Donors misunderstand energy transitions, warns Asian Development Bank

The donors funding Just Energy Transition Partnerships in Asia misunderstand the scale of the “decades”-long process amid a push for short-term announceables, according to a senior expert at the Asian Development Bank. “These are going to be messy, difficult programs, and, and that's normal,” said Andrew Jeffries, an adviser on Just Energy Transition Partnerships at ADB. The bank is providing technical support to countries embarking on Just Energy Transitions Partnerships, known as JETPs, including advising on mitigating the myriad risks. JETPs involve weaning large developing countries with a high-growth trajectory and coal dependency off fossil fuels in favor of greener energy sources while addressing the economic and social fallout of such a transition. Financial support is provided by donors, called the International Partners Group, or IPG, and multilateral development banks, with the aim of catalyzing private sector investment. After the first JETP was announced with South Africa in 2021, excitement for the program skyrocketed, with some experts viewing it as a pioneering marriage of climate and development policies, though it has been mired in challenges, including sensitivities around the scandal-ridden state utility company Eskom and the economic fate of coal-dependent communities. The following year, JETPs were launched in Vietnam and Indonesia, where they are supported by ADB, among other organizations. But because they deal with such fundamental changes in countries, JETPs are also shrouded in complexity. “We've been involved as a development partner in these countries for a long, long time. I personally don’t think there’s enough appreciation at the IPG level about how big a challenge it is for these countries,” said Jeffries, who was previously ADB’s country director for Vietnam. One of the key aspects of JETPs which Jeffries said there was little “appreciation” for is that in high-income countries, economic growth rates are relatively low and electricity demand is relatively flat, making gradual decarbonization of energy systems easier to plan — though it’s still far from cheap and simple. But because the fast rate of growth in developing economies such as Indonesia and Vietnam demands frequent infrastructure updates — it needs to simultaneously double in size each decade and decarbonize — even if they match the efforts of high-income countries, “emissions would only perhaps remain flat, or they still might be going up slightly,” said Jeffries. Meanwhile, the infrastructure upgrades are largely paid for by the electricity bills of ordinary people, whose average incomes are a small fraction of those in high-income countries, Jeffries explained. “And they don't have the luxury of fully developed capital markets,” making local investment harder to find. Ultimately, the energy transition for low- and middle-income countries “is actually far greater than the challenge of a developed country,” he said. But at a high level, “everyone's viewing these JETPs as a sprint, and they're a marathon,” said Jeffries. “There’s huge challenges in these countries, and this transition is going to go on for decades. And everybody's focused on what can be accomplished to be announced at COP 28, in November,” he added, referring to the U.N. Climate Conference in Dubai. Jeffries told Devex that organizations, such as the Rockefeller Foundation, are already hosting calls to examine lessons learned from JETPs, but “we’re just getting out of the gate.” “How can you have any lessons learned yet … the work in Indonesia just started three or four months ago? The work in Vietnam started a few months ago and … hasn't even really kicked into a higher gear.” Jeffries said he understood the desire to prove the value of JETPs and demonstrate “some positive success and momentum,” but warned there was a “short-term” focus. He denied there was tension between the countries involved, but said “everyone on all sides is kind of nervous. … The more you dig into the issues, the more challenging they are.” The international scrutiny on Vietnam and Indonesia brought about by the JETPs — Jeffries called them “stressful” for governments — did have an upside. “They’ve certainly succeeded in focusing minds,” he said. They’ve “forced a lot of convergence of, and consensus-building within these governments,” according to Jeffries. In Indonesia, the JETP has focused investor interest, too, he said, though Vietnam has had a slower start. Private sector engagement is crucial because rather than JETPs delivering a low-carbon energy transition, they are “about turning the ship in the right direction and creating an environment where then it can kind of escalate from there,” said Jeffries. While the Indonesian JETPs “has a horizon of three to five years” to deploy financing, “we know, the transition is going to take another 30 years,” he added.