Do Just Energy Transition Partnerships collide or converge with substantive investment law standards? Case studies from Indonesia and Vietnam

Abstract Just Energy Transition Partnerships (JETPs) are novel financing mechanisms that encourage coal‐dependent emerging economies to transition away from fossil fuels. JETPs aim to facilitate coal phaseout and transitions to renewable energy through private and public financing. However, JETPs face significant obstacles, including arbitration threats from international investors based on expropriation and fair and equitable treatment standards. This article thus examines the tensions between these substantive standards and enquires whether investment law facilitates or impedes the just energy transition on two fronts. First, it analyses how coal‐fired power plants could be decommissioned early while preventing arbitration claims and hefty compensation requirements; second, it examines the effectiveness of de‐risking tools to address risks pertaining to renewable energy investments, especially regulatory risks. This article critically analyses relevant legal and financial mechanisms with a focus on mechanisms facilitating decommissioning coal and de‐risking renewables. The paper juxtaposes international and national obligations at the climate‐investment law nexus. It then suggests potential legal reforms based on two case studies: Indonesia's and Vietnam's JETPs. The article argues that JETPs and investment laws, including investment contracts, can be mutually supportive provided they are carefully designed and implemented.