Electricity Minister Raises Concerns Over US Withdrawal from Energy Transition Plan
Electricity and Energy Minister Kgosientsho Ramokgopa has expressed concerns over the potential withdrawal of the United States’ funding for South Africa’s Just Energy Transition Investment Plan (JET-IP), which aims to shift the country from fossil fuels to cleaner energy sources.
Ramokgopa indicated that the US share of the funding may be at risk due to the current administration’s policy changes.
“Of course, for our side, the JET-IP… we suspect that might be at risk — at least the US share, I can’t say that in absolute terms until we get confirmation, but [US] President [Donald] Trump has made it clear what their priorities are.”
Since taking office, Donald Trump has pushed for revised climate policies, focusing on promoting fossil fuels and rolling back renewable energy initiatives.
Notably, his administration has moved to withdraw from the Paris Agreement, which aimed to limit global temperature rises to 2°C above pre-industrial levels.
The Impact of Potential US Funding Cuts
The International Partners Group (IPG), which includes the US, France, Germany, the UK, and the EU, had committed to supporting South Africa’s transition through a substantial $13.9 billion pledge. This funding was intended to help implement the JET-IP, which aims to provide a fair and equitable energy shift for communities affected by the transition from fossil fuels.
Initially, at the COP26 summit in 2021, the group pledged $8.5 billion, with contributions from other countries and institutions increasing the total amount to $13.9 billion. The US portion includes $56 million in grants through the US Agency for International Development (USAID) and Power Africa, as well as $1 billion in commercial capital from the Development Finance Corporation.
South Africa’s Commitment Despite Funding Challenges
Ramokgopa emphasised that South Africa’s commitment to the Just Energy Transition would not be conditional on external financial contributions.
The estimated cost for South Africa’s energy shift is around R1.5 trillion ($81.5 billion). Ramokgopa acknowledged that while the government faces budget constraints and Eskom’s financial challenges, the country could rely on private sector investments to fund the transition.
Despite these challenges, he assured that South Africa had not yet fully tapped into the IPG’s pledged funds, and discussions with National Treasury were ongoing to clarify the terms, including the balance of concessional loans, grants, and the costs of other financial components.
Energy Transition and the US Shift in Policy
Ramokgopa also discussed the US’s stance on energy at the G20 meeting. He highlighted that the Trump administration had expressed concerns about the “affordable and inclusive energy transition” and had moved towards exploiting its oil and gas resources, rather than promoting renewable energy projects.
Trump’s decision to withdraw from the Paris Agreement and cut funding for green projects further complicated discussions around global energy transition efforts. Ramokgopa noted that the US seemed to want to “reset” the conversation on energy and warned that this would likely become a contentious issue at the G20 talks.
South Africa’s G20 Priorities and Complex Conversations Ahead
South Africa’s theme for its G20 presidency is “solidarity, equality, and sustainability”, building upon Brazil’s themes from the previous year.
Despite US Secretary of State Marco Rubio and US Treasury Secretary Scott Bessent opting not to attend G20 meetings, Ramokgopa confirmed that the US would be represented at the Energy Technical Working Group meeting later in February at a director-general level.
“What is comforting is that they’ve committed to attend, and attend at a high level.”
Ramokgopa concluded by expressing confidence that President Ramaphosa’s leadership would guide South Africa through the complex negotiations to secure the best possible outcomes for the country’s energy transition.