Transition Supporting the phase-out of fossil fuels

Whilst various industrialised countries and emerging economies have been making great progress, especially with regard to renewable energy, many poorer countries in Asia, Africa and Latin America are still lagging far behind. This is less a question of a lack of will or a lack of energy resources and more a matter of coping with the particular challenges that many of these countries face.

Their energy demand is growing as their economies become more developed. In such a situation it is tempting to rely on coal, oil and gas as a way to achieve rapid economic growth, because the markets for fossil-based forms of energy are well established, whilst renewable energies sometimes call for new value chains, new infrastructure and high initial investment. Economic performance and jobs could also be lost in the phase-out of fossil fuels, posing major problems for whole regions.

Because of that, the countries of the Global South need international assistance for the energy transition, for building the necessary infrastructure and for setting up the social programmes needed to cushion the impact on their populations.
The BMZ is assisting its partners in their efforts to develop new branches of industry beyond coal, oil and gas. Many of these countries have enormous renewable energy potential – they are located in sunny regions, have rivers with a plentiful flow of water, and frequently also have good potential for wind power, for example along the crests of mountain ranges or in coastal areas. The BMZ is an advocate for a just transition into the new era of energy generation. Any negative impacts that might arise from the energy transition must be balanced out and cushioned so that they are socially just. This can be achieved through social protection systems, by establishing alternative markets and market opportunities, and by creating jobs. A “just transition” means taking possible economic and social distortions into account at an early stage. People will only accept the change which the energy transition entails if they are included in the process and their needs are taken into consideration.

One way that the BMZ supports this is through Just Energy Transition Partnerships (JETPs). The first JETP was established in 2021 with South Africa. It was followed by JETPs with Indonesia, Viet Nam and Senegal. These partnerships are about accompanying the phase-out of fossil energy, especially the phase-out of coal, whilst at the same time expanding the use of renewable energies in a way that is socially just.

From a long-term point of view, renewable energies are a sound option: they are cheaper than fossil fuels, they create jobs with a viable future, improve energy supply both on- and off-grid, reduce dependence on expensive energy imports and protect the climate. Building out renewables can also become an important driver of development for the countries of the Global South.