In January 2025, the United States officially withdrew from the International Partners Group (IPG)—a coalition of wealthy nations supporting South Africa’s Just Energy Transition Partnership (JETP). The announcement came as a surprise to many and has raised new questions about the future of one of Africa’s most ambitious climate finance programs.
The JETP, originally launched at COP26, was hailed as a landmark model for climate finance in the Global South. With an initial commitment of $8.5 billion from partners including the U.S., UK, Germany, France, and the EU, the aim was to help South Africa decarbonize its coal-heavy power sector while safeguarding workers and communities dependent on fossil fuels.
The U.S. exit signals both a challenge and an opportunity—one that could reshape how developing nations engage with climate finance, and how partnerships like these are structured moving forward.
Understanding the Just Energy Transition in South Africa
South Africa generates around 80% of its electricity from coal, making it one of the most carbon-intensive economies in the world. The transition to clean energy is essential not only to meet national climate goals, but also to modernize its crumbling power infrastructure—currently plagued by rolling blackouts and energy insecurity.
The Just Energy Transition Partnership is designed around three key principles:
- Decarbonization – phasing out coal in favor of renewable energy like wind, solar, and green hydrogen.
- Social Equity – protecting jobs, livelihoods, and communities in coal-dependent regions.
- Economic Restructuring – using clean energy investment as a springboard for inclusive industrial growth.
While progress has been made—with over $1 billion disbursed to renewable infrastructure and reskilling programs—the full $8.5 billion has yet to be unlocked, and implementation has been slower than hoped.
What the U.S. Withdrawal Means
The Biden administration cited internal budgetary constraints and shifting geopolitical priorities as reasons for pulling back from JETP, just months after reaffirming its commitment at COP28.
Implications of the exit include:
- A $1.5 billion shortfall in the original funding pledge
- Potential loss of momentum for South Africa’s energy reform process
- Reduced investor confidence in climate finance consistency
However, this move has also galvanized other partners to reaffirm their commitments. The EU and Germany have pledged additional support to make up for the gap, and the African Climate Foundation has called for stronger local ownership of the transition process.
Local Leadership is More Important Than Ever
The U.S. exit underscores a broader reality: Africa must drive its own energy future. While international climate finance is crucial, the path to net zero must be built on locally-led, context-specific solutions.
In response, South Africa has:
- Accelerated reforms to unbundle its national utility, Eskom, to improve grid stability and renewable integration.
- Expanded its Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), unlocking new solar and wind capacity.
- Launched its Green Hydrogen National Strategy, positioning itself as a global supplier of clean fuels.
These are critical steps toward reducing reliance on coal and increasing energy security through a diversified mix.
CLG Energy Transition Centre: Supporting Africa’s Just Energy Transition
At CLG Energy Transition Centre, we’ve long believed that the future of energy in Africa must be decentralized, decarbonized, and locally owned.
We support:
- Investors seeking to develop utility-scale or hybrid renewable projects in South Africa
- Governments designing legal frameworks and transition roadmaps
- Private sector developers in need of grid access, environmental licensing, and stakeholder engagement strategies
We also help clients navigate emerging climate finance instruments, such as:
- Blended finance models
- Carbon credit markets
- Green bond issuance
- Debt-for-climate swaps
Our legal and advisory teams ensure projects remain bankable, compliant, and inclusive.
The Bigger Picture: JETPs Across the Global South
South Africa’s experience with the JETP is being closely watched by other countries considering similar partnerships. Indonesia, Vietnam, and Senegal have all launched their own versions, with varying degrees of success.
What South Africa has shown is that:
- Climate finance must be predictable and transparent
- Just transition plans must be tailored to local labor and industry
- Strong institutions and policy clarity are key to execution
As these models evolve, they must go beyond large donor commitments and include private capital, regional banks, and African-led climate funds.
Conclusion: South Africa’s Transition is Still On Track
Despite the withdrawal of a major partner, South Africa’s commitment to a just energy transition remains strong—and increasingly self-driven. The shift toward renewables, green hydrogen, and industrial decarbonization is gaining momentum, supported by local policy reforms and international collaboration.
The moment calls for renewed investor confidence, innovative finance mechanisms, and platforms like CLG Energy Transition Centre that can bridge the gap between policy and execution.
The U.S. may have stepped back, but Africa’s energy transition is still moving forward.
Shaping Africa’s Future at the Energy Transition Centre
As we embark on a critical journey towards a sustainable energy future, your involvement is crucial. The Energy Transition Centre at CLG is at the forefront of transforming Africa’s energy landscape, advocating for an energy mix, including renewable energy adoption to foster economic growth and improve quality of life. We invite you to join us in this essential mission. Whether you’re an industry expert, a policy maker, or a concerned citizen, your contribution can make a significant difference. For guidance, insights, or to share your ideas, feel free to contact the Energy Transition Centre today with questions:
- Oneyka Ojogbo, Head of Energy Transition Centre: [email protected]
- Leon van Der Merwe, Head of Energy Transition Centre: [email protected]
- Brenda Wagura: [email protected]
Together, we can shape a brighter, more sustainable future.
