Banele Ginidza

The International Partners Group (IPG), a coalition comprising countries like the United Kingdom, Germany, France, and the European Union, has announced its intentions to fill the funding gap left by the United States after its withdrawal from the Just Energy Transition Partnership (JETP).

This decision follows the US severing its financial support, which had previously included $56 million (R1 billion) in grant funds and $1bn in commercial debt and equity aimed at aiding South Africa’s transition from coal to cleaner energy sources.

On Thursday, the UK's Foreign Commonwealth and Development Office released a statement highlighting the discussions among IPG partners to continue supporting initiatives that had been financially backed by the US.

The total initial international pledges to South Africa now amount to $12.8bn, which incorporates more than $9bn from the IPG along with contributions from Spain, Switzerland, and Canada. However, this total excludes Spanish export credits.

In their statement, the IPG reiterated their commitment to collaborating with the South African government and other stakeholders to allocate existing funding effectively.

"We look forward to continuing to work with the government of South Africa and other stakeholders to allocate existing funding in support of a just energy transition that will benefit all South Africans. The political, technical and financial support from the IPG remains strong and steadfast." the IPG said.

Originally announced at COP 26, the JETP initiative aims to facilitate South Africa’s move away from coal, paving the way towards a low-emission and climate-resilient economy.

While the US has halted its contributions, the IPG assures that the investment of over $2.5bn to date reflected a solid commitment to the partnership's goals. They anticipate that pledges from both the IPG and other development partners will exceed original commitments due to increased engagement.

Earlier this month, the Department for International Relations and Cooperation (Dirco) acknowledged the Trump administration revoking the US International Climate Finance Plan issued by the previous administration, including policies that were implemented to advance JETP.

"South Africa notes the decision and remains committed to the implementation of international agreements, including decisions taken at the historic Paris Climate Change Conference. South Africa and other international partners will evaluate the implications of the US withdrawal from the JETP," Dirco said.

This funding vacuum poses significant challenges, especially as various projects are already facing suspension. Among the first initiatives impacted is the electrification of South Africa’s informal settlements.

The United States Agency for International Development (USAID)-driven Power Africa programme was particularly ambitious in its plans to provide energy access to 24 municipalities by 2030.

Kouga Local Municipality in the Eastern Cape saw substantial progress under the programme, connecting 700 informal dwellings to the grid. However, as funding has now been entirely cut, local authorities are resorting to alternative financing.

Kouga Municipality's Mellise Baton confirmed that it had to resort to alternative means for funding the programme.

"All funding attached to the Power Africa Programme under the JET partnership has been stopped by USAID under the Trump leadership. All our own electrification in Kouga was done with internal funding and funding captured as part of human settlements programmes," Baton said.

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International Partners Group backs SA's Just Energy Transition as US cuts R1bn funding