Financing the Just Component of JETP through a Just Transition Fund

The Just Transition Fund

This is a brief introduction to the Just Transition Fund concept. We will publish a detailed paper shortly which will elaborate on the challenges faced in financing the just component of the Just Energy Transition Partnership (JETP) and the proposed Just Transition Fund to overcome this.

Adequate financing is pivotal in driving just energy transitions around the world

Adequate financing will be pivotal in driving just energy transitions around the world. In our work supporting countries and institutions on just transition implementation across Southeast Asia, Africa, Latin America, and the Caribbean, we’ve learned that just transition finance comes with its complexities. The cross-sectoral nature of transformative just transition programs requires a specific financing vehicle that can address these complexities.

Why a Just Transition Fund is needed

For the Just Energy Transition Partnership (JETP), the world’s largest financer of energy transitions, the need for adequate just transition financing is equally as relevant. However, the absence of a dedicated mechanism for channelling available funds has led to uncertainties among donors and philanthropies. In addition, the lack of a definition of what constitutes just transition investments has led to a misalignment between contributors and JETP countries.

In our engagements with entities contributing to the development of JETP, we’ve shared the need for a Just Transition Fund to accelerate just transition financing. 

What is the Just Transition Fund?

The Just Transition Fund is a JETP financing vehicle that would manage financing towards sectoral activities aligned with a country-tailored just transition framework, boosting donor confidence and unlocking more resources towards fulfilling the just component of JETP.

Next step

We are looking forward to engaging with leading just transition finance players in further developing the concept of the Just Transition Fund and how it can contribute to JETP success.

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