Aljoscha Karg

Between ‘Paradigm Shift’ and ‘Business-As-Usual’ Climate Finance—The Just Energy Transition Partnerships: Towards A Just and Inclusive Fossil Fuel Phase Out in the Global South?

The Just Energy Transition Partnerships (JETPs) between a consortium of Global North countries and South Africa, Indonesia, Viet Nam and Senegal represent a vanguard climate finance agreement aimed at expediting the energy transition in the Global South. While previous climate finance efforts have largely been insufficient, nontransparent and predominantly loan-based, with recipient countries having limited autonomy over finance allocation, the JETPs emphasize recipient country-led implementation and just energy transition outcomes. The existing literature on climate finance and justice has mostly focused on expanding renewables, neglecting the crucial aspect of phasing out fossil fuels. Against this backdrop, this thesis asks: How can the JETPs overcome the existing fossil fuel-based energy regime, initiate an inclusive and effective fossil fuel phase out and accelerate the energy transitions in the four recipient countries? Drawing on institutional analysis, transition theory, Inclusive Development, twenty-two expert interviews and policy documents, this research offers four main conclusions. First, the JETPs are vital climate finance policies because of (i) recipient government’s endorsement, (ii) the IPG’s significant financial commitment (~ $30.8 billion), (iii) country-owned investment plans, (iv) the development of just transition frameworks and (v) raising awareness about the energy transition. However, in their current form, the JETPs lack effectiveness and inclusivity due to (i) the IPG’s past non-transparency regarding financial terms, (ii) the IPG’s just transition and coal phase out pledge without providing the necessary high-quality finance (~ 4% grants), (iii) missing transparency and flawed consultations, (iv) a multiplicity of financing conditionalities and (v) a privatization bias. To mitigate these shortcomings, this thesis provides ten policy recommendations. Third, geopolitical motives in the selection of recipient countries and their recent liberalization of the energy sector raise serious concerns about the future equitable distribution of climate finance globally. Finally, for the JETPs to be legitimate and consistent, Global North countries must immediately phase out fossil fuels in their own countries and halt all new fossil investments.

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