Freddie Daley is a research associate with the Centre for Global Political Economy at the University of Sussex. Charlie Lawrie is a postdoctoral associate at the University of Sussex.
In December 2025, Indonesia quietly abandoned plans to close the Cirebon-1 coal power plant. This was no ordinary power plant. Cirebon-1 was supposed to be the centre-piece of a $21.4 billion (£16.5bn) international deal backed by the US, UK, Japan and the EU to help Indonesia end coal use.
Indonesia’s so-called Just Energy Transition Partnership, or JETP, was launched at a G20 summit in Bali in 2022. Similar deals have been struck with South Africa, Vietnam and Senegal. They are widely regarded as the most ambitious attempt at getting international climate finance to end coal use in populous, coal-dependent middle-income countries.
The UK government once touted the JETPs as “a template on how to support just transition around the world”. This refers to efforts to ensure that the phase-out of fossil fuels and phase-in of low-carbon technologies is fair, inclusive and reflects the demands of workers and affected communities.
But if this approach cannot retire a single plant in Indonesia, the world’s fourth largest coal consumer, there is reason to question whether the model itself works. Our research suggests these partnerships are better understood as a cautionary tale.
Investors needed
The idea underpinning the JETPs is elegant in theory: use public money from rich countries to attract private investment for renewable energy projects and closing down coal plants.
Grants from governments and low-cost loans supposedly reduce the risk enough to bring in billions more from banks and asset managers. The public money “unlocks” the private money, and together they fund an energy transition that benefits the public through cleaner air, reliable energy and reduced climate risk. Win, win.
But across all four JETP countries, the private money has yet to materialise at the scale envisioned. In Indonesia, as of early 2025, only around $1.1 billion of public money had been disbursed. But the country’s plan for decarbonising electricity estimates it needs $97 billion in investment by 2030 – a cavernous gap.
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More troubling still is the lack of consolidated financial reporting for the JETP funds. Fifty separate funding packages within the Indonesian JETP, all with their own financial instruments and accounting frameworks, make it all but impossible to track how much money has been spent.
As international climate law expert Lukas Bogner has argued, this kind of finance creates complex bureaucratic layers that recipient countries must navigate.
Why investors haven’t shut coal plants
Decommissioning a coal plant is not like building a new one. It means buying out existing contracts, compensating investors for lost future profits, and renegotiating complex legal agreements.
Even then, the electricity the plant provided still needs to be replaced. This requires further investment in generation systems that may not yet exist. Investors have little appetite for any of this, and the costs fall primarily on the state.
In fact, the supposed unlocking of private investment with public money raises a perennial tendency: private capital moves where returns are highest and risks lowest.
Investors in London and New York, for example, demand high returns from middle-income economies like Indonesia, yet baulk at complex regulatory environments, state-owned electricity companies, powerful coal interests and mounting sovereign debt burdens. Public money can make some projects more attractive, but will not remove the supposed political and economic risks investors see in countries like Indonesia.
The JETP also means loading Indonesia with more debt. Of the $21.4 billion now pledged, only 2.6% comes in the form of interest-free grants. Most JETP finance would arrive as commercially-priced loans which Indonesia must eventually repay.
In other words, Indonesia is being asked to borrow more to decommission coal assets that currently generate government revenue and employment. At the same time, it will have to purchase renewable electricity from the privatised companies that would replace them.
In the words of one of our interviewees, the Indonesian state is expected to “pay twice” – once to close the old system, and again to buy power from the new one. Trade unions in Indonesia have been blunt about what this means in practice. Under the JETP model, they warn electricity will no longer be treated as a public good, but as a commodity that ordinary Indonesians will pay more for.
Why rich countries are “reluctant” on additional JETP coal-to-clean deals
The JETP model can also weaken the same state institutions needed to manage the energy transition. Countries that have managed rapid clean-energy booms, from China to Vietnam, have done so through strong state-owned enterprises, clear industrial strategies and the ability to direct investment and discipline business.
The JETPs, by contrast, are designed around a diminished role for the state and a central role for private capital. This happens through regulatory reform, the creation of new private markets, or through investor-friendly technologies.
In the case of Indonesia, this “de-risking” agenda explains the pressure to break up the national electricity company and sell off its assets – a prospect fiercely resisted by trade unions, civil society and even wealthy groups who profit from the existing system.
A broken model?
International climate finance remains important. Rich countries must still fund energy transitions in the Global South. But the Indonesian JETP suggests that relying on private investors to deliver coal phase-outs may be the wrong model.
