SA is seeking alternative funding to plug a climate financing gap of more than $1bn, after the US withdrew from the Just Energy Transition Partnership (JETP) with the UK, France, Germany and the EU.
Indonesia, Vietnam and Senegal, which are also beneficiaries of loans, financial guarantees and grants from developed nations — known as the International Partners Group (IPG) — to help them move away from coal, are also likely to be affected as the US escalates its antagonistic stance towards green energy.
The JET project management unit, located in the presidency, said it was told of the US decision to withdraw from the climate financing initiative last Friday. The US embassy in SA cited President Donald Trump’s executive orders signed on January 20 and February 7.
“The withdrawal of the US from the JETP reduces the current overall international JET pledges to SA from $13.8bn to $12.8bn, largely in respect of commercial investment potential,” the unit said in a statement on Thursday.
“SA remains steadfast in its commitment to achieving a just and equitable energy transition,” said unit head Joanne Yawitch. “All other partners remain firmly committed to supporting SA’s Just Energy Transition Investment Plan (JET-IP).”
“The US’s 2021 pledges to SA’s JET Investment Plan (JET IP) comprised $56m in grant funds and $1bn in potential commercial investments by the US International Development Finance Corporation (DFC). No concessional loans were offered by the US to SA for the JET IP.”
The total R1.5-trillion plan is integral to SA meeting is commitments to reduce carbon emissions. JET-IP seeks to put the country on course to achieve its revised nationally determined contributions submitted at COP26.
The revised nationally determined contributions committed the country to reduce carbon emissions by 350-million tonnes to 420-million tonnes of carbon dioxide equivalent by 2030, and to achieve net-zero emissions by 2050. That would be a reduction of about 20%-33% from current emissions by 2030.
Remaining pledges
Pledges made by individual countries and the EU amount to about $10bn and those by multilateral development banks $3.9bn.
Of the total, $836m is in the form of grants, $450m in highly concessional loans from the Climate Investment Funds — largely intended for Eskom and the communities around power stations in Mpumalanga.
A further $7.7bn is concessional loans is mostly intended for Eskom, and $3bn in commercial debt and equity is to support the private sector, plus $1.9bn as export credits.
“The US’s 2021 pledges to SA’s JET-IP comprised $56m in grant funds and $1bn in potential commercial investments by the US International Development Finance Corporation. No concessional loans were offered by the US to SA for the JET-IP,” the JET project management unit said.
The department of international relations & co-operation said that “with the US withdrawal, associated financial pledges are also withdrawn. Grant projects that were previously funded and in planning or implementation phases have been cancelled”.
“SA notes the decision and remains committed to the implementation of international agreements, including decisions taken at the historic Paris Climate Change Conference. SA & other international partners will evaluate the implications of the US withdrawal from the JET-IP.”
Firing line
The US withdrawal does not come as a surprise because the country had already withdrawn from the Paris Agreement.
SA has also been in the firing line of the US administration since January when Trump signed an executive order halting funding to SA and offering refugee status to white Afrikaners. The SA government has said it would continue to use available diplomatic channels to engage the US.
In his address at the Energy Indaba on Wednesday, energy and electricity minister Kgosientsho Ramokgopa warned that geopolitical uncertainties would negatively impact on climate commitments and trade.
“We convene in a world where multilateral co-operation is increasingly under strain. Global capital flows remain deeply unequal. Trade policies are increasingly politicised and the commitments under the Paris Agreement remain largely unfulfilled,” Ramokgopa said.
“The weaponisation of trade and finance further worsens existing disparities, making it even more difficult for developing nations to access the resources necessary to transition for sustainable development,” he said.
Update: March 10 2025
This story has been updated with figures regarding US climate financing.
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