A surprising move has come from the United States. The U.S. government has officially withdrawn from the Just Energy Transition Partnership (JETP), a global initiative aimed at helping developing countries transition from coal to clean energy. This decision, announced on March 5, 2025, could disrupt energy transition efforts in several countries, including Indonesia.
U.S. Decision: “Not in the National Interest”
According to Reuters, the decision is part of the new policies under Donald Trump's administration, which views the program as incompatible with U.S. economic and energy interests.
"We will no longer use American taxpayer funds to support policies that harm our domestic energy industry," a U.S. spokesperson stated in a Reuters report (March 5).
JETP was first introduced at the 2021 UN Climate Summit in Glasgow. It involves donor countries such as the United Kingdom, Germany, Japan, and the European Union, which have pledged financial assistance to accelerate the energy transition in developing nations. Indonesia is one of the largest beneficiaries, with a promised $20 billion in funding to reduce coal dependency.
However, with the U.S. exiting the consortium, concerns are rising over the sustainability of this financial support.
Indonesia Faces Uncertainty: What Are the Implications?
For Indonesia, the U.S. decision could have significant consequences for its planned energy transition efforts. The following are some of the potential impacts:
1. Potential Loss of $20 Billion in Funding
Under the JETP scheme, most of the pledged funds consist of concessional loans and grants from donor countries. However, the U.S. withdrawal could shake investor confidence and slow down the disbursement of funds.
Without this funding, major projects—such as the early retirement of coal-fired power plants (PLTU) and the development of renewable energy sources—face delays or even cancellation.
2. 2060 Decarbonization Target at Risk
Indonesia has committed to achieving Net Zero Emissions (NZE) by 2060. A key strategy involves accelerating the shift from fossil fuels to renewable energy sources such as solar and wind power.
However, with reduced financial support, this target may be jeopardized. Without international assistance, the government may have to seek alternative funding sources, which could mean additional debt or increased subsidies.
3. Continued Dependence on Coal
Currently, coal accounts for more than 60% of Indonesia’s energy mix. JETP was expected to be a key solution in reducing this reliance.
Without U.S. support, the risk of transition failure increases, and energy companies may continue prioritizing coal as the primary energy source. This could leave Indonesia lagging behind in the global shift toward green energy.
4. Impact on Investors and the Energy Market
The U.S. decision could create uncertainty among investors. Many private sector entities previously interested in supporting Indonesia’s energy transition may now reconsider.
Global investors seek regulatory stability and financial backing. If JETP funds are no longer secure, investment risks in Indonesia’s clean energy sector will rise.
Indonesian Government’s Response
As of now, the Indonesian government has not issued an official statement regarding the U.S. decision. However, based on past responses to global energy policy changes, the government may consider the following actions:
- Seeking alternative funding from other countries still committed to JETP.
- Adjusting energy transition targets, particularly in reducing coal usage.
- Strengthening partnerships with the private sector to support renewable energy investments.
In a previous interview, National Energy Council (DEN) member Septian Hario Seto emphasized the need for the government to reassess its energy transition strategy by considering long-term economic and investment factors (Katadata, 2023).
Solutions and the Way Forward
Despite the challenges, Indonesia still has several options to maintain momentum in its energy transition:
- Relying on Other Donors – European countries (especially Germany) and Japan remain committed to JETP. Strengthening relations with these nations could help secure continued funding.
- Attracting Private Investment – By creating more investor-friendly regulations, Indonesia could offset the funding gap through private sector and global investor contributions.
- Utilizing Domestic Funding – The government could optimize green financing schemes such as Green Sukuk and green bonds to finance clean energy projects.
- Encouraging Technological Innovation – Developing more efficient and affordable renewable energy technologies could be a long-term solution to reducing reliance on external funding.
The U.S. withdrawal from JETP is a setback for Indonesia’s energy transition efforts. However, this does not mark the end of the journey toward clean energy. With the right strategies, collaboration with other nations, and active private sector participation, Indonesia can still achieve its decarbonization targets and secure a sustainable energy future.
What remains clear is that the government must act swiftly to ensure Indonesia’s green energy ambitions do not stall midway.
References:
- Reuters. (2025, March 5). U.S. withdrawing from plan to help major polluters move off coal sources. Retrieved from https://www.reuters.com/sustainability/climate-energy/us-withdrawing-plan-help-major-polluters-move-coal-sources-2025-03-05/
- Kompas.com. (2022, November 20). AS Dukung Peluncuran Kemitraan Transisi Energi yang Adil (JETP) di Indonesia. Retrieved from https://www.kompas.com/global/read/2022/11/20/160300170/as-dukung-peluncuran-kemitraan-transisi-energi-yang-adil-jetp-di
- ANTARA News. (2022, September 16). AS-Indonesia berupaya majukan kemitraan transisi energi. Retrieved from https://www.antaranews.com/berita/3121025/as-indonesia-berupaya-majukan-kemitraan-transisi-energi
- ANTARA News. (2023, August 24). AS: Pendanaan kemitraan transisi energi JETP masih harus didiskusikan.Retrieved from https://www.antaranews.com/berita/3695772/as-pendanaan-kemitraan-transisi-energi-jetp-masih-harus-didiskusikan
- Katadata. (2023). DEN Kaji Ulang Langkah Transisi Energi RI Usai AS Keluar dari Perjanjian Paris. Retrieved from https://katadata.co.id/ekonomi-hijau/ekonomi-sirkular/67a5774f1dc3b/den-kaji-ulang-langkah-transisi-energi-ri-usai-as-keluar-dari-perjanjian-paris
