Why the world’s most ambitious coal phase‑out deal has failed, and what it means for climate finance
The Collapse of the Just Energy Transition Partnership: A Cautionary Tale for Global Climate Finance
The decision by Indonesia to abandon its plan to close the Cirebon-1 coal power plant in December 2025 has sent shockwaves through the global climate finance community. Once hailed as a flagship project of the Just Energy Transition Partnership (Jet-P), the $21.4 billion deal was meant to serve as a blueprint for transitioning coal-dependent nations to renewable energy. Now, its failure raises urgent questions about the viability of international climate finance models.
The Cirebon-1 Fiasco: A $21.4 Billion Bet That Went Wrong
The Cirebon-1 plant, a cornerstone of Indonesia’s climate ambitions, was supposed to be retired by 2035 as part of a landmark agreement involving the U.S., UK, Japan, and the EU. However, Indonesia’s sudden reversal has exposed critical flaws in the Jet-P model. Despite the promise of $21.4 billion in international funding, only $1.1 billion had been disbursed by early 2025, far short of the $97 billion needed for Indonesia’s energy transition by 2030.
“The Jet-P was supposed to be a template for global climate action,” says climate analyst Dr. Lena Hartmann. “But when the private sector fails to follow through, the burden falls entirely on the host country.” The lack of consolidated financial reporting further complicates matters, with 50 separate funding packages creating a labyrinth of accountability issues.
Why Investors Aren’t Jumping In
Decommissioning coal plants is a complex, costly process. It involves buying out contracts, compensating investors, and replacing lost energy supply—tasks that private capital often avoids. In Indonesia’s case, the Jet-P’s reliance on commercially priced loans has added to the country’s debt burden, with just 2.6% of funds coming as interest-free grants.
“Investors want high returns with low risk,” notes economist Rajiv Mehta. “Indonesia’s regulatory environment, state-owned energy companies, and political resistance to privatization make it a tough sell.” The result? A model that prioritizes private capital over public good, leaving Indonesia to “pay twice”—once to retire coal assets and again to purchase renewable energy from privatized firms.
The Broader Implications for Climate Finance
The failure of the Jet-P isn’t just a setback for Indonesia; it’s a wake-up call for global climate finance. Similar deals in South Africa, Vietnam, and Senegal face the same challenges. As international climate law expert Lukas Bogner argues, the current model risks creating “bureaucratic nightmares” for developing nations.
“The Jet-P assumes that public money will unlock private investment,” says Bogner. “But when that doesn’t happen, the recipient country ends up shouldering the risk.” This has led to calls for alternatives, such as larger grant-based financing or the Bridgetown Initiative, which proposes using IMF resources for climate investment.
What’s Next for Indonesia and the Global South?
Indonesia’s energy transition now hinges on rethinking its approach. Experts suggest a focus on direct grants, stronger state-led industrial strategies, and public-private partnerships that prioritize equitable outcomes. “A just transition requires more than financial deals—it needs political will and institutional capacity,” says environmental advocate Siti Nurhaliza.
For the global community, the lesson is clear: Climate finance must evolve beyond reliance on private capital. As the Cirebon-1 case shows, without systemic reforms, the world’s most ambitious climate deals risk becoming hollow promises.
Did You Know?
The Cirebon-1 plant’s closure was meant to reduce Indonesia’s coal dependence by 15%—a critical step in its net-zero goals. Its reversal has already sparked protests from local communities, who blame the plant for health and environmental issues.
Pro Tips for Understanding Climate Finance
- Look beyond funding amounts: The success of climate deals depends on transparency, accountability, and local stakeholder engagement.
- Question private sector involvement: While private investment is crucial, it must be balanced with public oversight to prevent exploitation.
- Support alternative models: Explore grant-based financing and publicly-owned energy transitions as viable alternatives to the Jet-P model.
Frequently Asked Questions
Why did Indonesia back out of closing Cirebon-1?
Indonesia cited technical and financial concerns, including the high cost of decommissioning and the need to maintain energy stability. The country also faced political pushback from coal interests and state-owned energy companies.
What alternatives exist to the Jet-P model?
Alternatives include larger grant-based financing, the Bridgetown Initiative, and publicly-led transitions that prioritize equitable energy access over private returns.