If Just Energy Transition Partnerships don’t serve the interests of developing countries or the West, whose purposes do they serve?

The leaders of the members of the Just Energy Transition Partnership (JET-P) with South Africa meet in Egypt at COP28. Credit: Simon Walker/No 10 Downing Street.

If something looks like a duck and quacks like a duck, then – the wisdom goes – it is probably a duck.

But what if something looks and quacks like a duck but doesn’t swim, fly, or lay eggs like a duck? What should we make of a Potemkin duck?

The hot new thing in climate finance

At the COP26 climate talks in 2021, the UK hosts along with its US and G7 allies were determined to put on a show. With the world gathered in Glasgow, they unveiled what was, up to that point, the most comprehensive answer given by Western elites to the question of how to mobilise financial resources for the global energy transition. They announced the catchily dubbed Glasgow Financial Alliance for Net Zero (GFANZ), which they promised would bring $130 trillion to bear on the climate crisis.

The press release boldly declared: “These commitments, from over 450 firms across 45 countries, can deliver the estimated $100 trillion of finance needed for net zero over the next three decades. To support the deployment of this capital, the global financial system is being transformed through 24 major initiatives.”

If GFANZ was the hammer, Western powers also took the opportunity of COP26 to introduce the scalpel: Just Energy Transition Partnerships (JET-Ps). These new deals between rich countries and key developing countries were to target foreign funding at obstacles to energy transitions and ensure no constituency was left behind.

The first JET-P was to involve Western donors mobilising $8.5 billion to support South Africa reduce its dependence on coal. This inaugural partnership was well chosen. South Africa is the world’s 14th largest carbon emitter thanks to its coal-dependent – and chronically crisis-ridden – power grid. The country desperately needs an energy transition and, in 2021, had announced plans to close almost all its coal-fired power stations by 2050.

Insofar as we can speak of a “hot new thing” in climate finance, the JET-Ps have been it since 2021. Programmes with Indonesia, Vietnam, and Senegal have followed. The plans have become the calling card of the US, European Union, and Japan.

But what have JET-Ps amounted to? What are these seemingly ambitious but mysteriously empty policy programmes? If they are important for addressing the global energy transition, how should we interpret their obvious inadequacy?

What does it mean to call something a duck that may look like and quack line one but neither flies nor swims?

The other motive of the JET-P

At the end of 2023, the performance of JET-Ps was the subject of two reviews: one by the Overseas Development Institute (ODI), the other by the Rockefeller Foundation.

The latter introduces JET-Ps, in rather anodyne terms, by pointing out that currently “more than 90% of all increased spending in renewables is going into developed countries and China”.

It says JET-Ps were designed to address this challenge and explains: “Righting that imbalance and bringing clean energy to those most in need will require the creation of in-country ecosystems to help speed that transformation. That means working to build local expertise; strengthening institutions; engaging civil society, utilities, and regulators; establishing sound transition plans; and helping to bring in outside capital of all kinds.”

A couple of things are worth pointing out about this narrative.

The first is the agency of recipient countries in the design of JET-Ps. This is borne out most directly in their name. It was the African National Congress (ANC) government of South Africa – where energy is deeply politicised and trade union consent will be necessary for any kind of orderly exit from coal – that insisted on the “Just”.

South Africa’s JET-P was also based on plans previously developed in the country. According to an account of the initiative’s origins, a small South African think tank in 2018 developed an idea for how the state utility Eskom could escape its debt trap. That plan was then adopted and adapted by the company’s CEO. “The proposition was for donors to provide concessional finance in exchange for decommissioning electricity plants that had reached retirement age, combined with compensations for those victimised by such transition. A modified version became the foundation of the JET-P,” reads the report.

A second point worth noting from the Rockefeller passage is what it obscures by eliding “developed countries and China”. While true that 90% of funding goes to this group, the report’s formulation glosses over the fact China alone accounted for 40% of all new green investments worldwide in 2023.

A clearer recognition of this fact puts in focus the other challenge JET-Ps were designed to address but on which Rockefeller is quiet.

