On March 6, U.S. treasury secretary Scott Bessent withdrew the United States from the Just Energy Transition Partnership (JETP), a platform for developed nations to aid developing nations transition from coal to clean energy. The withdrawal impacts over $3 billion of U.S. commitments in Vietnam and Indonesia, mostly commercial loans. Vietnam and Indonesia, both industrializing nations with significant power needs, have prioritized the development of clean, reliable energy. Both countries have ambitious decarbonization plans, striving for net-zero emissions by 2050.
Indonesia’s JETP launched in November 2022, with a promised $20 billion from the United States, Japan, and European partners to aid its green energy transition. According to its Comprehensive Investment and Policy Plan, Indonesia aimedto cap its power sector emissions at 290 million ton CO2eq, boost renewable energy to account for 34 percent of power generation, and hit net zero emissions by 2050. JETP funding would have covered $20 billion of the estimated $235 billion required for Indonesia to meet its net-zero ambitions by 2050. Indonesia’s special envoy for energy and the environment, Hashim Djojohadikusumo, criticized JETP for minimal disbursements of funds, calling it a “failed program.” The United States’ JETP commitments, while small in comparison to Indonesia’s total need for energy financing, were still a meaningful gesture that demonstrated U.S. commitment to Indonesia. Japan and Germany, now co-leaders for the International Partnership Group that manages Indonesia’s JETP, will have to find new funding to fill the gap left behind by the United States.
The United States’ deep commitment is perhaps even more important to Vietnam, which is seeking to toe the line between the United States and China as it funds its energy transition. The United States and its partners committed $15.5 billion in public and private finance to support Vietnam’s energy transition. Like Indonesia, Vietnam has ambitious aspirations of reducing peak power sector emissions by up to 30 percent, lowering Vietnam’s coal capacity to 30.2 gigawatts from 37 gigawatts, and achieving 47 percent renewable energy electricity generation by 2030. With the withdrawal of U.S. funding, however, Vietnam will likely seek different avenues of engagement with the United States, perhaps through its pursuit of U.S. funding to aid its ambitious nuclear energy program.
The United States’ departure from JETP combined with the sudden freeze on foreign assistance will diminish U.S. standing in the region.
Japhet Quitzon is an Associate Fellow for the Southeast Asia Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.
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