Semarang – The Institute for Essential Services Reform (IESR) and the Ford Foundation in Indonesia encourage the government to prioritise equity, especially in the Just Energy Transition Partnership (JETP).
In a report launched digitally by IESR and the Ford Foundation on Friday, 22 September, the promised JETP funding is not enough to cover the cost of the entire transition process. Instead, it serves as seed funding to catalyse and mobilise other funding sources.
The report highlights the outcomes and recommendations of The JETP Convening, Exchange and Learning from South Africa, Indonesia, and Vietnam held from 25-28 June 2023 in Jakarta. The Ford Foundation, the Institute for Essential Services Reform (IESR), and the African Climate Foundation organised the event.
“As the initial JETP funding is time-limited, it is important to set milestones and projects that are reasonable and achievable within the agreed timeframe and develop strategies to utilise other sources of funding to cover the costs of achieving the 2030 targets,” said Fabby Tumiwa, Executive Director of IESR.
The JETP links financial packages consisting of concessional financing (soft loans) and grants from donor countries with energy transition initiatives in Southern countries.
Tumiwa also added that financing instruments such as soft loans, commercial loans, equity, guarantee funds, grants, and other instruments must be carefully reviewed to avoid a ‘debt trap’ in the future. “The government should continue to advocate for greater demand for grants and concessional loans to achieve the agreed targets without increasing the burden on recipient countries,” he said.
This was affirmed by Edo Mahendra, Head of the JETP Indonesia Secretariat, as a speaker in a panel discussion entitled ‘Safeguarding the “Just” in Just Energy Transition Partnerships (JETP) and Other Emerging Climate Finance Models’ at the New York Climate Week.
“The highest funding component still comes from commercial and investment loans with non-concessional interest rates. Therefore, it is important to build partnerships and collaboration between the government, philanthropic organisations, and the private sector,” he said.
Alexander Irwan, Regional Director of the Ford Foundation in Indonesia, said implementing the JETP must fulfil the basic principles of equity.
“Social justice elements must be included in transition discussions and plans. The concept of equity should take centre stage, ensuring a just transition is inclusive of all groups or communities, particularly workers, children, women and local communities that are highly dependent on fossil fuel supply chains,” he said. (Hartatik)
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