Just Energy Transition Partnerships and the future of coal
Recent climate diplomacy efforts have resulted in Just Energy Transition Partnerships (JETPs) with South Africa, Indonesia and Vietnam, mobilizing financial support for ambitious decarbonization targets. Here, to assess JETPs’ alignment with global climate targets, we conduct a model-based assessment of JETPs’ energy and emissions targets. Results show greater alignment with a global 1.5 °C trajectory, indicating a promising route for international collaboration to keep Paris Agreement goals within reach.
Just Energy Transition Partnerships (JETPs) are a novel cooperation format to accelerate the energy transition of developing and emerging economies. JETPs bundle financial support from high-income countries into high-level cooperation agreements to facilitate the achievement of energy and climate targets of recipient countries.
The first JETP, between South Africa and the International Partners Group (France, Germany, United Kingdom, USA and the European Union (EU)), was established during COP26 (ref. 1). It committed the mobilization of US$8.5 billion to accelerate South Africa’s decarbonization, in line with its most ambitious nationally determined contribution (NDC) target. In the wake of COP27, Indonesia, Vietnam and Senegal followed suit in establishing JETPs with the International Partners Group2,3,4 (expanded to include all G7 members, the EU, Denmark and Norway), agreeing on initial financial support volumes of US$20, 15.5 and 2.5 billion, respectively, towards power sector-related energy and climate targets. With a combined volume of US$45 billion over a 3–5-year period5, JETPs represent a substantial mobilization of climate finance from developed to developing countries and a step forward to the target of US$100 billion per year defined within the Paris Agreement (Extended Data Fig. 1 and Supplementary Section 2).
Despite the urgency to phase out the use of coal for electricity generation to meet the Paris Agreement goals, international climate diplomacy has previously failed to restrain the persistent global expansion of coal-fired power plants6,7 as a means to cover a growing electricity demand in emerging economies8. The unprecedented pace in reduction of coal use9 implied by the Paris Agreement targets represents a particular challenge for emerging economies10, straining their institutional capacity11,12 and raising questions on its feasibility12,13. Against this background, JETPs represent a promising format, yet their alignment with global climate targets remains unassessed.
Aligning partnerships with Paris
To assess the 1.5 °C compatibility of JETPs’ decarbonization targets, we quantify three policy pathways with the POLES-JRC global energy model for South Africa, Indonesia and Vietnam, as large coal-reliant economies: a reference (REF) under policies and plans before JETP agreements, a JETP energy and emissions target scenario (summarized in Fig. 1a), and a 1.5 °C globally cost-efficient scenario (see Methods). Per construction, the JETP scenario is determined by the JETP targets until 2030. Despite its long-term nature, achieving a global 1.5 °C target will require embarking in a global emissions trajectory with concrete and immediate implications for sectoral emissions, including the power sector composition and emissions by 2030 (ref. 14). Depending on emission sources and mitigation options, among other considerations, country-specific 1.5 °C-compatible emission trajectories differ, raising the question on how 2030 JETP targets align with 1.5 °C pathways.
The results reveal diverging evolutions for the capacity of coal-fired electricity generation in the reference scenario in the three countries (Fig. 1b). South Africa’s ageing coal fleet, combined with the policy framework of the Integrated Resource Plan and considerable renewable energy potentials, implies gradually declining installed coal capacity. In contrast, stronger electricity demand growth in rapidly growing economies of Vietnam and Indonesia, younger power plant fleets (Supplementary Fig. 2) and political drivers15 lead to strong planned expansion of coal capacities. Given the tight carbon budget, our 1.5 °C trajectory leaves no room for unabated coal capacity additions (Extended Data Table 1). The particularly steep reduction required in South Africa calls for dedicated efforts in limiting the adverse social implications of such a rapid transition, for example, by investment in revitalizing coal regions, workforce reskilling and economic diversification11. Indonesia’s and Vietnam’s envisioned coal capacity expansions until 2030 within the JETP targets deviate from a globally cost-efficient 1.5 °C pathway. At the same time, the reduction in coal use, even in the 1.5 °C trajectory, is less pronounced than in South Africa, with comparatively less severe socio-political challenges from their respective coal transitions.
In the reference scenario, the share of renewable electricity generation across the three examined countries would fall substantially short of required levels for a 1.5 °C trajectory, but the JETP targets bring considerable alignment with the 1.5 °C trajectory by 2030. The combination of no new coal commitments beyond 2030 with the improving competitiveness of renewable technologies lead to a continued integration of renewable energy towards mid-century. Even in the absence of additional climate policies beyond 2030, the share of renewable electricity generation in the JETP scenario would increase to about 65% in all studied countries, while still falling short by approximately 10 percentage points of 1.5 °C compatible levels in Indonesia and Vietnam.
