South Africa’s energy transition resists Trump’s tensions

Hello and welcome to Energy Source, who comes to you from New York.

The FT energy team returned from Ceraweek in Houston with bulky notebooks full of stories and a better appreciation of where Donald Trump’s administration is directed with his “energy domain” agenda.

The deregulation will be a key issue of Trump 2.0, as evidenced by the proposed repeal of dozens of Environmental Rules of Lee Zeldin, administrator of the United States Environmental Protection Agency. The agency is now more interested in measures to reduce energy invoices, instead of eliminating toxic emissions that damage human health, critics say.

Doug Burgum, Trump’s energy tsar, issued a meeting call to the industry to drill and extract more on federal lands while committing to sweep the rules that hinder project approvals. Coal, gas and nuclear energy that can provide the so -called “Baseload Base”, or the 24 -hour power, are back in Vogue in Washington, while renewable energies, wind and solar energy are unpleasant.

The White House sees the oil and gas sector as an economic driver for the US economy and government budget. Encourage companies to drill more in federal lands produces more royalties that can help address national debt. And the sale of more liquefied natural gas abroad can help join commercial deficits with partners in Europe and Asia.

Oil and gas executives at the conference applauded the fuel agenda in favor of Trump’s fossils, although concerns about the formulation of unpredictable policies, tariffs and a sunk stock market bubbled under the surface.

The senior leaders of the energy industry are scheduled to meet with the president at the White House on Wednesday, where these thorny issues will undoubtedly be transmitted outside the camera. But for now, the oil and gas industry, which was a key sponsor of Trump’s electoral campaign, continues to adopt his vision of unleashing the American “energy dominance”.

A story that deserves a mention today is a long reading directed by Amanda Chu, which focuses on how Big Oil is increasingly using the courts to silence critics. Energy Transfer vs Greenpeace in North Dakota is emerging as a key test of freedom of expression in Trump’s era.

For today’s main article, our correspondent in Johannesburg, Rob Rose, analyzes how South Africa is sailing through Trump’s dismantling support for global decarbonization initiatives.

Thanks for reading, Jamie

The EU fills the $ 1 billion gap in the ‘energy transition’ of South Africa

The EU has increased to fill a hole of $ 1 billion in the Energy Transition Plan of South Africa created by the “immediate” retirement of the Donald Trump administration of the historical global climate financing program.

Earlier this month, the United States said it retired from the Fair Energy Transition Association (JETP), launched in 2021 to help South Africa, Indonesia and Vietnam change coal to renewable energy. The United States, together with the United Kingdom, France, Germany and the EU promised $ 45 billion to the project.

Washington’s change of sense was not unexpected after his withdrawal from the Paris Climate Agreement on Trump’s first day in office, as well as his declared belief that climate change is a hoax. But he left the three countries fighting.

In a brief letter of 166 words sent to the Government of South Africa, obtained by the FT, the former United States Chargé, Dana Brown, said Trump’s executive order, which requires putting the United States first in international agreements, “revokes and rescinds the International Climate Finance Plan of the United States issued by the previous one by the previous one [Biden] administration”.

Brown wrote: “Effective immediately, the United States is no longer a member of the International Partners Group for fair energy transition associations for Indonesia, South Africa and Vietnam” and “All associated financial promises also withdraw.”

Subsequently, a highly qualified race diplomat resigned as tensions between South Africa and the United States to the new minimums, with Trump ending the aid to HIV/AIDS programs of the country on a new law of expropriation of land. Last Friday, the United States declared the South Africa ambassador to Washington “Non Grata”.

The Jetp Unit of South Africa, which is under the presidency, said that the withdrawal of the United States reduced general promises to the country from $ 13.8 billion to $ 12.8 billion. The United States had promised $ 56mn in subsidy funds and $ 1 billion in possible commercial investments.

Speaking to the Energy Source, Dion George, Minister of Environment of South Africa, Fisheries and Silviculture, said that all other countries remain committed to the association. A new commitment obtained from the EU last week will fill part of the vacuum, he said.

