Case Study

Technical assistance helps formulate Just Transition Framework for JETP in Indonesia

Developing a Just Transition Framework for JETP Indonesia

How Neyen Contributed to the formulation of the Just Transition Framework in the Comprehensive Investment and Policy Plan for Indonesia’s Just Energy Transition Partnership (JETP)

The Story

Guide the "just" aspect of a just energy transition

Neyen collaborated with a development agency to develop a framework guiding the implementation of the “just” aspect of a country’s just energy transition. We did this by analyzing the planned energy transition activities in the country and identifying associated risks, impacts, and mitigation actions.

Conceptualize the Just Transition Framework

The development agency needed assistance to conceptualize the Just Transition Framework (JTF) for Indonesia’s Just Energy Transition Partnership with regards to the structure, implementation, and financing.

Determine key elements in the Indonesian context

We engaged closely with the client to determine the key elements of the Just Transition Framework, considering the Indonesian context. We also collaborated to develop just transition programs at the national, sub-national, and project levels aimed at delivering on the just transition objectives of the investment plan. 

Lastly, we developed three concept notes outlined below:

1. Technical guidelines

We created a set of technical guidelines for project developers to facilitate their implementation of the JTF at the project-level, providing a step-by-step approach for conducting a just transition assessment during the feasibility study stage of a project cycle.

2. Building institutional readiness for JTF implementation

In order for the Just Transition Framework to be effectively implemented, adequate institutional capacity is needed. This concept note defined how this capacity can be built with the support of a Just Transition Facility, whose responsibilities are to be:

  1. provide technical assistance to ensure the sustainable and effective implementation of the JTF;
  2. conduct just transition assessments; and
  3. mobilize financing for the implementation of just transition programs

3. Financing just transition programs

The concept note presented potential pathways for just transition financing in Indonesia. It proposed the concept of a Just Transition Fund, an investment vehicle aiming to provide clarity on how just transition financing is channeled to proper just transition efforts through a defined mechanism for fundraising and management. It also explores other supplementary financing mechanisms to support other efforts.

Outcome

The Just Transition Framework was completed to serve as a guide for Indonesia to implement the “just” aspect of its just energy transition under JETP support.

Drivers of change

Supporting transformational change

With the completion of the Just Transition Framework, the Government of Indonesia is equipped with a systematic approach to mitigate risks and enhance opportunities across areas impacted by JETP activities. The framework will serve as a guiding document for relevant players in the country, particularly the national and subnational governments, to develop transformative actions in response to more systemic impacts from an accelerated energy transition.

Lessons Learned

1. Cross-sectoral efforts are needed

In defining how to ensure that Indonesia’s energy transition is ‘just’, we’ve seen the existing project development paradigm abide by country regulations and lenders’ safeguards to address the negative impacts of the project. Cross-sectoral just transition efforts are needed to supplement these existing measures to bring more transformative change to the country.

2. The role of national and subnational governments

The national and subnational governments have a larger role to play in carrying out transformative action towards a country’s just energy transition.

3. The need for adequate financing

Adequate financing will be pivotal in ensuring that just transition projects uphold the Just Transition Framework towards leaving no one behind. However, there are some complexities associated with just transition financing, such as defining the scope of just transition activities, uncertainties of who should be responsible for these efforts, and how they should be financed.