Indonesia decided last month to delay launching an investment plan for the $20 billion Western-sponsored climate funding, known as the Just Energy Transition Partnership (JETP). This delay shows us several things. First, the problematic nature of how our leaders are handling the issue of energy transition, and second, the West’s relentless effort to assert its domination over developing countries.
At the same time, it opens up an opportunity for China to swoop in and be even more involved in Indonesia’s energy projects. Indonesia must learn from the mistakes it’s currently making with JETP, take advantage of alternative countries like China, and avoid becoming dependent on the West.
Initially, the JETP investment plan was to be unveiled in August as a present for the nation’s Independence Day. Unfortunately, we did not get that present. The JETP Indonesia Secretariat said in a press release that the delay was meant to give more time to accommodate civil society’s aspirations and perceptions.
Public involvement in energy transition is certainly necessary. Energy has a huge impact on people’s lives and livelihoods, so energy-related policies will directly impact society. But the public is now having a hard time believing the JETP management’s explanation for the delay. Why?
Let’s go back to the JETP launch at the G20 Summit in Bali. During the Summit, the Indonesian government worked to shut down events held by civil societies on the island. At that time, civil society organizations only wanted to remind advanced countries to uphold their commitment to support the energy transition in developing countries, including Indonesia. As we can see, the government has banned the participation of the public since day one. The JETP was launched amid the suppression of public voices. This means, that since its inception, the JETP has ignored the public’s right to participate in shaping our energy policies.
After that, the JETP management continued to ignore the public’s rights, this time by withholding transparent information about the funding’s progress and negotiations. Even until the time this article is published, there is still no website that provides information regarding JETP.
Whoever will help finance Indonesia’s energy transition, Indonesia must have an equal position with that partner. In the context of the JETP scheme, domination of debt in this scheme is one way for developed countries to control Indonesia’s energy policy.
The JETP management finally responded to pressure regarding governance by hosting dialogues with civil society organizations. However in reality the dialogue is still far from participatory because it is not preceded by a clear agenda for the dialogue. Until now, it is also unclear the status of the aspirations of civil society organizations that emerged in the dialogue.
In my opinion, though, this “dialogue” is simply a theater put together to cover up the real problem behind the delay.
The real culprit is tough negotiations with donors from advanced industrial countries, who want to fill the fund with foreign debts. As reported by Indonesian media KOMPAS, the Indonesian government is trying to renegotiate and lessen the debt portion. At the launch of JETP, Indonesian civil society organizations had warned the government of the potential risk of debt distress but were silenced.
JETP’s investment plan document will now be released at the end of this year, its managers said. Until then, the management must significantly improve governance. Prioritize openness and transparency, and encourage real public participation.
The Indonesian government must be able to clearly communicate the downsides of debt-majority schemes for energy transition projects. First, it shifts ecological responsibility from rich to poorer countries, and second, it takes away opportunities for community-based renewable energy development. The Indonesian government also needs to have a strong bargaining position in negotiations with donor countries in JETP. Finding funding alternatives is one way to do that.
Data shows that most of the top five renewable energy investors in Indonesia are not JETP donors. Only Japan, which accounts for about 12% of the total renewable energy investment in the country, is also a donor to the JETP. What does this mean? This means that there is no need for Indonesia to worry if the JETP fails. Indonesia can focus on attracting funding from the other top investors instead – Singapore, South Korea, the Netherlands, and China. Indonesia can also finance the transition through funding from government-owned banks, which are currently competing with each other to become green banks.
It is especially a big opportunity for China, which is already one of Indonesia’s top investors for green projects. Since 2016, China has put green finance at the center of its foreign policy, and the country has been working to step up its commitment.
Indonesia should use the JETP delay as a time to get closer to China. This week, the Indonesian Minister of Energy and Mineral Resources Arifin Tasrif invited China to help Indonesia build the Super Grid – an inter-island power network that will primarily use renewable energy – a major project that was included in the JETP plan. The Super Grid is envisioned to optimize the use of renewable energy sources and create a sustainable energy system throughout the country.
In the end, whoever will help finance Indonesia’s energy transition, Indonesia must have an equal position with that partner. In the context of the JETP scheme, domination of debt in this scheme is one way for developed countries to control Indonesia’s energy policy. In other words, the energy transition in Indonesia must continue with or without the JETP.
Firdaus Cahyadi is a longtime environmental consultant and a regular columnist for several of Indonesia’s largest news publications.
