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Considering South Africa being formally informed by the United States Embassy on about the United States' decision to withdraw from the Just Energy Transition Partnership (JETP) – how does South Africa proceed?

The US had pledged in support of the JET Investment Plan (JET-IP), which was subsequently developed by South Africa, comprising $56 million in grant funds, and $1 billion in potential commercial investments by the US International Development Finance Corporation.

The JETP was expected to provide $8.5 billion in funding from partner countries (US, United Kingdom, European Union, Germany, and France) to support South Africa's transition from coal to cleaner energy. The US withdrawal could reduce the available funds or create uncertainty around the disbursement of pledged amounts.

State utility Eskom needs significant investment to upgrade infrastructure and transition to cleaner energy so the loss of US participation will hinder progress on Eskom’s restructuring and plans for renewables.

International investors may see the withdrawal as a sign of reduced global commitment to South Africa’s energy transition, possibly affecting future green investments. However, other JETP partners are still committed, so alternative funding options might be explored.

In addition, the withdrawal of the US could strain US-South Africa relations, especially as South Africa maintains ties with BRICS nations. This would see South Africa seeking more secure alternative partnerships with China and/or private investors to fill the funding gap.

South Africa’s ability to meet its climate targets (reducing carbon emissions and achieving net zero by 2050) is now at risk. Without sufficient support, the country will struggle to balance economic growth, job preservation in coal-dependent regions, and decarbonization efforts.

South Africa will have to explore several alternative funding sources to compensate for the US withdrawal from the partnership. South Africa could negotiate for increased contributions from the remaining partners. Institutions like the World Bank, IMF, and African Development Bank (AfDB) may provide concessional financing for energy transition projects.

Given South Africa’s strong ties to BRICS, the BRICS New Development Bank could be a viable alternative for funding renewable energy projects. China has shown interest in financing energy infrastructure in Africa.