Trump administration pulls more than $1bn of pledged funding for SA’s energy transition

6 Mar 2025

The Trump administration has officially cut $1bn in planned investment in South Africa’s energy transition.

The United States government under President Donald Trump’s administration has withdrawn from the Just Energy Transition Partnership with South Africa, taking with it $56-million in grant funds and $1-billion in potential commercial investments by the US International Development Finance Corporation.

The US pulling out of the partnership lowers international funding pledges to South Africa from $13.8-billion to $12.8-billion, mainly affecting potential private investments.

Just over a week ago, Daily Maverick reported that Electricity and Energy Minister Kgosientsho Ramokgopa said there was a risk that the US would pull its share of the International Partners Group’s funding for South Africa’s Just Energy Transition Investment Plan.

Read more: Ramokgopa warns of risk of US pulling its Just Energy Transition funding

That risk has now become a reality.

In a statement on Thursday, the Just Energy Transition Project Management Unit in the Presidency acknowledged the US’s decision.

“The South African government was formally informed of the decision by the US Embassy on 28 February 2025, citing the executive orders issued by President Trump on 20 January and 7 February 2025,” it reads.

The International Partners Group, initially comprising France, Germany, the UK, the US and the EU, has pledged and in some instances committed significant funding to support South Africa’s Just Energy Transition Investment Plan — aimed at transitioning the country from a carbon-intensive economy to a low-carbon economy and society while ensuring a just and equitable process for affected communities.

The International Partners Group initially pledged $8.5-billion at the UN Climate Change Conference (COP26) in 2021, to catalyse the first phase of this transition.

In the years since, Denmark, Spain, Switzerland, the Netherlands and Canada, along with institutions such as the World Bank and the African Development Bank, have joined the effort, which brought the total pledge to $13.8-billion.

The US’s total bilateral contribution to the Just Energy Transition Investment Plan is smaller than all other partners, barring Canada, Denmark, and Switzerland, and less than half the size of Spain’s pledged contribution.

South Africa is one of the top 15 greenhouse gas emitters globally, with four-fifths of its emissions stemming from energy, primarily coal-fired electricity generation. Emissions and climate change are global challenges, but the South African context offers a more cost-effective mitigation option than in the developed partner countries.

According to the World Bank and the Brookings Institute, renewables, such as wind and solar, are already the least-cost option for South Africa considering the deteriorating state of its coal infrastructure, the costs of modernising it with abatement technologies and the billions in indirect costs due to its unreliability. Transitioning to a renewables-dominated energy system, therefore, not only reduces emissions but also addresses the country’s electricity supply challenges.

The Just Energy Transition Project Management Unit, in its Just Energy Transition Quarterly Progress Report for the period ending 31 December 2024, notes that the Just Energy Transition Investment Plan shows that R1.5-trillion (about $100-billion) in investment is needed from multiple sources, including fiscal budgets, multilateral development banks, bilateral donor countries, the private sector, and philanthropies.

“The $13.8-billion international financing pledged to date includes grants, concessional loans, and commercial debt and equity,” the authors of the report write.

Read more: ‘There’s no belief people will benefit’ — Mpumalanga mining communities’ deep mistrust of just transition

One of the achievements the project management unit touts is that private sector investment in renewable energy has already surpassed R350-billion since 2023. Moreover, $56-million in grants has been deployed in Mpumalanga to address economic diversification and community development in the province with a populace most vulnerable to the impacts of the transition.

Joanne Yawitch, head of the project management unit in the Presidency, said: “South Africa remains steadfast in its commitment to achieving a just and equitable energy transition,” adding that “all other International Partners Group partners remain firmly committed to supporting South Africa’s Just Energy Transition Investment Plan.” DM

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