US Backpedals on Climate : Will it Derail Africa’s Energy Transition

(5 Minutes Read)       

Africa, despite contributing minimally to global emissions, is highly vulnerable to climate change and suffers from severe energy poverty. The continent’s energy transition is critical but heavily dependent on external financing, primarily from the US and Europe. However, recent geopolitical shifts—especially under the Trump administration’s rollback of climate commitments and funding—have severely undermined Africa’s transition efforts. 

Energy Transition is fundamental for Africa’s survival. The continent contributes the least to global emissions. Yet, it remains the most vulnerable to climate disasters. Africa also faces huge energy poverty.  Almost 42% of its population has no access to electricity, and nearly 70% lack access to clean cooking fuels. Therefore, energy transition is a lifeline for Africa. To realise its climate and development goals, the continent desperately needs low-cost financing. The US and Europe have been the major sources of climate financing for Africa.

However, the current geopolitical events have derailed Africa’s modest ambitions to achieve a ‘fair Energy Transition”. President Trump’s withdrawal from the Paris Accord and the revocation of climate change commitments are a catastrophe for the developing nations, especially for Africa.

The US has drastically cut its direct official development aid and climate financing. Clean energy funding is the lowest priority for the Trump 2.0 government.  Soon after taking up the office in January 2025, Trump announced the withdrawal of US support for climate change projects, including aid programmes like the Power Africa Programme that supported clean and renewable energy projects.

The Trump administration has also announced its exit from the Joint Energy Transition Partnership (JETP) and revoked USD 1 billion in funding from South Africa’s JETP.   This first JETP, set up for Africa, was meant to support South Africa’s transition from Coal. The complete withdrawal of the US from the JETP is bound to impede this African JETP, which is already starving for funds.

It was recently reported that a draft executive order of the Trump administration proposes to abolish the US State Department agency that oversees the US policy in Africa. The document also calls for the closure of several ‘non-essential’ US embassies on the continent.

The World Bank’s International Development Association (IDA) is the top source of climate financing to Africa.  Being a large stakeholder in the institution, the US can heavily influence the selection of projects to finance. This, in turn, could impact funding for Climate projects. It was reported recently that the US blocked the World Bank-linked Climate Investment Funds (CIF) worth USD  500 million to South Africa.

European countries and European Union institutions are the next largest providers of climate loans to Africa. The European Union has been extending its steady support to Africa’s clean energy projects. Recently, to offset the US withdrawal of support, the EU made a commitment of 5 billion Pounds investment for various projects in South Africa, including energy transition projects.

But Europe’s public funding of African clean Energy projects is likely to take a back seat due to the economic and geopolitical challenges faced by the EU. The EU budget is severely stretched with its urgent need to address new priorities, especially the critical need to increase its defence spending. Several European countries are struggling to fund their clean energy programmes. Europe’s green deal legislations are also undergoing some modifications that could impact its climate finance commitments to developing countries, including Africa.  Consequently, the European support for Africa’s renewable energy projects could be less public funding and more private sector sources of financing. This could be in the form of joint initiatives and programmes. This shift in the funding structure may be a challenge for Africa ‘s fragile investment and lending system.

Globally, private sector financing has played a pivotal role in renewable energy projects. However, in Sub-Saharan Africa, public funding has played the central role while private sector investment has remained very nominal.  With the drying up of funding from international donors, Africa will be compelled to seek private sources of finance. Unfortunately, most of the African economies fail to attract private finance due to their inherent shortcomings.

The dominant issue is the bankability of the clean energy projects. Multiple risk factors undermine the bankability of these projects across Africa. Inadequate legal and regulatory frameworks, limited affordability of energy tariffs, poor infrastructure, high sovereign and corporate debt, governance challenges, and persistent political instability are some of these. Collectively, these issues erode investor confidence and impede the flow of essential capital into the sector.

African countries that account for less than 4% of global gas emissions have always voiced their frustration at the climate change actions demanded of them, without adequate financial backing. The change in the policies of the US and Europe will aggravate their resentment.  This can push back Africa’s energy transition ambitions. Given the huge financing gap to meet its climate action, Africa will be constrained to rethink its decarbonisation and methane emissions reduction commitments.