In 2022, Indonesia and Vietnam made significant agreements known as Just Energy Transition Partnerships, funded by developed nations to assist in transitioning from coal to cleaner energy sources like solar and geothermal. However, progress under these deals has been slow, with critics pointing out the lack of guidelines for implementation.
Indonesia’s deal involves more than $20 billion to phase out coal-fired power plants and focus on developing renewable energy sources over the next few years. This move is crucial as the country currently relies heavily on fossil fuels, with a large portion coming from coal, resulting in significant carbon dioxide emissions.
Vietnam’s $15.5 billion deal, signed in December 2022, aims to increase clean energy consumption to nearly half of the country’s electricity by 2030. Vietnam has already made strides in solar energy production, generating over 10% of its electricity from solar power in the first half of 2022.
The absence of clear guidelines has hindered progress under these agreements, with experts pointing out the complexity of social, political, and economic factors involved in implementing such transitions. Both countries have outlined numerous potential projects to utilize the funding effectively, but challenges remain in convincing operators of coal-fired power plants to retire them.
The funding pledged for these Just Energy Transition Partnerships falls significantly short of the total amount needed to achieve the countries’ 2030 goals. Concerns have also been raised about the majority of funding coming in the form of loans, which could strain the countries’ finances in the future.
Vietnam faces internal challenges in policy reform, such as bureaucratic hesitancy and pressure to keep electricity prices low. Despite obstacles, recent policy changes show progress, including the completion of a major transmission line and decrees allowing factories to purchase electricity directly from renewable sources.
While these deals could serve as a model for other nations, the reliance on loans for funding may deter other fossil fuel-dependent countries from following suit. Real success in implementing these agreements is key to encouraging other countries to commit to similar transitions.