Alternatives do exist, from proposals for much larger grant-based financing to the Bridgetown Initiative proposed by Barbados’s prime minister, Mia Mottley, which would use International Monetary Fund resources to support climate investment. More radical proposals call for publicly-owned, worker-led transitions. But so far, these ideas have made little progress.
Our research suggests just transitions are more likely when governments receive direct grants that help them retain the capacity to shape their own energy systems, and to support domestic industries through green industrialisation.
The failure to decommission Cirebon-1 matters beyond Indonesia. It suggests the world’s flagship model for financing the end of fossil fuels isn’t working. And the longer it takes to admit that, the harder the transition becomes – for Indonesia, and for everyone.
This article is republished from The Conversation under a Creative Commons license. Read the original article.
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Indonesia’s failing Just Energy Transition Partnership is a cautionary tale
When oil and gas shipments stopped flowing through the Strait of Hormuz at the start of the Iran war, Southeast Asian nations were left reeling as the supply crunch laid bare their acute reliance on fossil fuel imports.
As prices soared, governments in the region scrambled to introduce emergency energy-saving measures – from a four-day working week to curbs on air conditioning. Thailand revived decommissioned coal plants while the Philippines, which imports nearly all of its oil, declared a “national energy emergency”.
But the crisis has also prompted renewed resolve to find a long-term solution to their vulnerability at a time when electricity demand is booming to power the region’s growing industry, cooling needs and the mushrooming of energy-hungry data centres.
At the heart of Southeast Asian nations’ response is a longstanding infrastructure project to connect the region’s power grids by 2045 and enable cross-border trading of clean electricity through a network of underground and subsea interconnectors.
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The plans will allow nations with high renewable energy generation potential to trade surplus power to their neighbours and major demand centres like Singapore, helping to integrate more renewables into the power mix and reduce reliance on fossil fuel imports.
“[It] will give us more energy security,” the Philippines’ energy secretary, Sharon Garin, told a press conference after a meeting of the Association of Southeast Asian Nations’ (ASEAN) energy ministers last week, when they discussed accelerating the delivery of the regional grid as part of measures to respond to the energy crisis.
“The Philippines is rich in solar power, Malaysia is rich in hydropower and Indonesia has geothermal: different countries have different resources. [The ASEAN Power Grid] will optimise the utilisation of renewables to the benefits of each member state,” said Garin.
But turning this decade-old political vision into a reality has been slow, held up by painstaking work to harmonise a patchwork of regulatory and legal frameworks and mobilise the private capital needed to build cross-border infrastructure.
More than $300 billion is needed to expand and modernise the region’s fragile grids to support the projected energy demand increase by 2050. This includes $27 billion required to deliver the cross-border interconnections by 2040, according to the International Energy Agency (IEA).
Every year of delay could cost the region billions of dollars in additional fuel costs and lock in new gas infrastructure for decades to come, according to analysis by global energy think-tank Ember.
The building block for energy security
With electrification high on the agenda of the COP31 climate talks in Türkiye next month, there is growing attention on the need to modernise and expand grid infrastructure to cope with growing electricity use and more renewables in the power mix.
Clean electrification and energy efficiency could deliver about a third of cumulative carbon emission reductions between 2026 and 2050, according to the International Renewable Energy Agency’s World Energy Outlook. But delivering that would require doubling annual global grid investment to $1 trillion between now and 2035.
Last month, the UN launched an initiative to accelerate investment into expanding and modernising grids in Southeast Asia and Africa.
First conceptualised in 1997, the ASEAN Power Grid has gained fresh impetus in recent years as countries turn to renewables to cut their emissions and move away from volatile fossil fuel markets.
Energy supply disruption caused by wars in Ukraine and the Middle East has strengthened the case for regional grid connections. Before this year’s conflict began, the Middle East accounted for 60% of Southeast Asia’s crude oil imports. Competition for fewer, more expensive oil and gas shipments has left Southeast Asia facing a $160 billion energy import bill this year. Based on current policies, this could rise to $400 billion by mid-century.
In the Philippines last week, energy ministers agreed on an enhanced planning framework to deliver the ASEAN Power Grid and made progress on regulatory guidelines.
Garin said ministers were considering accelerating the project’s delivery. “The first study was to connect [by] 2045 – that’s too far,” she said.
A strong business case
The economic benefits of the plan have “captured the political imagination” of leaders in the region, Robert Cooke, grids advocacy lead at the Global Renewables Alliance, told Climate Home News. “The business case is stronger than ever,” he said.