He said: “The EU committed € 4.7 billion to South Africa for a series of projects, and this includes for the transition of fair energy, so this will help fill the void. This illustrates that the program must continue, when it comes to the energy transition, regardless of what the United States is doing.”

The commitment occurred at a summit held between the EU and South Africa in Cabo del Cape last week, in which the president of the European Commission, Ursula Von der Leyen, said that the € 4.7 billion ($ 5.1 billion) would be used in part to underpin the fair energy transition project and for green energy.

In a clear reference to the United States, von der Leyen said that “we know that others are retiring”, but said that the EU wants “to be very clear with our message: we are doubling our support. We are here to stay.”

George said that this illustrates the schism between the United States and other countries developed in energy, and shows that even without the United States, the transition to renewable energies has reached a point where it is unlikely to retire.

He said: “The impulse is such that the ball will not stop shooting. Yes, the United States is an important economy, but I have not heard that any other country articulates that you plan to follow the example of President Trump. In any case, other global finance centers, particularly in London, have indicated that they would increase more.”

The crack was evident at the Summit of Finance Ministers of the G20 in Cabo Cabo in early February, where the United States was fundamental to block the agreement on climate financing proposals. As a result, the meeting could only issue a basic “president” president “, instead of the usual statement that establishes agreements and tasks.

George said that while the United States federal government has backed away the financing of the weather, this does not necessarily end the country’s participation in these discussions.

“We have spoken with several individual states, including New York and California, who are still committed to mitigating climate change,” he added. “So, although the Trump administration has indicated that it no longer wants to be part of this, it is not the end of the participation of the United States.”

Decreasing the influence of the United States

Analysts warned that Trump withdrawal from global financing PACT means that the country runs the risk of losing their seat at the table when it comes to establishing climate policy.

“When withdrawing from climatic promises, the United States will lose influence on climatic policy worldwide,” said Teboho Makhabane, chief of ESG in one of the largest assets of assets in Africa, Sanlam Investments.

“In Africa particularly, we will probably see China plug in some of the gaps left by the United States, which is something that the United States will probably not like, given its tense relationship with China.”

While Trump has said that American energy policy will recalibrate to oil and gas, based on its motto “drill, baby, drill”, Makhabane said that the rest of the world has not revolved again. Countries like South Africa, Indonesia and Vietnam “will learn to live without the United States” as their transition from energy systems.

Tracey Davies, Executive Director of the South African Loss Forest Organization Just Share, said that if something, Washington’s exit from the program can be positive for the Energy Association.

She said: “If the United States had stayed and has been obstructive, this could have further slowed down. Therefore, in a sense, its absence could be positive for climate financing.”

Davies says that the highest risk can be at the diplomatic level, where countries run the risk of compromising their climatic objectives to appease the United States.

She said: “South Africa can try to offer an olive branch to the United States as an easier access to oil and gas exploration, which is an option that has been discussed. This could affect the country’s fair transition plans.”

While European countries remain aligned with the climate plan now, it is possible that the choice of more populist leaders with inclinations similar to Trump about the climate can change this dynamic. Argentina, for example, has indicated that you can follow Trump’s example about the weather.

Davies said that the next climate meeting of the Police, which will be held in Brazil in November, will provide a test of whether other countries have been emboldened by the withdrawal of the United States, or if “they will take a firmer position against the type of climatic hypocrisy that has become a distinctive seal of the conference.”

Even so, other analysts believe that the reversions of the United States in climatic promises can induce a dose of realism in the energy debate, decelerating the transition at a pace that is more reasonable for companies to accommodate.

Nazmeera Moola, sustainability director of the Assets Manager based in the United Kingdom, Nety One, argued that the actions of the United States can be a necessary corrective. “Where we can end is a situation in which companies are more realistic about what they can achieve and how they can do it,” he said. (Rob Rose)

Power points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with the support of the FT Global Reporter Team. Communicate with us in energy.source@ft.com and follow us in x in @Fotegy. Put up up to date with the past editions of the newsletter here.