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Scaling up just energy transitions through country sector platforms

Written by Nick Simpson, Archie Gilmour, Michael Jacobs

Hero image description: wind farm in the Department of Rivas, Nicaragua Image credit:Secretary-General Visits Nicaraguan Wind Farm. Credit: UN Photo Image license:CC BY-NC-ND 2.0

As COP28 debates whether fossil fuels should be phased ‘out’ or ‘down’, a number of countries in the global South have already started out on ambitious energy transitions. Some of the most prominent are doing so under the label of Just Energy Transition Partnerships. These are agreements under which a national government commits to accelerating the shift from coal to renewables, and a group of international donors commits to mobilising investment finance in return. Four countries have such ‘JET-P’ agreements so far: South Africa, Indonesia, Vietnam and Senegal.

Yet they have each faced significant challenges. Since the agreements were signed, progress on defining the precise investment programme has been slower than many had hoped. Part of the reason is that the partnerships were high-profile political agreements, signed before many of the technical and coordination details had been prepared. Public consultations – for example on how to make JET-Ps deliver on their ‘justice’ element – have inevitably taken time. And the sheer complexity and political difficulty of energy transitions – how to reconcile many different stakeholders and interests and agree long-term plans – make rapid progress difficult. Decommissioning coal plants is financially complex and politically controversial.

Some of the challenges lie outside the JETPs themselves. The financing needs for these energy transitions are huge – in some cases estimated as ten times larger than the international public finance pledged as part of the JET-P deals. The assumption is that private sector investment can be leveraged to fill the gap, but this is much easier said than done. It is not a problem just for JET-Ps, but for the entire field of climate and development finance.

For all these reasons, the JET-Ps should not be judged too early. Their success or otherwise will take several years to emerge. It is probably unlikely that many more JET-Ps will be signed in the forms so far announced: the number of countries with potential for large-scale coal phase-down, and the appetite among the international partners for significant new financing commitments, both appear limited. But many of the core features of the JET-Ps could be extended to other countries in other ways.

At heart a JET-P is what might be called a ‘country sector platform’. The idea of a country platform is of a mechanism by which a government can collaborate in a coordinated way with the full range of external stakeholders in a national investment plan, including MDBs, bilateral funders, the national development bank and the private sector. Nationally determined (rather than determined by external lenders), a country platform enables the various stakeholders to prepare and implement a goal-focussed investment programme. A JET-P applies this idea to the energy sector.

It does not need a high-profile international agreement, of the kinds which have characterised the JET-Ps, to put a country sector platform in place.

Egypt’s Country Platform for the Nexus of Water, Food and Energy (NWFE), for example, was launched in July 2022. It aims to deliver on key elements of an energy transition, with an estimated total cost of $14.7 billion. According to the Egyptian Minister for International Cooperation, Rania A. Al-Mashat, speaking at COP28, it was explicitly designed to build on the idea of JET-Ps: it is envisaged as a way for Egypt to access larger-scale financing in exchange for greater ambition to meet global climate goals. Building on this experience, North Macedonia has also just launched a country sector platform to accelerate the just energy transition, supported by the EBRD, the Climate Investment Fund and international partners. Reuters reports that the plan – for 3bn euros – is to phase out coal use by 2030 and accelerate the deployment of renewable energy and associated grid investments.

‘Country sector platforms’ need not be limited to energy transitions. Other appropriate fields for just transitions could include transport, agriculture, water and adaptation. And their investment plans could be linked to the new Nationally Determined Contributions (NDCs) required by the Paris Agreement in 2025.

At COP28 ten multilateral development banks have committed to work together to support nationally-led country platforms. With improved coordination, and alongside other MDB reforms to increase and speed up lending, the opportunities for rapid and ambitious just transitions are getting to look more promising.