Why the world's biggest green finance deal is failing
Summary
Our latest paper, published in New Political Economy, interrogates a landmark international climate finance deal meant to help Indonesia phase out coal and scale up renewable energy. The deal has largely stalled, exposing deep flaws in a finance model that asks developing countries to shoulder debt and shrink state power in exchange for investment that never quite arrives.
The Just Transition Energy Partnerships centre the role of the state rhetorically but in practice transfer authority to private finance, thereby eroding state power.
When world leaders gathered in Bali in 2022, they announced a landmark $20 billion partnership to help Indonesia ditch coal and go green. It was hailed as a template for how wealthy nations could bankroll the energy transition in the developing world. Three years on, the money hasn't arrived — and a new study explains why.
Writing in New Political Economy, we argue that Indonesia's Just Energy Transition Partnership (JET-P) isn't just underperforming: it's structurally designed to fail. By March 2025, Indonesia had received just $1.1 billion of its $21.4 billion commitment. The flagship coal plant retirement the deal was built around may not happen at all.
The problem runs deeper than slow bureaucracy. The authors show that the deal's finance model — which uses public money to attract private investment rather than fund the transition directly — ends up loading Indonesia with debt, stripping its government of decision-making power, and funnelling returns back to financial institutions in the Global North. Less than 3% of the public money arrives as grants. The rest comes as loans, with strings attached.
Meanwhile, the gap between what's been pledged and what Indonesia actually needs is staggering. The country's own investment plan estimates it needs $97 billion by 2030 to transform its power sector. The JET-P, even if fully delivered, would cover just 22% of that.
We conclude that deals like this one — now being replicated across Africa and Asia — don't empower developing nations to lead their own transitions. They do the opposite: transferring authority to private finance while leaving states holding the bill.