegovernmentandtheIPG(co-ledbyJapanandtheUnitedStatesandincludingCanada,Denmark,theEuropeanUnion,France,Germany,Italy,Norway,andtheUnitedKingdom)inNovember2022receivedhigh-levelpoliticalattention.TheMinistryofFinanceistakingtheleadinacceleratingenergytransitionandconvenedaninterministerialsteeringcommitteetooverseethejusttransitionefforts.JustenergytransitionwaselevatedtooneofthetopthreeprioritiesunderIndonesia’sG20presidencyin2022.InFebruary2023,thegovernmentofIndonesiaandtheIPGannouncedthatthesecretariatfortheJETPwouldbehostedintheMEMRandsupportedbytheADBandthatitwillserveasthecoordinatorforinternalandexternalstakeholdersontheJETP.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?50InvestmentPlanSouthAfricaTheJETPInvestmentPlanforSouthAfricaemphasizesdecarbonizingthepowersector,avertingtheworstimpactsofrapidtransition,andlayingthefoundationsfordecarbonizedeconomicdiversification—contributingtothegoalsofdecentworkforall,socialinclusion,andtheeradicationofpoverty.Onceimplemented,thisplancanachieveanemissionlevelof420to350MtCO2eby2030insupportofupdatedNDCs.Transitioncostsforthepowersectoraloneareestimatedat$145billionbetween2023and2035.Identifiedneedsforphase1(2023–2027)oftheJETPInvestmentPlanareestimatedat$99billion.ForallocationseeFigure18.IndonesiaTheJETPInvestmentPlanhasyettobepreparedanddisclosed.YetthedraftCIFInvestmentPlanandtheJointStatementofthegovernmentofIndonesiaandtheIPGprovideinsightsintomaincomponents.Theobjectiveistoachievepeakingofpowersectoremissionsandrenewablesconstituting34.0percentofpowergenerationby2030toachieveitsnetzerotargetsby2060.PLN,whichownsandoperatesabout60percentofinstalledpowerassets,announcedaplantoincreaserenewableenergygenerationfrom12.7percentoftotalgenerationin2021to24.8percentby2030andphaseoutCFPPsby2055.Thisplanshouldfacilitateacceleratedintegrationofrenewablesanddecarbonizationofthesystem.Inaddition,governmentspledgeinthejointdeclarationthatthepartnershipshouldsupport:•earlyretirementofcoalplants;•widespreaddeploymentofrenewablesandenergyefficiency;•achievementofunfinishedelectrification;•developmentofalocalindustryinrenewableenergy;•deliveringofajusttransitionbysupportingallsegmentsofthepopulationmostvulnerabletopotentialnegativeimpactsofthetransition;•accelerationofreforms,includingstandards;and•strengtheningoftechnologycapacity.JustTransitionComponentsSouthAfricaNinetypercentofinvestmentsallocatedforjusttransitionmeasuresintheInvestmentPlan,or$4billion,areplannedtoflowtoMpumalanga,whichhosts11outof13coalplantsoperatedbyEskomandwillbedisproportionatelyaffectedbythetransition.Plannedinterventionsaimtospureconomicdiversificationtocompensatetheregionforlostrevenuesandjobs,navigatecompetingstakeholderinterests,andaddresslastinglaborandsocialimpacts.Plannedmeasuresincludesupplychaindevelopmentinnewenergytechnologies,promotingsmallandmediumenterprisedevelopment,socialprotectionandreskilling/upskillingprogramsforcoalworkers,andcapacitydevelopmentprogramsforlocalinstitutions.TheInvestmentPlanintroducesprogramstodevelopskillsforlow-carbonjobsandtoattractrenewablesandlow-carboninvestmentsinaffectedregions.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?51JustTransitionComponentsLow-CarbonJobsandSkillsDevelopmentProjectFinancing(ZARbillion)Skillshub/platformfor“JustEnergyTransitionandtheFutureofWork”0.05PilotSkillsDevelopmentZonesinMpumalanga,EasternCape,andNorthernCape–EstablishmentofthreeSDZs–Trainthetrainersandcurriculumdevelopment–Catalyticfundinginthenewjustenergytransitionskillsprograms1.000.100.50Targetedtomobilizeallocationstothejustenergytransitionfromtheexistingpublicandprivatepost-schooleducationandtrainingfundingperannum1.00Total2.65LowCarbonandRenewableInvestmentsProjectFinancing(ZARbillion)Investingindistributiongridstocatalyzeinvestmentinrenewableembeddedgeneration200.00Electrificationbacklog45.00TotalfundingforcatalyticinvestmentrequirementsforSouthAfrica’smunicipal-scaleelectricityservicedelivery,2023–2027319.06IndonesiaThegovernment—committedtopursuingenergytransitioninajustandaffordablemanner—appointedacountryplatformmanagertodevelopandimplementtheJustTransitionFramework.Through2022,thegovernmentworkedwithMDBstodevelopacomprehensiveapproachthatconsidersdirect,indirect,andinducedimpactsfromcoalassetretirementsatvariouslevels.Thisapproachalsoconsiderstheneedforlocaleconomicdiversificationandtheneedtocompensateaffectedcommunitiesandregions.NodetailsabouttheJETPInvestmentPlanareknown,yet,butCIFintroducesprogramsforskillsdevelopmentforlow-carbonjobsandtoattractrenewablesandlow-carboninvestmentsinaffectedregions.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?52JustTransitionComponentsLow-CarbonJobsandSkillsDevelopmentProjectRelevantComponentsTotalFinancing(US$million)PLNRBLIncreaseinthenumberofwomenintheenergysector;transitionandretrainingofPLNworkersaffectedbytheretirementofCFPPs950JustTransitionandCFPPsandCoalMinesRepurposingInvestmentTransformationofworkers,broadercommunityimpacts,andalternativelivelihoodneeds600PLN/MEMREnergyTransitionProgramforResultsGovernanceandinstitutionalreformincludingcapacitybuildingandtrainingprogramsonvariousaspectsofenergytransitionrelevantforgovernmentcounterparts435PRIMESTePCreationofopportunitiesthatcansupportajusttransitionbyprovidingworkerswiththemeanstoaccesssustainableanddecentlivelihoods149Low-CarbonandRenewableInvestmentsProjectRelevantComponentsTotalFinancing(US$million)PLNRBLActivitiessupportingandexpendituresonincreasingtheshareofelectricitysupplyfromrenewableenergysources;expansionofthesmarttransmissiongridinfrastructure950PTSMIIndonesiaETMCountryPlatform—Facility1SupportoftheaccelerationofIndonesia’sclean-energytransitionacrossthespectrumofactivitiesidentifiedintheCIF-ACTIPforIndonesia201PLN/MEMREnergyTransitionProgramforResultsScale-upofrenewableenergythroughreplacementRE;storagecapacityandgridenhancementstotaketheplaceoffossilfuelgeneration435JustTransitionandCFPPandCoalMinesRepurposingInvestmentProjectsMineandCFPPrepurposing:developmentofrenewableenergy,storage,andancillaryservices600THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?53JustTransitionComponentsProjectRelevantComponentsTotalFinancing(US$million)PRIMESTePCreationofopportunities,includingforcleanenergy,bysupportingR&D,innovationfacilities,improvingtheinnovationecosystem,andstrengtheningtheR&Dandinstitutionalcapabilityofscienceandtechnologyparks149AcceleratingStorageTechnologyDeploymentinPowerandTransportSupportofthefirstgenerationofREandstorageprojects,batterymanufacturingplants,nickelsmeltersusingREandstorage,ande-vehicles/charginginfrastructure500PrivateSectorDispatchableRenewablesProgramPrivatesectorfinancingofdispatchableREcapacityinthecountry;focusonbothrepurposingexistingCFPPsitesandsupportingREgenerationscale-upinotherareas560PTSMIIndonesiaETMCountryPlatform—Facilities2and3(StandbyFacilityandRELoanFacility)Scale-upofREfinancingthroughfiscalincentives—acreditenhancementfacilitywillsupportenergytransitionwhilebolsteringthelocalcurrencybondmarket500FinancingSouthAfrica•$8.5billionfundingpledgefromIPG,comprising•4percentgrantsforstudies,analyses,andcapacitydevelopmentthroughatleastsixdeliverychannels•75percentconcessionalsovereigndebtthroughsixdeliveryarrangementsfromtheCIF,theEuropeanInvestmentBank,theFrenchDevelopmentAgency,andKfWDevelopmentBank•21percentcommercialdebt,equity,and/orriskmitigationforprivatesectorinvestmentsthroughatleastthreeprivatesectororientedDFIs/MDBs,includingtheAfricanDevelopmentBank,theDevelopmentFinanceCorporation,andBritishInternationalInvestment•$34billioninprivatesectorinvestments•$10billionfundingfromMDBsandDFIsTheseamountscombinedplacetheoutstandingfundinggapforphase1at$46billion.Unfundedinvestmentsforjusttransitioninthepowersector,greenhydrogeneconomy,andnewenergyvehicleamountto$21billion,$19billion,and$7billion,respectively.