US and Japan Offer a $20 billion Deal Aims to Help Indonesia Quit Coal. Will it Work?

· A $20 billion Climate-Finance Deal Aims to Help Indonesia Quit Coal. South Africa Shows it will be Tough.

· Similar $8.5 billion package that seeks to wean South Africa off coal

· Just Energy Transition Partnership, seeks to mobilize $20 billion in financing from the public and private sector over the next three to five years.

· Climate pollution from Indonesia’s power sector to peak by 2030, seven years earlier than projected, and to reach net-zero emissions by 2050

· Half of the finance will come from the private sector, officials said, with seven banks participating under the auspices of the Glasgow Financial Alliance for Net Zero, including Bank of America and Citigroup.

· Energy Transition Partnerships with India, Senegal and Vietnam.

The United States, Japan and other countries on Tuesday pledged to mobilize $20 billion to help Indonesia, the world’s fifth-largest greenhouse gas emitter, shut down coal plants and ramp up investment in renewable energy.

The climate-finance deal, unveiled at the Group of 20 leaders summit in Bali, marks a significant step toward slashing the world’s dependence on fossil fuels, even as prospects fade for any ambitious agreement at the U.N. Climate Change Conference in Egypt, known as COP27.

Still, some environmentalists have criticized a similar $8.5 billion package that seeks to wean South Africa off coal, saying civil society has not been adequately consulted and that the financing pales in comparison to what is needed.

The details: The pact, formally known as a Just Energy Transition Partnership, seeks to mobilize $20 billion in financing from the public and private sector over the next three to five years.

· The United States and Japan are co-leading the initiative on behalf of the Group of Seven major industrial nations. Also supporting the initiative are Canada, Denmark, the European Union, France, Germany, Italy, Norway and the United Kingdom.

· The deal calls for climate pollution from Indonesia’s power sector to peak by 2030, seven years earlier than projected, and to reach net-zero emissions by 2050, a decade ahead of the country’s current target, according to State Department and Treasury Department officials.

· In addition, the agreement seeks to roughly double the deployment of renewable energy in Indonesia by 2030, so that clean energy generation comprises at least 34 percent of the country’s power generation by the end of the decade.

· At least half of the finance will come from the private sector, officials said, with seven banks participating under the auspices of the Glasgow Financial Alliance for Net Zero, including Bank of America and Citigroup.

Tuesday’s announcement follows roughly a year of talks between U.S. climate envoy John F. Kerry and Indonesian Finance Minister Sri Mulyani Indrawati, as well as several conversations between President Biden and Indonesian President Joko Widodo.

“Together, we hope to mobilize more than $20 billion to support Indonesia’s efforts to reduce emissions and expand renewable energy and support workers most affected by the transition away from coal,” Biden said at an event Tuesday with Widodo and European Commission President Ursula Von Der Leyen.

Kerry said in a statement that the deal "can truly transform Indonesia’s power sector from coal to renewables and support significant economic growth. At every step, Indonesia has communicated the importance of building a clean economy that works for the people of Indonesia and attracts investment.”

A truly ‘just’ transition in South Africa?

The agreement is modeled after an $8.5 billion Just Energy Transition Partnership, announced at last year’s COP26 climate talks in Scotland, that seeks to help South Africa move away from coal. That deal is backed by the United States, the United Kingdom and the European Union.

However, civil society groups and environmental justice communities in South Africa have not been sufficiently briefed on the inaugural Just Energy Transition Partnership, raising questions about whether it is truly “just,” said Luísa Abbott Galvão, a senior international policy campaigner at the green group Friends of the Earth.

“In South Africa, our partners were being consulted on plans that they didn't have the actual documents for, so they didn't have a lot to base their actual input on,” she said. “So JETPs still have a lot to prove, frankly, to live up to their name.”

Meanwhile, the scale of financing that South Africa needs for its clean-energy transition is orders of magnitude larger than the $8.5 billion offered by wealthy nations, environmentalists say.

To realize the Just Energy Transition Partnership over the next five years, South Africa will need at least $86.7 billion, according to the Life After Coal campaign, a coalition of South Africa-based environmental groups including ground Work, Friends of the Earth South Africa, Earthlife Africa and the Centre for Environmental Rights.

“South Africa’s plan is ambitious, and we need new, additional funding at scale in order to realize such ambition,” Leanne Govindsamy, head of the corporate accountability program at the Centre for Environmental Rights, said in a statement.

Similarly, the $20 billion offered Tuesday will make a small dent in the estimated $600 billion that Indonesia needs to pivot away from coal power, which currently produces more than 60 percent of electricity in Southeast Asia’s largest economy.

In addition to Indonesia and South Africa, leaders of the G-7 countries have said they plan to explore potential Just Energy Transition Partnerships with India, Senegal and Vietnam. However, observers do not expect an announcement about those three countries at the G-20 summit this week.