Under Trump 2.0, the United States withdrew from Just Energy Transition Partnerships such as the one with South Africa, resulting in significant financial setbacks that led to the cancellation of energy transition projects, compromised emissions reduction goals, and deepened dependence on coal power.
A man works at the Selemela Solar Power Plant, one of the largest solar power plants on the African continent, which contributes to the country's energy needs by generating renewable electricity from sunlight, in Lichtenburg, South Africa, on May 8, 2025.
© picture alliance / Anadolu | Ihsaan Haffejee
The United States (US) triggered a colossal shockwave that sent ripples worldwide, upending decades of coordinated climate action and shaking the global climate finance landscape. On 20 January 2025, President Trump signed an executive order titled “Putting America First in International Environmental Agreements”, which initiated the process of withdrawing the United States from the Paris Agreement. As a next step, the US withdrew from Just Energy Transition Partnerships (JETP) with South Africa, Vietnam and Indonesia on 6 March 2025. The resulting ripple effect undermines decades of coordinated climate action and forces the global community to recalibrate leadership and responsibilities in the fight against climate change. This withdrawal has significant implications for South Africa, resulting in the loss of USD 56 million in grant funds and USD 1 billion in potential commercial investments, reducing the total international pledge from USD 13.8 billion to USD 12.8 billion.
Launched at COP26 in 2021, the Just Energy Transition Partnership (JETP) was established as a dedicated financing mechanism to support emerging economies – specifically South Africa, Indonesia, Senegal and Vietnam – transitioning to low‐carbon energy systems. The core objective of the JETP extends beyond reducing dependence on coal and fossil fuels; it seeks to ensure a “just” transition by addressing the socioeconomic impacts on affected workers and communities. The International Partners Group (IPG) – consisting of Canada, the EU, France, Germany, Italy, Japan, Norway, the Netherlands, the UK, and the US – collectively pledged funding and support, reflecting a unified global commitment to sustainable energy development.
The US withdrawal from JETP has ignited strong criticism. Critics, including environmental organizations and international partners, argue that the move undermines US leadership on climate issues and shirks its historical responsibility as a major polluter. For instance, Germany’s Federal Ministry for Economic Cooperation and Development expressed regret over the withdrawal. Still, it remained optimistic about continuing JETP without US involvement, highlighting the partnership’s growth, particularly in South Africa. A joint statement from the International Partners Group (IPG), published on 19 March 2025, reaffirmed their commitment to supporting South Africa’s energy transition, noting the more than USD 2.5 billion already spent. The South African Government acknowledged the US withdrawal, reaffirmed its commitment to international climate agreements, and is evaluating the implications while seeking alternative funding to sustain its energy transition efforts.
The US withdrawal from the JETP and the Paris Agreement has set in motion a cascade of challenges for South Africa’s energy transition efforts. First, the reduced international pledge creates a financial shortfall that forces the cancellation of energy transition projects. Second, the funding gap risks delaying decarbonization in a coal-dependent economy, thereby jeopardizing the nation’s ability to meet its ambitious emission reduction targets. Third, the cut in funding disrupts the strategic transition timeline of Eskom – South Africa’s state-owned electricity utility – slowing investments in renewable infrastructure and prolonging reliance on coal power plants.
The South African Department of International Relations and Cooperation statement indicates that previously funded grant projects have been cancelled, whether planned or already in progress. Potentially affected projects include renewable energy installations, energy efficiency programmes, and upgrades to grid infrastructure. Delayed transitions could exacerbate existing challenges, such as energy poverty and unemployment in coal-dependent regions. For South Africa, this could mean slower progress on electrification efforts and continued reliance on outdated, polluting infrastructure, with potential job losses in coal areas without adequate transition support.
This funding gap increases the financial burden on remaining donors – such as the European Union, France, Germany, the UK, and other IPG members – who have to reassess and potentially raise their contributions to address the shortfall. For instance, President von der Leyen recently announced a Global Gateway Investment Package worth EUR 4.7 billion, with the largest share of EUR 4.4 billion earmarked for projects that support a clean and just energy transition in South Africa.
South Africa is a coal-dependent economy. As the continent’s largest coal producer, the nation exports around 30 per cent of its domestic output and holds the world’s fifth-largest recoverable coal reserves. This makes South Africa the leading CO₂ emitter in Africa and the world’s ninth most carbon-intensive economy. In 2022, coal accounted for 84 per cent of electricity generation in South Africa, with coal-fired power stations being a significant source of greenhouse gas emissions, posing risks to achieving climate targets. The International Monetary Fund estimates that phasing out coal in line with a 1.5°C limit could yield a global net economic gain of USD 85 trillion, emphasizing the need for decarbonization.
However, insufficient financial resources present a significant barrier to this shift, adversely affecting South Africa’s commitments to reduce emissions by 42 per cent by 2030 and reach net zero by 2050. Limited funding may slow progress on electrification and infrastructure upgrades, particularly in coal-dependent regions where job retention is a key concern. The withdrawal risks South Africa not meeting carbon emission reductions and net zero by 2050.
The United States’ withdrawal from the JETP has undermined confidence in international climate commitments and significantly reduced the capital available for critical energy infrastructure investments in South Africa. This financial setback challenges Eskom’s energy transition timeline, as the utility depends on such funding to implement its Just Energy Transition (JET) strategy, which was established in 2020. Under this strategy, Eskom aims to decommission 10 coal power stations by 2040 and 2050, targeting key sites such as Komati, Grootvlei, Camden, Hendrina, Arnot, and Kriel for closure by 2030. However, the lack of US funding could stall investments in renewable energy projects – such as microgrids, battery storage, and wind turbines – essential for reducing South Africa’s reliance on coal. These delays may also hinder infrastructure upgrades needed to integrate more renewable energy into the grid, potentially prolonging the country’s coal dependence and impacting economic growth and job preservation in coal-dependent regions. Despite these challenges, Eskom remains committed to its JET strategy. To adapt, Eskom is exploring innovative solutions, such as repurposing decommissioned coal plants for renewable energy projects.
In conclusion, the US withdrawal from JETP slashes South Africa’s energy transition funding by USD 1 billion, leading to cancellation of energy transition projects. The resulting financial shortfall risks missing 2030 emission targets, prolonged coal reliance, and stagnation in coal-dependent regions. South Africa can seize this opportunity to diversify and strengthen its global partnerships, thereby accessing alternative financing and bridging the gap.
Dr Phemelo Tamasiga is an Associate at Megatrends Afrika and a Researcher at the German Institute of Development and Sustainability (IDOS).
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