South Africa relies on coal to generate about 80% of its electricity and has the most carbon-intensive economy of any of the Group of 20 nations.
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A $9.3 billion climate deal rich nations struck with South Africa to help it transition to clean forms of energy will forge ahead despite the withdrawal of the US, with other partners remaining committed to it, the UK’s climate envoy said.
The US had planned to contribute about $1 billion in commercial loans to the Just Energy Transition Partnership, or JETP, which was agreed during President Joe Biden’s tenure. Similar deals were struck with Indonesia and Vietnam. France, Germany, the European Union, the UK, the Netherlands and Denmark are part of the South African deal.
“The US withdrawal is regrettable,” Rachel Kyte, the UK’s climate envoy said. “The rest of the world moves on.”
President Donald Trump, who succeeded Biden and has clashed with South Africa over its land-expropriation and foreign policies, was widely expected to pull out of the deal given his skepticism about global warning.
A unit in South African President Cyril Ramaphosa’s office said notification of its exit had been received, without giving further details.
Kyte said she was unaware whether the US has also withdrawn from the Vietnam and Indonesia programs.
South Africa relies on coal to generate about 80% of its electricity and has the most carbon-intensive economy of any of the Group of 20 nations.
The JET funding was contingent on it lessening its dependence on climate-warming fossil fuels. The program’s implementation has been led by France and Germany, which have provided €1.5 billion ($1.6 billion) in concessional loans so far.
“It leaves the JETP in the same place,” Kyte said. “The rest of the international partner group is committed to the South African energy transition.”
The next step in the South African program, she said, was to focus on building out the grid. The transmission network is strong in the east of the country, where coal deposits are situated, but weak in the west, where the nation’s best solar and wind resources lie.
“South Africa is an attractive international investment destination,” Kyte said. “If we can get that grid sorted out, then I think there’s no reason to believe we can’t build that green energy out at pace.”
The JETP programs were initially hailed as a breakthrough when they were first conceived in 2021 because, in theory at least, they solved a crucial problem: How to bring together public and private money to make it economically feasible for large developing nations to wean themselves off the use of coal to produce electricity. South Africa’s was the first to be agreed.
The initiative has however struggled to deliver many of the intended objectives so far because of slow progress in financing efforts, political leadership changes in Indonesia and Vietnam, and the complexity of shuttering power plants that often have many decades of remaining operational life.
South Africa’s recurrent power outages have also stiffened political opposition to their closure. Many of its plants are close to their mandated closure dates and some are beyond them.
The programs also only represent a fraction of the total financing required. Annual energy transition investment topped $2 trillion globally last year, yet that was only about 37% of the total that’s needed to put the world on track for net zero emissions by 2050, according to a BloombergNEF report.