The US has quit the Just Energy Transition Partnership (JETP) initiative it helped launch to support several developing countries in their shift away from coal to clean energy, ending its contribution to the $45 billion in climate finance pledged to back their efforts.
The withdrawal is the latest in a rapid-fire series of US funding cuts for work in developing countries after President Donald Trump, a climate change sceptic, came to power in late January. His right-wing administration has since given notice that the US will leave the Paris Agreement, rescinded pledges of $4 billion to the Green Climate Fund, and given up the US seat on the loss and damage fund board.
The JETP initiative was launched in 2021 to great fanfare, with South Africa signing the first deal with the International Partners Group (IPG) – including the European Union, Germany, the UK, France and the US – at the COP26 climate summit in Glasgow.
The group pledged to mobilise an initial $8.5 billion between 2023 and 2027, a total that increased by several billion dollars as the Netherlands and Denmark joined. In 2022, Indonesia negotiated a JETP deal with a $20-billion commitment from the IPG, including $10 billion from commercial investors, followed by Vietnam with $15 billion.
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Last week, the US wrote letters to those three recipient countries – Indonesia, Vietnam and South Africa – informing them of its decision to withdraw funding as part of the IPG, a coalition of donor countries and financial institutions providing funding and other technical support to the deal.
A fourth JETP was agreed with Senegal, but the US was not part of that from the beginning.
Germany described the US decision to exit as “regrettable”. However, German Development State Secretary Jochen Flasbarth said his government is convinced the work of the JETPs “can be continued successfully”.
As Climate Home News reported last year, Germany and the UK disclosed at the COP29 climate summit last year that they were hesitant to pursue additional JETPs and set out the lessons learned so far.
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But in his statement on the US withdrawal, Flasbarth said the partnerships “have grown”, adding that “the decision to share responsibility between so many partners is now turning out to be very helpful”.
He added that while public funding plays an important role in the JETPs, the mobilisation of private investment “is far more important”. The partnership has been working on the “conducive environment and reliable regulations” to stimulate such investment flows, he noted.
In South Africa, for example, energy legislation reforms laid the foundation for “a market-led boom in renewable energy”, Flasbarth said, meaning that renewables are now mostly cheaper than fossil fuels.
UK climate envoy Rachel Kyte said in South Africa this week that while the US exit is “regrettable”, she believes there is a “clear path forward”, in comments reported by the Financial Times.
Kyte went on to announce additional funding support for South Africa’s JETP to help prepare the country’s wholesale electricity market and explore interim transmission solutions.
‘Dangerous precedent’
While the IPG plans to move on without the US, environmental group 350.org said the US remains morally bound to deliver on its financial obligations to developing countries, adding that the exit is “deeply concerning” for the future of the planet and communities dealing with escalating climate chaos.
“Big polluters like the United States are financially obligated to support climate-vulnerable nations,” said Norly Mercado, Asia regional director at 350.org. Mercado said the US exit sets a “dangerous precedent” and signals to the rest of the world that the second-biggest emitter of planet-heating gases will no longer be accountable for its climate obligations.
Mercado added that the JETP withdrawal by the world’s richest country should not serve as an excuse for developing countries to roll back their commitments to phase out coal and urged them to accelerate the adoption of cleaner renewable energy sources.
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Joanne Yawitch, head of South Africa’s Presidential Just Energy Transition Project Management Unit, said in a statement on Thursday, that the government remains “steadfast in its commitment to achieving a just and equitable energy transition”. She added that the country will seek alternative funding, while other partners in the IPG remain “firmly committed to supporting South Africa’s Just Energy Transition Investment Plan” .
The US pledge to South Africa included grant funding of $56 million and $1 billion in commercial investments, which the JETP unit said did not amount to a significant reduction from the total investment of $13.8 billion.
Thandolwethu Lukuko, Climate Action Network’s director for South Africa, said South Africa had not relied heavily on aid from the US for its JETP – which accounted for about 10% of the initial investment – and could proceed without it, with other partners able to fill the space left by the US.
But, he warned, broader climate policy changes and funding cuts by the US to mechanisms like the Green Climate Fund are “more worrisome” and could affect other countries’ ability to meet their climate goals.
