By Alexandra Scherrer
In recent years, there has been a geoeconomic turn in climate change mitigation. Rather than focusing solely on minimising the costs of decarbonisation, countries are increasingly reaping economic gains of the green transition through new jobs and technologies, supply chain realignment and economic development through domestic value capture and industrial upgrading.
But integrating commercial and strategic interests into collaboration on decarbonisation raises questions about who captures the value of green innovation, prompting concerns that the green transition could reproduce North–South asymmetries or harm local populations.
What Are Just Energy Transition Partnerships?
The Just Energy Transition Partnerships (JETPs) are a set of country-specific cooperation agreements. The South African agreement was the first JETP, launched at COP26 in Glasgow in 2021. The partnerships aim to support developing and emerging economies to transition to a low-carbon economy, with the EU as a major donor. Donor countries mobilise public and private finance to help recipient countries achieve decarbonisation, giving them resources to escape carbon lock-in path dependency. At the same time, donor countries benefit from new market access for their green technologies and new energy sources to wean off coal- or gas dependencies. The word ‘just’ refers to the ambition to make the transition socially fair and inclusive. But what does it mean for Europe to support a ‘just’ energy transition in South Africa?
Who Pays, and on What Terms?
The stated goals of the partnership are to decarbonise South Africa's power sector, create new jobs and industries, and ensure a fair and inclusive transition. The partnership has to reconcile the interests of its international donors while distributing the resulting economic gains fairly. The original International Partners Group commitment at launch was US$8.5 billion, later increased to US$9.3 billion. This figure represents the historical commitment, since the United States subsequently withdrew from the JETP in March 2025. This number reflects the sum of a package of vastly different financial instruments, especially between pledges, allocated funding and money actually disbursed. The wider South African Just Energy Transition investment plan has since recorded a total of US$14.36 billion pledged, with US$6.12 billion being allocated as of 31 March 2026, reflecting a 42.6% allocation rate across funding instruments.
However, as with most financial agreements in the development space, the terms matter: In 2022, the European Union announced €35 million in grants and technical assistance in support for a just transition, and the European Investment Bank indicated it could provide up to €1 billion in concessional loans. Although concessional loans offer more favourable terms than commercial financing, they still create repayment obligations. Many community- and worker-based approaches, like compensation and retraining, may not generate direct returns. Furthermore, the specific spending of the mobilised resources is not specified in the JETP agreement, based on the understanding that these ’will be developed based on extensive consultation with a wide range of stakeholders including workers, the business sector and broader civil society’. This raises questions about whether the financing structure is actually suitable for the social objectives of a ‘just’ transition.
The size of the financial commitment alone cannot be used as a measure of how ‘just’ the transition is. Still, its terms and its distribution shape the burden of the partnership. The benefits then, in turn, are shaped by the economic opportunities created by the partnership and who actually captures their value.
Shared Interests, Shared Gains?
Decarbonisation is not only about reducing emissions but also about supporting emerging industries. In a 2024 initiative within the broader EU–South Africa cooperation, the European Union promised two grants amounting to €32 million to support South Africa’s green hydrogen agenda. This funding is intended to support South Africa’s hydrogen sector and its related infrastructure. European investment in transportation, storage, pipelines, and ports could facilitate mutual benefits, as improving this infrastructure simplifies export opportunities. Cooperation of this kind can open new markets and export opportunities for European technology, a benefit that has been noted prominently by donor countries, for instance, Germany. At the same time, the EU grants are intended to promote sustainable economic growth and leverage even more investment in South Africa’s renewable energy sector. The interests of both parties in the partnership therefore overlap, and economic benefits are present on both sides.
From Value Creation to Value Capture
The 2025 Team Europe Investment Package Support to JET Value Chains places explicit emphasis on not only providing financing, but actually building up ‘capacities and capabilities in skills development, research, innovation, and sustainability’. This suggests longer-term goals of building up productive capacities in South Africa, rather than a simple finance-for-resources exchange. The 2024 hydrogen initiative also highlighted the ambition of moving South Africa up the sustainable green hydrogen value chains. Beyond the JETP itself, the Clean Trade and Investment Partnership (CTIP) seeks to improve EU access to raw materials and aims to strengthen local value addition and industrialisation in South Africa. Whether these ambitions translate into local value capture, or just local value creation, remains to be seen.
While these broader, macro-level ambitions are pronounced in detail, community- and worker-focused aspects, centring on the ‘just’ part of the just transition, have garnered some criticism. The OECD 2024 Development Co-Operation Report sees both the South African and the Indonesian JETP as ‘missed opportunities to solicit broad community and stakeholder input on the country-specific priorities’. Specific criticisms of the South African agreement included civil society groups and media claiming a lack of transparency in the project selection, and the contention that local municipalities, chambers of commerce and labour groups were integrated into planning far too late to influence already-rigid plans. Other critics have argued that the JETP was skewed towards capital equipment rather than job creation. All these criticisms point to a wider problem: a lack of social legitimacy and genuine co-production in the development of investment plans might reinforce narratives of the transition being imposed onto the country from outside.
The case of the South African JETP shows that the goals of economic development, climate solidarity and geoeconomic donor interests do not have to be mutually exclusive. European investment can advance strategic objectives and create opportunities for industrial development at the same time. However, a just outcome is not guaranteed. The partnership’s success in terms of distributive justice depends not only on the partnership’s design and the amount of financing, but on whether these resources are directed towards building up productive capacities and integrating benefits for communities and workers. Ultimately, social legitimacy and mutual economic benefit will be crucial for upholding partnerships like the JETP. The test of climate solidarity is not just about sharing mutual interests, but whether they can be pursued without compromising on the development priorities of the partner countries.