In the decade leading up to 2021, rich countries had not only failed to deliver on their promise to mobilise $100 billion in climate finance but on sustainable development altogether. Meanwhile, China was pouring money into developing countries under its Belt and Road Initiative (BRI) with no regard to sustainability whatsoever.

At COP26, with relations between China and the West straining, climate finance took on a new significance. As the ODI report notes with commendable frankness, the challenge of China was a key motivating force behind the JET-Ps. “This geopolitical aim was never stated, but it had been clear for some time that Western countries were concerned about Chinese political influence in the global South and wanted a counter-offer to the BRI,” it says.

This context explains why the International Partners Group of donors for the JET-Ps is comprised of the US, UK, France, Germany, and the European Commission. It explains why China, by far the largest provider of bilateral funding and the world’s leader in renewable energy investment and technology, is excluded.

If JET-Ps are thinly veiled acts of climate geopolitics, does it necessarily follow that they have an effect on the world, either with regard to competition with China or the climate crisis? Does this thing that looks and quacks like a duck fly?

This is where the puzzle starts.

A lot of hot air?

Both the Rockefeller and ODI reviews of the JET-Ps conclude that, after two years in the spotlight, it is not obvious that there is anything there. The partnerships are inspired by the logic of “development finance” that believes relatively modest injections of public funds will serve to derisk and catalyse much larger flow of private funds. Yet, for all the fanfare, there have been no major investment programmes or social packages, no substantial shift from coal to renewables, and no significant gain in political capital.

Rockefeller’s consultations yield the sobering conclusion that: “The theory underpinning JETPs is that they support political leaders in host countries to address domestic political-economy constraints by providing cheap and catalytic capital to invest in strategic projects, while also addressing the human cost of exiting from fossil fuels. As no projects have yet been financed under JETPs, the consensus view of stakeholders, experts and practitioners is the evidence to validate this theory is currently lacking.”

The ODI and Rockefeller reports refuse to say JET-Ps are merely hot air. A report for the European think tank ECDPM, which notes that €600 million in concessional loans do seem to have been transferred to South Africa Treasury by Germany and France, similarly refrains from reaching this conclusion. Rather, it suggests the main benefit of South Africa’s JET-P is that it has prompted sophisticated internal discussions in which international partners have played a modest role, at most.

The relative absence of donor input is not surprising. As the ODI report stresses, energy transitions are a complex and laborious business with very long time periods. The more obvious reason for international partner’s meagre role, however, is the plainly insufficient funding they have mobilised. The JET-Ps in both South Africa and Indonesia have barely raised one-tenth of what is required. Much money appears to be rebadged funds that were already allocated, and a tiny share is in the form of grants.

As well as being underfunded, JET-Ps’ visions of transition are lopsided and inconsistent. A key focus of COP21, for instance, was phasing out coal. That fit well with the South African context and the first JET-P. But in the lowest income countries at large, there is precious little generating capacity of any kind, coal or otherwise. For that reason, the Senegal programme has little in common with its three predecessors.

Indeed, as Rockefeller observes, JET-Ps are not so much a generalisable model as a series of ad hoc offers dictated by expediency. Indonesia got a programme largely to jolly up its chairing of a high-stakes G20 meeting in 2022. Vietnam is on the frontlines of the China containment strategy. Egypt launched its JET-P equivalent the year it was to host COP27. There is no general process for potential candidates for JET-Ps nor an organisation to which they can apply.

If energy transitions were easy, developing countries wouldn’t need initiatives like JET-Ps to provide the kind of high impact support necessary to overcome entrenched fossil fuel interests. Yet this is precisely what JET-Ps, to date, do not deliver. In candid conversations last year, South African experts told me the main lesson learnt from their JET-P was that they could not rely on foreign aid and would need to do the energy transition “for themselves”.

If these grand climate plans don’t provide meaningful funding or support to recipient countries, one is left wondering what these policy packages for? If something that looks and quacks like a duck isn’t a duck, what is it?

