Last November, G20 leaders in Bali hailed what they said was a transformational climate change finance deal to help wean Indonesia off coal. Nine months on, not a single dollar of the $20 billion package has been spent on actively closing down fossil fuel projects.

As the northern hemisphere sweats out one of the planet’s hottest-ever summers, and G20 leaders prepare to gather again in India this month, the project that was supposed to provide a breakthrough model in paving the way for the developed world to assist emerging countries to reduce carbon while their economies grow remains mired in meetings on operational details.

The investment plan to activate Indonesia’s much-needed ‘Just Energy Transition Partnership’ (JETP) funding remains absent after negotiators missed a mid-August deadline. While the U.S. and Japan have led in securing political will and financing pledges, standing in the way are practical challenges: working out which targets qualify for investment, agreeing on private or public finance mechanisms to support them — and bridging diverging views on loan repayment rates.

As the clock ticks, prospects for JETPs in other countries in the Asia-Pacific region, responsible for about half of global carbon emissions, remain distant. A $15.5 billion JETP for Vietnam agreed in December 2022 remains in the starting blocks, while a further JETP mooted for India — the world’s third-biggest carbon emitter — is in its infancy.

“We need to figure out, for example, Indonesia’s future electricity demand to calculate how much funding needs to be allocated to decarbonize the power sector while sufficiently providing energy,” a Japanese finance ministry official in charge of negotiations told Nikkei Asia.

“New data based on different prerequisites and from various sources are coming in at every moment, and opinions differ among parties on which data should be used to make accurate projections,” the official said, speaking on condition of anonymity because of the sensitivity of the matter. “We needed more time to think it through.”

Climate change, and climate finance, are likely to be high on the agenda for this month’s summits of both G20 leaders and ASEAN countries. Progress or otherwise on Indonesia’s JETP — described last year by John Morton, then a U.S. climate counselor, as “arguably the single largest country-specific climate investment partnership ever” — will loom large.

The Indonesia JETP intends to mobilize the $20 billion over the next three to five years. To access the funding, Indonesia is required to move forward its net zero carbon pledge by 10 years from 2060 to 2050, reach its total power sector emissions peak by 2030 — seven years earlier than previously projected — and cap carbon dioxide emissions at 290 megatons by that year, down from a baseline value of 357 megatons.

Without elaborating, Indonesia’s secretariat for the JETP said in a statement on Aug. 16 that the publication deadline of the “comprehensive investment and policy plan” has been “adjusted” because “additional data has been identified that need to be integrated into the technical model”. The plan will be launched “later this year” after securing time for public comment, it said, without specifying a detailed timeframe.

According to a joint statement on the launch of the partnership, Indonesia is to “roughly double the total renewables (energy) deployment over the course of this decade compared to current plans.” That would mean renewables making up 34% of Indonesia’s total power generation by 2030, up from the current 13%. Accelerating the early retirement of coal plants, conditional on international support, is also “a necessary element to achieve the above targets,” according to the deal.

The treatment of coal power remains a sticking point in discussions, according to Fabby Tumiwa, executive director of Institute for Essential Services Reform (IESR), a Jakarta-based thinktank which advises and conducts modeling work in drafting the investment plan.

Indonesia currently sources more than half of its electricity from coal. An ambitious economic growth projection during the early years of President Joko Widodo’s leadership led to the construction of many coal plants. Now, oversupply to the electricity grid is posing hurdles to renewable energy development plans.

In particular, addressing emissions from coal plants used and managed by industries rather than for general use “requires further investigation,” Tumiwa told Nikkei. Updated data show emissions are “quite enormous, beyond what has been predicted before when countries agreed on the JETP targets, and changes the equation” of how the coal fleet should look by 2030 — and what solutions need to be provided.

Another major bottleneck will be “coming to an agreement on an equitable and impactful financing structure for the deal,” said Melissa Cheok, Associate Director at Sustainable Fitch, which provides information for the ESG community.

The JETP fund is to use a mix of grants, concessional loans, market-rate loans, guarantees and private investments. Some $10 billion will come from public sector pledges, while the other half will be facilitated in private investment from an initial set of private financial institutions coordinated by the Glasgow Financial Alliance for Net Zero, which includes such global names as Bank of America, Citi, BlackRock, HSBC, Macquarie, MUFG and Standard Chartered.

“Each financing source may come from an array of financial institutions that could prioritize profit over impact,” Cheok told Nikkei. “Balancing the demands of a large and diverse group of global investors with equitable financing and environmental outcomes for Indonesia will pose challenges.”

For Indonesia, financing must come at favorable terms. Luhut Pandjaitan, a senior Indonesian official in charge of the JETP negotiations, repeated to reporters in June what he said he told U.S. officials after a meeting in Washington the previous month: “If you give us loans at commercial loan rates, then forget it — we can do this on our own … [otherwise] you’ll disrupt our economy.”

“The lack of a global definition on transition” among the investor group may be standing in the way, said Cheok of Sustainable Fitch.

Such differences “may make deal execution challenging because of confusion and lack of clarity over what can be considered a viable transition project,” said Cheok. “Lack of clarity can also lead to fears of being accused of transition-washing or greenwashing and may give investors room for pause.”

Still, the Japan finance ministry official working on JETP negotiations said, parties involved were “aiming for the same goal of making an effective, practically beneficial plan for Indonesia, so there are no controversies at the basic level.” Parties remain dedicated to launching the investment plan “as soon as possible,” the official said.

Delays have also crept up on Vietnam, whose JETP deal was secured last December from developed economies led by the European Union on the sidelines of a first-ever ASEAN-EU summit.

Hanoi has announced few details since then, except to establish a secretariat in July — three months behind schedule. Observers in Vietnam said prospects have been clouded by the one-party state’s jailing of anti-coal activists, criticized by EU officials in 2022 as “harassment of human rights defenders.”

While Vietnam hopes to ditch coal power and hit net zero emissions by 2050, its current energy plan factors in coal-based electricity capacity increasing by 2030. How such realities will synchronize with the JETP targets of accelerating the peak of Vietnam’s greenhouse gas emissions by five years, to 2030, and speeding the adoption of renewables to account for nearly half of electricity generation by the same year, remains unclear.

Despite slow progress under current JETPs, enthusiasm for new deals for other countries has been high. “The European Union wants to conclude more such agreements with ASEAN countries,” European Commission President Ursula von der Leyen told reporters in December.

India, which succeeded Indonesia in holding the G20 presidency this year, is now in discussions with developed countries for a JETP of its own.

But a sticking point for the nation is that signing up to a JETP “will entail that while you use these finances to accelerate your clean energy growth, you shouldn’t expand on fossil fuels or coal-based resources,” said Sunil Dahiya, an analyst at the Center for Research on Energy and Clean Air. This goes against New Delhi’s continued claims that it must increase coal power generation to meet its massive energy needs to fuel its rapidly growing economy.

The world’s most populous nation has been pushing back against the U.S. and Germany — co-leads of JETP negotiations for the investors’ side — on including a timeline to phase out coal due to concerns about coal-related job losses and power disruptions. A deal is unlikely to emerge this year during India’s term as G20 president, India watchers say.

Nevertheless, climate finance experts expect JETP deals to ultimately catalyze the broader, vast investment needs to change developing economies’ carbon-intensive energy systems. In the case of Indonesia, the Jakarta thinktank IESR estimates a minimum of $150 billion is required to actually meet the goals outlined in the JETP.

“How Indonesia’s deal is eventually structured will have implications for other emerging markets such as Vietnam and India,” said Cheok of Sustainable Fitch.