Limiting coal capacity expansion combined with a higher share of renewable electricity in the JETP scenario leads to a clear reduction of CO2 emissions over the considered timeframe, compared with the reference. Power sector emissions in South Africa under the JETP would strongly decline towards 2030. For Indonesia, the analysis suggests that the JETP emissions target is not binding due to the renewable energy targets in place, which would halve the 2030 power sector emissions gap between the reference and a 1.5 °C pathway. Given Indonesia’s envisioned coal capacity expansion until 2030, achievement of its JETP renewable generation target will imply a low utilization rate for those capacities, indicating an economically inefficient capacity expansion planning. For Vietnam, the 170 MtCO2 power sector emissions target in 2030 closes about 80% of the 2030 power sector emissions gap between the reference and a 1.5 °C scenario. While 2030 JETP emission targets improve alignment with a 1.5 °C target, they still fall short of 1.5 °C compatible levels for all three countries in terms of power sector emissions. Pursuing mid-century net-zero decarbonization pledges remains essential to comply with the goals of the Paris Agreement (Supplementary Section 3).
In the absence of JETP targets and financial support, near-term investment for the expansion and technological overhaul of the power sector reaches close to US$50 billon in Indonesia and Vietnam (each) and US$12.5 billon in South Africa, according to our estimates (over a 5-year period; Fig. 1). JETPs support additional investment driven by JETP energy and emission targets. Our results indicate that the initial financial support foreseen in the JETPs fully cover these additional investments in South Africa and Indonesia, and roughly half of the investment needs in Vietnam. In Vietnam and Indonesia, however, investments in the JETP trajectory surpass the levels implied by the 1.5 °C scenario in 2030, given the short-term expansion of both renewable and partly unnecessary coal capacities. These coal capacity additions bear a risk of becoming stranded assets. To support larger investment flows of a 1.5 °C trajectory, JETPs are designed as catalytic mechanisms, aiming to improve conditions for private investment in renewable energy. JETPs support a structural and political risk reduction16, developing dedicated regulatory reform roadmaps for clean investments (Supplementary Section 4). The extent to which grants and concessional public finance foster learning17 in the financial and energy sectors will largely impact on the private financial flows and costs for the transition, given the capital intensity and risk sensitivity of renewable technologies to financing conditions18.
Achieving a 1.5 °C-compatible trajectory will require scaling up initial JETP goals’ ambition. Beyond its own emissions, the power sector decarbonization represents a fundamental step to decarbonizing the whole energy system via electrification of end uses6,19,20. Scaling up energy efficiency investments, keeping captive coal capacities in check (Supplementary Section 4) and transforming coal-intensive industries (for example, steel manufacturing) will be important elements to align with a Paris trajectory. Corresponding targets, backed up by implemented policies, could complement existing or new JETPs. As such, initial JETPs’ energy and climate goals offer an entry point to more ambitious climate policy packages, in line with the scientific literature demonstrating how stringent climate policy regimes can be implemented by incrementally increasing ambition21,22,23.
JETPs coverage and the emergence of coal-reliant economies
Despite the global surge in renewable electricity (Supplementary Tables 1 and 2), phasing out coal use in line with the Paris Agreement goals (Extended Data Table 1) will require dedicated policy support24. Rolling out JETPs to further coal-reliant economies can represent a step towards keeping the Paris Agreement goals within reach. Geopolitical considerations aside, addressing large and growing coal-reliant economies bears strong potential to reduce global emissions. China and India, each accounting for about 30% of net coal-capacity additions in 2020–2030, and home to approximately 55% and 10% of global installed coal capacities, respectively, are of utmost importance in limiting short-term global coal expansion patterns (Fig. 2). Beyond 2030, potential emerging coal users (Fig. 2d), inter-alia South Asian and Sub-Saharan growing economies, could potentially contribute to global coal emissions. Timely anticipation, for example, as envisioned in Senegal’s JETP, can help avoiding a potential coal phase-in rather than managing a coal phase-out. Continued climate policy and diplomacy efforts to prevent coal expansion via varied mechanisms will remain important, for example, leveraging trade policy25 or international finance regulating frameworks (for example, via taxonomies). Jointly, such mechanisms can support existing JETPs and prevent the emergence of new coal-dependent economies, while averting misaligned incentives to sustain low domestic climate ambition in the expectation of international finance.
Amidst the rise of industrial policy and protectionism, long-term partnerships represent a promising format to sustain cooperation in global challenges such as climate change. Cooperation beyond the provision of financial support can help in addressing prevalent technical, institutional and social challenges, and international fora can provide a useful platform for knowledge-sharing from policy design to its implementation stage. As domestic policies are incrementally aligned with JETPs’ targets (Supplementary Section 4) and impacts become measurable, the scientific community should critically assess successful elements and shortcomings of this novel cooperation format to inform global efforts to mitigate climate change in a just and equitable manner.
