The Trump administration has pulled $1 billion from South Africa’s energy transition plan, marking a significant setback for the country’s shift toward renewable energy. The decision, which includes withdrawing $56 million in grant funding, was communicated to the South African government on February 28, 2025, citing executive orders issued by President Donald Trump.
Photocredit:france24.com
U.S. Withdrawal and Its Impact on Climate Financing
The Just Energy Transition Partnership (JETP), a key initiative to help South Africa transition from coal to renewable energy, had originally secured $13.8 billion in international pledges. With the U.S. exit, this amount is now reduced to $12.8 billion, primarily affecting potential private investments.
The U.S. was a key member of the International Partners Group (IPG)—which includes France, Germany, the UK, the U.S., and the EU—and played a role in the initial $8.5 billion pledge announced at COP26 in 2021. Over time, additional contributions from countries like Denmark, Spain, Switzerland, the Netherlands, and Canada, alongside institutions like the World Bank and the African Development Bank, had increased the total to $13.8 billion.
South Africa’s Presidency Just Energy Transition Project Management Unit confirmed the U.S. withdrawal in a statement on Thursday, noting that all other international partners remain committed to the investment plan.
South Africa’s Energy Transition and Funding Needs
South Africa remains one of the top 15 greenhouse gas emitters globally, with nearly 80% of its emissions coming from coal-fired electricity generation. Transitioning to renewable energy is not only essential for reducing emissions but also for addressing the country’s ongoing electricity crisis.
The Just Energy Transition Investment Plan (JET-IP) outlines that R1.5 trillion (approximately $100 billion) is required from various funding sources—including public budgets, multilateral development banks, bilateral donor nations, private investors, and philanthropic contributions—to fully implement the transition.
According to the World Bank and Brookings Institute, renewable energy sources like wind and solar are already the most cost-effective solution for South Africa due to the deteriorating state of its coal infrastructure and the high costs of modernizing coal plants with emission-reduction technology.
Progress and Challenges in the Just Energy Transition
Despite the setback, private-sector investment in renewable energy has already surpassed R350 billion ($18.6 billion) since 2023. Additionally, $56 million in grants has been deployed in Mpumalanga—the region most affected by coal dependency—to support economic diversification and community development.
Joanne Yawitch, head of the Just Energy Transition Project Management Unit, reassured stakeholders that South Africa remains committed to achieving a just and equitable energy transition, emphasizing that the remaining international partners continue to support the plan.
What’s Next for South Africa’s Energy Transition?
With the U.S. withdrawing $1 billion from South Africa’s energy transition plan, the country must now explore alternative funding sources to bridge the financial gap. While the loss of U.S. support is a challenge, ongoing backing from other nations and institutions ensures that South Africa’s renewable energy transition remains on track.
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SOURCE: Ethan van Diemen VIA dailymaverick.co.za