The relentless (and incoherent) policy circuit

The authors of the JET-Ps are clearly competent experts. But precisely because of that, they must recognise that the programmes provide neither a serious counterweight to China nor an adequate contribution to sustainable development. No one in the Washington can believe $1 billion can make a significant impact on a problem as complex as South Africa’s energy transition.

Of course, the hope is that public money will catalyse private investment. This raises the cynical idea that perhaps the ultimate motive for JET-Ps is profit-seeking by Western financiers. Extending the ambit of private finance is a comprehensive rationale for global action. However, the actual sums of money mobilised by derisking and blended finance in developing countries is simply too tiny to weigh heavily. The few billion mobilised for global climate finance will not make a significant contribution to Wall Street’s profits.

One might suggest that JET-Ps are primarily gestures intended to foster good will towards the West. But what are South Africans to make of a situation in which the national power system is breaking down, a carefully budgeted programme for reconstruction comes in at $98 billion, and the offer is $8.5 billion of which less than a billion are grants? The result is not stronger international networks but the opposite. Patently inadequate funding makes donors look unserious. It is little wonder South Africans are turning inwards.

So whose purposes are served by these insubstantial programmes?

The answer may be multiple groups of actors in donor countries. Policymaking in the West is relentless but also polycratic, incoherent, and – if not entirely closed – highly self-referential. It is a process that feeds first and foremost on its own outputs.

Policymakers in Western capitals feel they have to respond to historic challenges like climate, China, or South Africa’s energy crisis. It is their job to devise at least purportedly rational strategies to address them. The people who make policy, however, do not hold the purse-strings. And those that do care about broader global issues prefer other tools – such as military power – or are unwilling to levy revenue from their constituents for such far-flung goals.

There is thus never “enough money” for the more complex dimensions of development and global policy. Yet the policy-machine grinds on. It comes up with policies like JET-Ps that tick all the boxes in terms of sophistication and conception. Powerful interests – notably high finance – may promote their vision of public-private partnership, at least notionally, and help paper over the lack of public funding. But the fiscal constraint remains paramount. The forces interested in global development are not as powerfully engaged as they are around the military-industrial complex, oil and gas, or the Wall Street nexus.

The result is a stream of ambitious and professionally designed policies that whip up enthusiasm in the ranks of analysts, think tanks, NGOs, and pundits but have no prospect of materially affecting reality. We end up with neither a highly profitable machine for the benefit of global finance nor a high-functioning mechanism to propel humanity into a sustainable 21st century. We end up with vacuity.

Looking at the JET-P since 2021, the conclusion we must surely draw is that the one interest they undeniably serve is the perpetuation of the policy circuit. In this arena, practical effectiveness is not necessarily the main driver of further policy generation. In fact, failure may be more productive. This not only perpetuates the machinery of policymaking but contributes to a “state effect” – the notion that the US, say, has a policy for x, y, z. It sustains the common sense that the world is governed, and that the process of governance is coherent.

It would be crudely nihilistic to claim this is all that policy does. Some state-led interventions do shape history. But clearly all policies do not. In general, they have an oblique relationship to coercive, persuasive, or material power.

The crisis spiral

In South Africa, the need for an energy transition is clear. Rolling power cuts along the coal-fired grid are unsustainable. The cost curves in favour of renewables are spectacular. Moreover, while unions representing 50,00 workers at Eskom and 2.5 million people in communities linked to coal mining may understandably fear change, a nation of 60 million is desperate for it.

As Crispian Olver of the country’s Presidential Commission on Climate Change has argued, failing to transition rapidly does not mean the status quo will be preserved. It means the crisis will keep on escalating.

The same could be said of the world more generally. The “equilibrium” we are in is highly unstable, prone to crisis, and progressively delegitimising for all involved. As Olver says of South Africa: “We muddle along, we continue to obfuscate, we delay, we’re behind the curve as the world economy moves…”

At some point, we must accept that the thing that looks like a duck is, quite simply, not a duck.

This essay is a version of a much longer piece on Adam Tooze’s newsletter The Chartbook.

If you are interested in this topic, check out UK All Party Parliamentary Group for Africa’s inquiry into UK support for Just Energy Transitions in Africa, supported by the Royal African Society and Oxfam.