Indonesia-Vietnam clean energy deal faces stagnation suspicions, but experts say it's not stalled yet

On September 13, 2024, news from Jakarta. In 2022, Indonesia and Vietnam signed multibillion-dollar energy transition agreements, seen as a major financing shift to push the two countries from relying on coal to clean energy.

These "Just Energy Transition Partnership" agreements are funded by developed countries and aim to help the two countries phase out and close polluting coal-fired power plants and replace them with solar, geothermal and other sources. However, nearly two years later, critics think progress is slow, while supporters say it's the first time stakeholders have jointly developed policies and it takes more time and is expected to attract more funds.

The Indonesian agreement provides over $20 billion for phasing out and closing coal-fired power plants and developing clean energy. Currently, most of Indonesia's energy demand relies on fossil fuels, with 60% coming from coal. In 2021, emissions from the energy sector ranked ninth in the world. The Vietnam agreement is $15.5 billion, with the goal of having nearly half of electricity coming from clean energy by 2030.

The lack of implementation guidelines has slowed progress. For example, although the Indonesian and Vietnamese plans list potential projects, they do not clarify how to implement them. The mismatch between funds and expectations is also a problem. The funds needed by the two countries far exceed the promised funds, and most of them are in the form of debt, raising concerns. Experts say the agreements are designed to attract future investors. It takes time to determine the funding needs and acquisition methods for projects, and there are also delays for governments and financial institutions in matching funds and projects.

Vietnam faces challenges in policy reform, but there have been recent policy changes. Experts believe these agreements can be examples for other countries, but limited funds may hinder other fossil fuel-dependent countries from signing similar agreements. For now, although the clean energy deal between Indonesia and Vietnam faces problems, it is not stalled yet.