On 04 March 2025, the US government sent messages to the governments of Indonesia, Vietnam, and South Africa that it was withdrawing from the Just Energy Transition Partnership (JETP). The US exit from JETP is not unexpected as the Trump administration had already abdicated the programme’s co-leadership role in early February 2025.

Representing more than US$45 billion in funding, the three JETPs seek to simultaneously encourage the early retirement of high carbon dioxide-emitting fossil fuel power plants while accelerating their replacement with clean energy. This transition would be funded through concessionary public finance and private sector investment backed by strategic grants and philanthropic monies. These funding sources spurred JETP governments to develop customised long-term investment plans, outlining how transition investment could be utilised. This planning may not have happened at the same scale or integrated extent without the JETP. 

US priorities contradict JETP’s objectives in Southeast Asia

Given the current US administration’s priorities and ambitions to “drill, baby, drill” for oil and gas, the withdrawal from JETP can be viewed as favourable for the energy transition. The programme’s complexities and transformative potential demand the involvement of a “coalition of the willing.”

The original countries (including the European Union), private sector partners, and philanthropies still support JETP and want to realise the mechanism’s potential. In the case of Indonesia, Germany has quickly stepped in to fill the US’s vacated leadership role. Japan has reaffirmed its co-leadership role and remains committed to Indonesia’s US$20 billion JETP. Despite the US exit, critical financing and support for the programme remains.

Continued US involvement in JETP may have led to delays or diversions from its intended transformative sustainability goals. The US administration clearly wants to enhance liquefied natural gas (LNG) sales overseas, which is fundamentally incompatible with JETP’s objectives. Meanwhile, LNG sales to developing markets in Asia face an uphill battle as countries struggle with the high cost of LNG compared to far cheaper and more sustainable renewable energy options like solar and wind. In fact, Vietnam has recently revised its power development plan to focus on renewables due to lower cost and faster delivery times. Consequently, the exit of the US, the world’s largest LNG exporter, may instead boost efforts to rapidly scale up renewable energy capacity in JETP countries by reducing emphasis on a perceived need for imported gas as a ‘transition fuel’ from coal.

Geopolitical volatility underscores the energy transition need

While critics lament that JETP has not progressed quickly enough since its announcement in November 2022, evolving global economic and geopolitical conditions have strengthened the case for the energy transition that the programme supports.

The current US administration’s policies have injected uncertainty and volatility into international markets. For countries that are energy importers, this manifests in unpredictable and rapidly changing fossil fuel prices. These energy price woes are exacerbated by adverse currency exchange rate fluctuations as those fuels are contracted for and purchased in US dollars. Furthermore, aggressive US protectionist trade policies risk fueling inflation, leading to higher interest rates and increasing financing costs for long-term debt in fossil-fueled power plants.

JETP and its associated low-cost, quick-to-build renewable energy investments are the appropriate formula for the challenges faced by emerging markets and developing economies. Deploying renewable energy in countries like Indonesia and Vietnam creates a natural hedge against the volatility of global markets and shifting geopolitics by increasingly tying energy supplies to stable, indigenous resources – sun, wind, and water.

Despite the clear economic advantages of renewable energy, these transition investments require large amounts of capital. Indonesia’s Comprehensive Investment and Policy Plan, developed for the JETP, outlines a US$100 billion commitment through 2030, while Vietnam’s Resource Mobilisation Plan identifies US$86 billion for transition projects. These figures are just the beginning. Over the next two decades, additional investments in transmission, energy management, and supply will be essential. Catalytic capital investment is needed to kickstart the transition process, making JETP, its core concepts, and committed partners critical for an environmentally sustainable future and a stable economy. 

Grant Hauber is strategic energy finance advisor, Asia, for Institute for Energy Economics and Financial Analysis, a think tank