Environmental (Commonwealth Union)_ In a move that signals a major shift in U.S. climate diplomacy, the administration of President Donald Trump has announced its withdrawal from two key global initiatives aimed at mitigating the impact of climate change and transitioning developing nations away from fossil fuels.
According to a letter obtained by The Washington Post, the United States has exited the governing board of the Loss and Damage Fund, a financial mechanism established in 2023 to assist countries grappling with climate-induced disasters. Additionally, a Treasury Department spokesperson confirmed that the U.S. is pulling out of the Just Energy Transition Partnership (JETP), a global program designed to support developing economies in shifting away from coal and other fossil fuels.
The move aligns with Trump’s broader executive order prioritizing “America First” policies in international environmental agreements. The administration maintains that the U.S. will continue engaging with partner countries on energy issues but will do so outside these formal frameworks.
A Major Blow to Climate Finance for Vulnerable Nations
The withdrawal from the Loss and Damage Fund, though not entirely unexpected, carries significant symbolic and financial weight. The fund was created as a result of painstaking negotiations to provide relief to nations hit hardest by climate-driven floods, droughts, and other extreme weather events.
“The impacts on developing countries are huge,” said Richard Sherman, a South African co-chair of the board, emphasizing the repercussions of the U.S. decision.
Although the U.S. had contributed only $17.5 million to the fund, an amount widely criticized as inadequate, the decision to step away entirely further weakens the program’s credibility. Ali Mohamed, Kenya’s climate envoy, expressed disappointment, stating, “At a time when the world needs a concerted effort to fight the effects of climate change, the spirit of multilateralism should remain our guiding light.”
The departure leaves the fund’s governance in the hands of 25 other nations, a mix of wealthy and developing countries, who must now recalibrate their approach in the absence of American involvement.
U.S. Exit from Just Energy Transition Partnership Creates Funding Gap
The second withdrawal, from the Just Energy Transition Partnership (JETP), further complicates international climate finance efforts. Established in 2021, JETP was designed to provide a mix of low-interest loans and grants to help heavily coal-dependent economies like South Africa, Indonesia, and Vietnam transition to renewable energy without disrupting their economic stability.
When the initiative was first introduced, President Joe Biden hailed it as a model for global climate cooperation, and then-Treasury Secretary Janet Yellen called it “groundbreaking.” However, with the U.S. now pulling out, the already sluggish progress of the initiative faces additional setbacks.
In South Africa, the U.S. exit reduces the JETP funding from an expected $13.8 billion for the country’s energy transition by $1 billion. South Africa’s JETP program lead, Joanne Yawitch, acknowledged the setback but affirmed that the country remains committed to its energy transition, noting that all other partner nations remain on board.
Meanwhile, in Indonesia, where 60% of the electricity grid still relies on coal-fired plants, an official confirmed that some planned studies would be suspended due to the funding shortfall. However, he remained optimistic that JETP’s broader goals could still be achieved with the remaining financial commitments.
A Growing Divide Between the Global North and South
The financial burden of addressing climate change has long been a source of tension between wealthier nations, which are historically responsible for the bulk of greenhouse gas emissions, and developing nations, which are often the hardest hit by climate-related disasters.
In December 2024, advanced economies pledged to mobilize $300 billion annually by 2035 to aid vulnerable nations, a figure that many experts say falls far short of the actual need. Even at the time of the agreement, negotiators had anticipated that the U.S. would contribute little, if anything, under a Trump administration.
Climate advocates have condemned the U.S. decision to walk away from these crucial financial commitments.
“By turning its back on international climate financing, the U.S. is failing its moral obligation as a historic polluter, abandoning the global community, and shirking its share of our collective responsibility,” said Namrata Chowdhary, chief of public engagement for 350.org.
As the global climate crisis deepens and the financial cost of inaction mounts, the U.S. retreat from climate leadership is likely to have far-reaching consequences. Without its support, developing nations will face even greater challenges in transitioning to sustainable energy and protecting their populations from the devastating impacts of a warming planet.
