foreign investment – Just Transition Initiative

Summary

This report discusses the potential for green job creation and sustainable development in the Asia-Pacific region in the context of just transitions. It outlines how the region could accelerate this transformation by creating clean energy jobs that contribute to climate change mitigation—provided certain policy measures are put in place.

The report explores some of the opportunities and challenges of green job creation in the Asia-Pacific, in particular in the climate-vulnerable Pacific islands and in the textile and garment industry, a polluting sector that is nonetheless an important source of women’s employment and foreign investment. It then explores lessons learned from just transition pilot programs in the Philippines and Uruguay.

The report groups its recommendations for how to address the challenges of a just transition in Asia-Pacific into five categories: policy and institutions, training and capacity building, social dialogues and collaboration, awareness raising, and financing.

Summary

This case study examines the implications of a surge in international investment in solar power in Indonesia since 2015. The spike in international investment partly reflects a broader shift from investment in the Global North’s established renewable energy markets to investment in emerging markets. Regulatory changes by Indonesia’s Ministry of Mineral and Energy Resources, which aimed to add 3.6 gigawatts of installed solar capacity between 2017 and 2019, also helped attract investment.

The surge in investment, however, does not fully align with Indonesia’s stated electrification goals. While foreign developers’ proposed projects will increase the country’s overall installed solar capacity, the investment landscape does not promote the small-scale, off-grid projects that would provide affordable and reliable electricity to the 25 million Indonesians currently without access. Additionally, the new pattern of investment has triggered a shift toward large-scale, centralized projects and more complex and opaque ownership structures as private financial institutions enter the market.

While investment has helped raise Indonesia’s installed solar capacity, it has done little to address the needs of the millions of Indonesians still without access to power. The current transition path has limited ability to achieve social and political transformations, suggesting a need for more thorough planning.