In December 2025, Indonesia quietly deserted plans to near the Cirebon-1 coal energy plant.
This used to be no peculiar energy plant. Cirebon-1 used to be intended to be the centrepiece of a US$21.4 billion (£16.5bn) global deal subsidized by means of the United States, UK, Japan and the EU to assist Indonesia finish coal use.
Indonesia’s so-called Simply Power Transition Partnership, or Jet-P, used to be introduced at a G20 summit in Bali in 2022. Identical offers had been struck with South Africa, Vietnam and Senegal. They’re extensively considered probably the most formidable strive at getting global local weather finance to finish coal use in populous, coal-dependent middle-income international locations.
The United Kingdom executive as soon as touted the Jet-Playstation as “a template on how to support just transition around the world”. This refers to efforts to be sure that the phase-out of fossil fuels and phase-in of low-carbon applied sciences is truthful, inclusive and displays the calls for of employees and affected communities.
But when this manner can’t retire a unmarried plant in Indonesia, the sector’s fourth biggest coal shopper, there’s explanation why to query whether or not the fashion itself works. Our analysis suggests those partnerships are higher understood as a cautionary story.
A coal mine in South Sumatra: Indonesia nonetheless generates maximum of its electrical energy from coal.
Hoirul Fatihin / shutterstock
Traders wanted
The speculation underpinning the Jet-Playstation is classy in concept: use public cash from wealthy international locations to draw personal funding for renewable calories initiatives and shutting down coal crops.
Grants from governments and cheap loans supposedly scale back the danger sufficient to usher in billions extra from banks and asset managers. The general public cash “unlocks” the personal cash, and in combination they fund an calories transition that advantages the general public via cleaner air, dependable calories and diminished local weather chance. Win, win.
However throughout all 4 Jet-P international locations, the personal cash has but to materialise on the scale envisioned. In Indonesia, as of early 2025, best round US$1.1 billion of public cash have been dispensed. However the nation’s plan for decarbonising electrical energy estimates it wishes US$97 billion in funding by means of 2030 – a cavernous hole.
Extra troubling nonetheless is the loss of consolidated monetary reporting for the Jet-P price range. Fifty separate investment programs throughout the Indonesian Jet-P, all with their very own monetary tools and accounting frameworks, make all of it however not possible to trace what quantity of money has been spent.
As global local weather regulation knowledgeable Lukas Bogner has argued, this sort of finance creates complicated bureaucratic layers that recipient international locations should navigate.
Why traders haven’t close coal crops
Decommissioning a coal plant isn’t like construction a brand new one. It approach purchasing out current contracts, compensating traders for misplaced long run earnings, and renegotiating complicated felony agreements.
Even then, the electrical energy the plant supplied nonetheless must be changed. This calls for additional funding in technology programs that won’t but exist. Traders have little urge for food for any of this, and the prices fall basically at the state.
If truth be told, the intended unlocking of personal funding with public cash raises a perennial tendency: personal capital strikes the place returns are best possible and dangers lowest.
Traders in London and New York, for instance, call for top returns from middle-income economies like Indonesia, but baulk at complicated regulatory environments, state-owned electrical energy corporations, tough coal pursuits and mounting sovereign debt burdens. Public cash could make some initiatives extra sexy, however won’t take away the intended political and financial dangers traders see in international locations like Indonesia.
The Jet-P additionally approach loading Indonesia with extra debt. Of the United States$21.4 billion now pledged, best 2.6% comes within the type of interest-free grants. Maximum Jet-P finance would arrive as commercially-priced loans which Indonesia should sooner or later pay off.
In different phrases, Indonesia is being requested to borrow extra to decommission coal belongings that recently generate executive earnings and employment. On the similar time, it’s going to have to buy renewable electrical energy from the privatised corporations that will substitute them.
Within the phrases of certainly one of our interviewees, the Indonesian state is anticipated to “pay twice” – as soon as to near the outdated gadget, and once more to shop for energy from the brand new one. Business unions in Indonesia had been blunt about what this implies in follow. Beneath the Jet-P fashion, they warn electrical energy will now not be handled as a public just right, however as a commodity that peculiar Indonesians can pay extra for.
Indonesia dangers ‘paying twice’ for electrical energy.
Echo G / shutterstock
The Jet-P fashion too can weaken the similar state establishments had to set up the calories transition. International locations that experience controlled speedy clean-energy booms, from China to Vietnam, have accomplished so via robust state-owned enterprises, transparent commercial methods, and the power to direct funding and self-discipline industry.
The Jet-Playstation, in contrast, are designed round a reduced function for the state and a central function for personal capital. This occurs via regulatory reform, the advent of latest personal markets, or via investor-friendly applied sciences.
On the subject of Indonesia, this “de-risking” time table explains the force to get a divorce the nationwide electrical energy corporate and unload its belongings – a prospect fiercely resisted by means of business unions, civil society, or even rich teams who take advantage of the present gadget.
A damaged fashion?
World local weather finance stays vital. Wealthy international locations should nonetheless fund calories transitions within the international south. However the Indonesian Jet-P means that depending on personal traders to ship coal phase-outs is also the fallacious fashion.
Possible choices do exist, from proposals for a lot better grant-based financing to the Bridgetown Initiative proposed by means of Barbados’s high minister, Mia Mottley, which might use World Financial Fund assets to strengthen local weather funding. Extra radical proposals name for publicly-owned, worker-led transitions. However up to now, those concepts have made little growth.
Our analysis suggests simply transitions are much more likely when governments obtain direct grants that assist them retain the capability to form their very own calories programs, and to strengthen home industries via inexperienced industrialisation.
The failure to decommission Cirebon-1 issues past Indonesia. It suggests the sector’s flagship fashion for financing the top of fossil fuels isn’t operating. And the longer it takes to confess that, the tougher the transition turns into – for Indonesia, and for everybody.