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?54FinancingIndonesia•$10billionfundingpledgefromIPG•$10billionfundingfromcommercialbanks,initiallyallmembersofGFANZ,whichattheinitialstageincludeBankofAmerica,Citi,DeutscheBank,HSBC,Macquarie,MUFG,andStandardChartered,catalyzedviatheETMfundingplatformthatpoolsfinancinginstruments(i.e.,grants,concessionalfunding,andcommercialtranches)forcatalyzinginvestmentsin(1)decarbonizingassetsand(2)renewablesandclean-energyinvestments.TechnologyTransferSouthAfricaUnclearwhetherpartnerswillsupporttechnologytransferandincentivesforprivatesectorpartnershipsinmanufacturingtodelivernewscaled-upmanufacturingvaluechains.IndonesiaNotes:CFPP=coal-firedpowerplant;CIF=ClimateInvestmentFund;CIF-ACTIP=ClimateInvestmentFund-AcceleratingCoalTransition;COP26=2021UnitedNationsClimateChangeConference;DFI=developmentfinanceinstitution;ETM=energytransitionmechanism;GFANZ=GlasgowFinancialAllianceforNetZero;G20=Groupof20;IPG=internationalpartnergroup;JETP=JustEnergyTransitionPartnership;MDB=multilateraldevelopmentbank;MEMR=MinistryofEnergyandMineralResources;MtCO2e=metrictonsofcarbondioxideequivalent;MUFG=MitsubishiUFJFinancialGroup,Inc;NDC=nationallydeterminedcontribution;PLN=IndonesianNationalElectricityCompany;PLNRBL=Results-basedloantoPLN;PTSMI=nonbankfinancialinstitutionunderIndonesia’sMinistryofFinanceassignedasEnergyTransitionMechanismcountryplatformmanager;RE=renewableenergy;SDZs=Specialdevelopmentzones.THEJETPsOFSOUTHAFRICAANDINDONESIA:ABLUEPRINTFORTHEMOVEAWAYFROMCOAL?55ReferencesAsianDevelopmentBank(ADB).2023.Energytransitionmechanism.https://www.adb.org/what-we-do/energy-transition-mechanism-etm#:~:text=What%20is%20ETM%3F,fossil%20fuels%20to%20clean%20energy.Baskaran,Grace.2022.CouldAfricareplaceChinaastheworld’ssourceofrareearthelements?BrookingsInstitution.https://www.brookings.edu/blog/africa-in-focus/2022/12/29/could-africa-replace-china-as-the-worlds-source-of-rare-earth-elements/.BlendedFinanceTaskforceandCentreforSustainabilityTransitions.2022.Makingclimatecapitalwork:Unlocking$8.5bnforSouthAfrica’sjustenergytransition.https://www.blendedfinance.earth/making-climate-capital-work.Bloomberg.com.“Indonesia’s$600BillionPlantoShutCoalPlantsStrugglesforSupport.”September15,2022.https://www.bloomberg.com/news/articles/2022-09-15/indonesia-s-600-billion-plan-to-curb-coal-struggles-for-support.Casim,Adila,Jack-VincentRadmore,NatashaDinham,andSteveMcCallum.2021.SouthAfricanclimatefinancelandscape2020.ClimatePolicyInitiative,BerthaCentre,andGreenCape.https://www.climatepolicyinitiative.org/wp-content/uploads/2021/01/South-African-Climate-Finance-Landscape-January-2021.pdf.ClimateActionTracker.2022a.Indonesia.https://climateactiontracker.org/countries/indonesia/.———.2022b.SouthAfrica.https://climateactiontracker.org/countries/south-africa/.ClimateTransparency.2022a.Indonesia.Climatetransparencyreport:ComparingG20climateaction.https://www.climate-transparency.org/wp-content/uploads/2022/10/CT2022-Indonesia-Web.pdf.———.2022b.SouthAfrica.Climatetransparencyreport:ComparingG20climateaction.https://www.climate-transparency.org/wp-content/uploads/2022/10/CT2022-South-Africa-Web.pdf.COBENEFITS.2022.FromcoaltorenewablesinMpumalanga:Employmenteffects,opportunitiesforlocalvaluecreation,skillsrequirements,andgender-inclusiveness.https://www.cobenefits.info/resources/from-coal-to-renewables-in-mpumalanga/.Cotterill,Joseph.2023.“SouthAfricanReserveBankcutsforecastsafterblackoutshiteconomy.”FinancialTimes.https://www.ft.com/content/dda4ab82-0af2-482e-80eb-a2980978e94c.Dahlbeck,Elke,andStefanGärtner.2019.GERECHTERWANDELFÜRREGIONENUNDGENERATIONENErfahrungenausdemStrukturwandelimRuhrgebiet.WWFDeutschl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