Just Energy Transition Partnerships and How They Work

To limit the damage caused by climate change, the world needs to rapidly reduce carbon dioxide emissions everywhere, not just in rich countries. To get there, poor and middle-income places will require trillions of dollars for replacing coal plants with cleaner energy, improving electrical grids and retraining workers, among other measures. Just Energy Transition Partnerships, or JETPs, are among the most high-profile financing mechanisms designed to funnel money from wealthy economies to some of the bigger developing-world emitters for the purpose of weaning off fossil fuels. South Africa signed the first agreement in 2021, and a handful of others are getting off the ground, including in Indonesia. But the process has been slow and politically fraught, raising the question of whether such flagship plans can be inclusive, effective and timely enough to fulfill their promise.

Cleaning up middle-income economies is crucial for the world to meet its climate targets, and the JETP model sees wealthier nations and private capital as part of the solution. The reasoning goes like this: These countries are balancing energy transition obligations against rising power demand, while also grappling with insufficient infrastructure, less robust government finances and acute coal dependence, along with other domestic priorities. They need financial support and incentives to continue to make decarbonization a priority on par with broader economic development. And they need to do it in a just way — one that accounts for the historic advantages reaped by rich countries unencumbered by environmental considerations. JETPs, which first made headlines at the United Nations-led climate talks in Glasgow in 2021, aim to do all of that.