JETP needs to be scaled up to be effective: Report

Market: Coal, Emissions
16/02/24

The Just Energy Transition Partnerships (JETPs) — intended to help emerging economies' energy transition efforts — need to be scaled up to achieve their full potential, according to a research report.

The JETPs have been "long on promise, but so far short on implementation," according to the Scaling the JETP model report by US research firm the Rockefeller Foundation and US-based environmental advocacy group the Environmental Defense Fund. The JETP is a financing mechanism led by the International Partners Group (IPG) — formed from various donor countries — and the Glasgow Financial Alliance for Net Zero, a coalition of major financial institutions.

The first three JETP deals in South Africa, Indonesia and Vietnam were based on enabling a just transition from coal to clean power, while the latest deal in Senegal focused on accelerating access to clean energy through deploying renewables.

But the deals only cover a small portion of total investment needed to achieve net zero power sector emissions, and there has not been enough "new and additional" concessionary capital after the initial "fanfare" when partnerships are announced. There has been insufficient access to technical, planning and modelling capacities within countries, and also a lack of clarity regarding the roles of involved multilateral development banks (MDBs).

The report suggests four pathways to address and overcome barriers to scale, as well as allow the model to reach its full potential. The first is the development of nationally-owned "country platforms", which are institutional venues that would allow for more structured dialogue between government officials, technical partners and financers. Such a platform would be able to oversee the development of a "nationally appropriate investment plan," states the report.

There are countries that have expressed interest in support packages but currently have no access to them, such as Kenya, Thailand, Mexico and Kazakhstan, according to the report. The second pathway suggests that these countries could come together and announce their interest in such JETP-like deals. This would send a signal to potential support partners and illustrate that there is enough demand to require a reformation of the international financial system, and the countries could collectively set out more "coherent and credible investment plans," states the report.

The third pathway sees more involvement from MDBs, especially if the aforementioned country platforms are successful, as the leadership of these banks will be necessary. The MDBs bring "relevant capabilities in technical sectoral expertise, country-led engagement, government relationship management, [and the] ability to navigate diverse financing partners." The MDBs could help to co-ordinate between providers of capital and help to design investment plans.

Lastly, the IPG needs to expand and increase the donor pool so that there is more concessionary capital, the lack of which is the biggest constraint that deals are currently facing. JETP packages would also be more successful if consolidated offers were made by the group, instead of each IPG member making a discrete offer.

By Prethika Nair

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