“If countries were to go about building their own separate grids, of course that would be an expensive endeavour. But the discussion around the ASEAN Power Grid includes what costs could we share in building out this grid,” added Tiza Mafira, director of the Indonesia office for the Climate Policy Initiative.
Stronger grids would help the region meet collective targets to increase the share of renewable energy in total primary energy supply from 14% to 30% and in installed power capacity from 34% to 45% by 2030.
Connecting and pooling dispersed renewable resources would also help smooth local power shortages caused by daily and seasonal variations, reducing the need for backup gas plants and battery storage.
The IEA found the ASEAN Power Grid could help unlock some of the 20 terawatts of untapped solar and wind potential across Southeast Asia – an amount around 55 times the region’s current total power capacity.
From lines on a map to shovels in the ground
Rather than building a single unified network, the ASEAN Power Grid is developing cross-border links between neighbouring countries and smaller groups of nations.
As of 2025, nine of 18 priority interconnection projects are operational – accounting for around 10 GW of capacity with an additional 13.7 GW planned by 2040.
Source: Ember
A power line channelling up to 200 MW of clean electricity generated from hydropower in Laos to Singapore via Thailand and Malaysia has emerged as a key building block for grid-to-grid trading.
Progress on technical discussions will also help provide the clarity the private sector needs to invest in bankable projects, said Cooke.
In 2025, the Asian Development Bank and the World Bank announced a dedicated funding initiative to support the project.
“The enabling pieces are emerging,” said Monalisa Dimalanta, former chair of the Philippine Energy Regulatory Commission and the National Renewable Energy Board. “But the timelines remain unclear and a 2045 vision cannot answer today’s emergency,” she said.
“A power grid… that exists only on paper will not keep the lights on.”
Singapore: the delivery test
The implications of failing to deliver the ASEAN Power Grid are most acute in Singapore.
Constrained by space, with few renewable energy resources and dependent on gas for more than 90% of its electricity mix, Singapore has emerged as a leading proponent of a regional power grid as it seeks to achieve net-zero emissions by 2050.
To meet its power needs, the city-state aims to import 6 GW of low-carbon electricity by 2035, around one-third of its energy demand – a target which it is set to miss, however.
The plans heavily rely on building interconnectors to import solar power from Indonesia across the South China Sea. Around 40% of the ASEAN Power Grid’s planned interconnections are directed towards Singapore.
Ember’s analysis found that delivering the planned interconnectors by 2035 could enable renewables to meet nearly half of Singapore’s electricity demand. Delays could drop this to only a fraction of the country’s needs, and risk locking in new gas capacity until the 2050s. Without the ASEAN Power Grid, Singapore would need to install an additional 300 MW of gas-fired power capacity to bridge the gap by 2035.
Already home to the largest data centre capacity in Southeast Asia, Singapore’s electricity demand keeps rising, driven by the boom in AI infrastructure. “At one point, [it] either has to build a new gas plant, or it has to get the interconnection to supply that demand,” Lam Pham, an Ember energy analyst and the report’s author, told Climate Home News.
A region at a crossroads
With capital increasingly available, political will is now the biggest risk standing in the way of timely execution, said Pham.
But there are other challenges too, including the lack of frameworks on transmission tariffs and how to share the benefits of clean power trading. “It’s really hard to justify projects without that,” he said.
In addition, climate-fuelled weather events, including extreme heat and tropical storms, pose major threats to the region’s grid infrastructure. Experts say stronger grid interconnection can isolate damage and build the system’s resilience.
Efforts to deliver on the ASEAN Power Grid also come as ministers stressed the “continued importance of oil and gas” for economic development and seek to secure fossil fuel supplies and stockpile oil to prepare for the next crisis.
Despite an acceleration of renewable deployment, particularly solar, coal still generates nearly half the electricity supply in ASEAN member states and dominates the power mix in Indonesia, the Philippines and Vietnam, while Singapore and Thailand rely on gas.
While these measures might help the region with the immediate crisis, “the long-term answer is more domestic renewable energy, electrification, storage, efficiency and regional power trade”, Dimalanta said.
Main image: An aerial view of the MTerra solar project in the Philippines, set to become one of the world’s largest solar-and-battery developments (Photo by Ezra Acayan/Getty Images)
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SE Asia speeds up plan for connected clean power grid after oil shock
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“Sink or swim”: WA Gov hugely underestimating decline in regional gas demand while sleeping on green exports, new report finds
PERTH, Tuesday 13 October 2026 — A new report from Greenpeace Australia Pacific and Springmount Advisory reveals green commodity exports are an untapped economic opportunity for Western Australia in a declining Asian gas market, while offering a genuine solution for decarbonising Asia.
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