U.S. withdrawal jeopardizes Indonesia's $20 billion commitment to coal reduction plan
The United States has withdrawn from the Just Energy Transition Partnership (JETP), a $20-billion deal aimed at helping Indonesia reduce its reliance on coal and transition to cleaner renewable energy sources. The US Treasury Department confirmed the withdrawal on Thursday.
This decision comes at a critical time, as the world grapples with the urgent need for action against climate change. Norly Mercado, a non-profit leader, has expressed concern that developing countries should not delay their commitments to phase out coal and accelerate the shift to renewable energy, especially in light of the US withdrawal.
Mercado also emphasised the need for governments to demonstrate leadership and cooperation in solving the climate crisis by redirecting billionaire wealth to community-led renewable energy projects.
The JETP, a climate funding deal between rich countries and the Global South, was co-led by the US. The US had committed $2 billion to the JETP, including a $1-billion guarantee to the World Bank and a $1-billion investment by the US International Development Finance Corporation (DFC). However, according to Hashim Djojohadikusumo, Indonesia's climate and energy envoy, not one dollar has been disbursed from the American government, and the funds will only be granted if funds are available.
The US exit from the JETP is likely to affect transition studies and the issuance of grants. This news follows a month after Indonesia's climate and energy envoy called the JETP a failure, and Djojohadikusumo's decrying of the Paris Agreement as "no longer relevant" for Indonesia, after the US pulled out of the historic climate pact soon after Donald Trump's return to the White House.
The US has also withdrawn from similar climate finance pacts with Vietnam and South Africa. This latest retreat from climate action has sparked concern among civil society and activists, who have been ramping up calls for polluters to be taxed and held accountable in recent years.
However, the other funding partners of the JETP, which include France, Germany, Britain, Canada, the European Union, and private donors, will continue to support the pact. The global loss and damage fund, which provides assistance to nations most severely impacted by the effects of climate change, will also continue to operate, although the US has informed the developed country co-chair for the fund that it will withdraw.
Activist Harjeet Singh stated that the US withdrawal from the JETP exemplifies a pattern of obstruction by the US government in securing necessary finance for addressing climate impacts. According to analysis by the Indonesian think tank the Institute for Essential Services Reform, some funds have been made available to Indonesia through JETP, including $230 million in grants and technical assistance.
Despite these challenges, Mercado remains optimistic that there is enough money to fund Asia's clean energy future. However, she notes that the money is concentrated in the hands of billionaires and big polluters. The question remains: will the world's leaders step up and take the necessary action to combat climate change, or will they continue to retreat from their commitments?
