US pulls out of flagship $45bn global climate finance coalition

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The US has withdrawn from a flagship global climate financing programme by rich nations to help developing countries quit coal, putting the $45bn effort in jeopardy as a result of the latest green retreat by Donald Trump.

The US president, who has called climate change a hoax, has made sweeping cuts to climate programmes since coming to power, axing funding and jobs even at critical US domestic weather and science agencies, such as the National Weather Service and the National Oceanic and Atmospheric Administration.

The US was a core member of the so-called Just Energy Transition Partnership (JETP), an initiative launched in 2021 to assist South Africa, Indonesia and Vietnam to abandon fossil fuels and move to renewable energy through a combination of loans, grants and private finance. It was designed to incentivise those countries to cut emissions in return for funding.

In letters sent to participating countries in the past week, the US said it was withdrawing from the JETPs covering Indonesia, Vietnam and South Africa, after a Trump’s executive order called for putting America first in international deals, according to three people familiar with discussions.

A terse one-page letter sent to South Africa’s energy minister from the US embassy, seen by the Financial Times, said the order revoked the US’s international climate finance plan.

Dana Brown, the US chargé d’affaires, said it meant “all associated financial pledges are also withdrawn [and] grant projects that were previously funded and in planning or implementation phases have been cancelled”.

At the time of their launch by former US climate envoy John Kerry, the JETPs were seen as crucial to building trust between rich countries, responsible for the bulk of the world’s historical greenhouse gas emissions, and developing nations.

Poorer countries are facing the consequences of global warming while struggling with the need for energy to develop their economies.

The US exit from the programme meant “the credibility [of the JETPs] is lost”, said one person familiar with Indonesia’s participation.

Rachel Kyte, the UK’s climate envoy, said on Thursday that the US’s exit marked a “withdrawal of commercial finance and so while regrettable, we believe there is a clear path forward”.

Other members of the international coalition — the advanced economies, including the EU, the UK and Japan — remained committed, she said.

German development state secretary Jochen Flasbarth also called the US move “regrettable”, but added: “We are convinced that the work of the Just Energy Transition Partnerships can be continued successfully.”

Germany has stepped up to co-lead the Indonesian programme alongside Japan, in lieu of the US. “The decision to share responsibility between so many partners is now turning out to be very helpful,” Flasbarth said.

In recent weeks, the UK and Germany have been among the countries trying to shore up the JETPs.

Indonesia, one of the top carbon emitters in the world, is set to receive $20bn, making it the biggest recipient. But the programme has been criticised since its launch for being too reliant on loans and the slow disbursement of funds. Hashim Djojohadikusumo, Indonesia’s climate and energy envoy, in January said it was a “failed programme”.

South Africa’s JETP unit, sitting under the presidency, said the US withdrawal reduced the overall pledges to South Africa from $13.8bn to $12.8bn. This showed it was not existential for its programme.

The US had pledged $56mn in grant funding, and $1bn in potential commercial investments, which will now not take place. 

“All other [international] partners remain firmly committed to supporting South Africa’s [programme],” said Joanne Yawitch, head of the unit. It would speak to other participants to “source alternative funding”, she said. 

The issues with the JETPs come as countries around the world continue to clash over climate finance. At COP29 in Baku in November, developing nations heavily criticised rich countries for their failure to provide effective financing to deal with climate change. 

At last week’s meeting of the G20 finance ministers held in Cape Town, no formal agreement could be reached between the countries on climate finance. 

South Africa’s finance minister Enoch Godongwana said certain countries had “a different view on how we manage climate finance”, with other sources in those meetings identifying the US as the holdout.

Additional reporting by Aime Williams