Deals Seeking $45 Billion in Climate Funds Seen Managing US Exit

(Bloomberg) -- Climate programs targeting about $45 billion in funding for emerging economies won’t be derailed by America’s decision to withdraw, according to analysts.

The US decision to exit from a leading role in Just Energy Transition Partnerships for South Africa, Indonesia and Vietnam will complicate financing efforts, but won’t halt the overall objectives of the deals, BMI, a unit of Fitch Solutions, said in a research note.

“Although we expect the loss of US funding in the JETP partnerships to be disruptive and potentially add further delays to these programs, we see other international partners stepping up to fill the void,” BMI analysts wrote in the note dated Tuesday. China could be among nations to replace US leadership and financing.

The US, which had pledged to contribute more than $4 billion according to investment plans drafted for the JETPs, has quit the programs amid President Donald Trump’s wider retreat from climate action. It’s a move that has raised questions about the future of the programs, which had been viewed as a test case of how to bring together public and private finance to help large developing nations move way from fossil fuels.

Germany confirmed last month that it would replace the US as co-leader of work focused on Indonesia. Japan has reaffirmed its support for transition efforts in both Vietnam and Indonesia, while the UK pledged renewed backing to a South Africa deal.

Many countries outside the US, along with private sector entities and philanthropists “still support JETP and want to realize the mechanism’s potential,” Grant Hauber, strategic energy finance advisor, Asia, at the Institute for Energy Economics and Financial Analysis, said in a Wednesday note. “Despite the US exit, critical financing and support for the program remains.”

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