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

The FT’s energy team returned from CERAWeek in Houston with bulging notebooks full of stories and a better appreciation of where Donald Trump’s administration is headed with its “energy dominance” agenda.

Deregulation will be a key theme of Trump 2.0, as evidenced by the proposed repeal of dozens of environmental rules by Lee Zeldin, administrator of the US Environmental Protection Agency. The agency is now more interested in measures to drive down energy bills, rather than phasing out toxic emissions that damage human health, say critics.

Doug Burgum, Trump’s energy tsar, issued a rallying call to industry to drill and mine more on federal lands while pledging to sweep away rules that stymie project approvals. Coal, gas and nuclear energy that can provide so-called “baseload”, or round-the-clock power, are back in vogue in Washington while renewables, wind and solar are out of favour.

The White House views the oil and gas sector as an economic driver for the US economy and the government’s budget. Encouraging companies to drill more on federal lands produces more royalties that can help tackle the national debt. And selling more US liquefied natural gas overseas can help bridge trade deficits with partners in Europe and Asia.

Oil and gas executives at the conference loudly applauded Trump’s pro-fossil fuel agenda, although concerns about unpredictable policymaking, tariffs and a plunging stock market bubbled under the surface.

Senior energy industry leaders are scheduled to meet the president at the White House on Wednesday, where these thorny issues will no doubt be aired off-camera. But for now, the oil and gas industry, which was a key backer of Trump’s election campaign, continues to embrace his vision to unleash American “energy dominance”.

A story that deserves a mention today is a long read led 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 shaping up to be a key test of free speech in the Trump era.

For today’s main item our correspondent in Johannesburg, Rob Rose, looks at how South Africa is navigating Trump’s dismantling of support for global decarbonisation initiatives.

Thanks for reading, Jamie

EU fills $1bn gap in South Africa’s ‘just energy transition’

The EU has stepped up to fill a $1bn hole in South Africa’s energy transition plan created by the “immediate” withdrawal of Donald Trump’s administration from the landmark global climate financing programme.

Earlier this month, the US said it was withdrawing from the Just Energy Transition Partnership (JETP), launched in 2021 to help South Africa, Indonesia and Vietnam switch from coal to renewable energy. The US, along with the UK, France, Germany and the EU pledged $45bn to the project.

Washington’s U-turn was not unexpected following its withdrawal from the Paris climate agreement on Trump’s first day in office, as well as his stated belief that climate change is a hoax. But it left the three countries scrambling.

In a terse 166-word letter sent to South Africa’s government, obtained by the FT, the former US chargé d’affaires Dana Brown said Trump’s executive order, which calls for putting America first in international deals, “revokes and rescinds the US international climate finance plan issued by the previous [Biden] administration”.

Brown wrote, “effective immediately, the US is no longer a member of the international partners group for the just energy transition partnerships for Indonesia, South Africa and Vietnam” and “all associated financial pledges are also withdrawn”.

A highly rated career diplomat, Brown subsequently resigned as tensions between South Africa and the US plumbed to new lows, with Trump terminating aid to the country’s HIV/Aids programmes over a new land expropriation law. Last Friday, the US declared South Africa’s ambassador to Washington “persona non grata”.

South Africa’s JETP unit, which sits under the presidency, said the US withdrawal reduced the overall pledges to the country from $13.8bn to $12.8bn. The US had pledged $56mn in grant funding, and $1bn in potential commercial investments.

Speaking to Energy Source, Dion George, South Africa’s minister of the environment, fisheries and forestry, said all the other countries remain committed to the partnership. A new commitment obtained from the EU last week will fill part of the gap, he said.

He said: “The EU committed €4.7bn to South Africa for a number of projects, and this includes for the just energy transition, so this will help fill the gap. This illustrates that the show must go on, when it comes to the energy transition irrespective of what the US is doing.”

The commitment came at a summit held between the EU and South Africa in Cape Town last week, at which European Commission president Ursula von der Leyen said the €4.7bn ($5.1bn) would be used in part to shore up the just energy transition project and for green energy.

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

George said this illustrates the schism between the US and other developed countries on energy, and shows that even without the US, the transition towards renewables has reached a point where it is unlikely to be rolled back.

He said: “The momentum is such that the ball will not stop rolling. Yes, the US is a major economy, but I have not heard any other country articulate that it plans to follow President Trump’s lead. If anything, other centres of global finance, particularly in London, have indicated they would step-up more.”

The rift was evident at the G20 summit of finance ministers in Cape Town at the beginning of February, where the US was central to blocking agreement on climate financing proposals. As a result, the meeting was only able to issue a basic “chair’s summary”, rather than the usual communique that sets out agreements and tasks.

George said that while the US federal government has pulled back on climate financing, this does not necessarily end the country’s participation in these discussions.

“We have spoken to a number of individual states, including New York and California, which remain committed to mitigating climate change,” he added. “So, while the Trump administration has indicated it no longer wants to be part of this, it is not the end of US participation.”

Diminishing US influence

Analysts warned Trump’s withdrawal from global financing pacts means the country risks losing its seat at the table when it comes to setting climate policy.

“In withdrawing from climate pledges, the US will lose influence over climate policy across the globe,” said Teboho Makhabane, the head of ESG at one of Africa’s largest asset managers, Sanlam Investments.

“In Africa particularly, we will probably see China plug some of the gaps left by the US, which is something the US probably won’t like, given its fraught relationship with China.”

While Trump has said US energy policy will be recalibrated back to oil and gas, premised on his motto “drill, baby, drill”, Makhabane said the rest of the world has not pivoted back. Countries such as South Africa, Indonesia and Vietnam will “learn to live without America” as their energy systems transition.

Tracey Davies, executive director of South African non-profit Just Share, said that if anything, Washington’s departure from the programme may be positive for the energy partnership.

She said: “If America had stuck around and been obstructive, this could have slowed things down further. So in a sense, its absence could be positive for climate financing.”

Davies says the bigger risk may be at a diplomatic level, where countries risk compromising their climate goals to appease the US.

She said: “South Africa may try to offer an olive branch to the US in the form of easier access to oil and gas exploration, which is an option that has been mooted. This could impact the country’s just transition plans.”

While European countries remain aligned with the climate plan now, it is possible the election of more populist leaders with similar inclinations to Trump on climate could change this dynamic. Argentina, for example, has indicated it may follow Trump’s example on climate.

Davies said the next COP climate meeting, due to be held in Brazil in November, will provide a test of whether other countries have been emboldened by the US withdrawal, or whether they will “take a firmer stand against the kind of climate hypocrisy that has become a hallmark of the conference”.

Still, other analysts believe the US reversals on climate pledges may induce a dose a realism into the energy debate, slowing the transition to a pace that is more reasonable for companies to accommodate.

Nazmeera Moola, chief sustainability officer at the UK-based asset manager Ninety One, argued the US’s actions may prove a necessary corrective. “Where we may end up is a situation where companies are being more realistic about what they can achieve, and how they can achieve it,” she said. (Rob Rose)

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu, Tom Wilson and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at [email protected] and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.