Quantum Commodity Intelligence – The fall-out from the Trump administration’s anti-climate agenda is extending beyond simply exiting the Paris Agreement, with the suspension of development aid hitting several initiatives and potentially many more.
Since coming to office on January 20, the Trump administration has suspended all non-critical finance for programmes of the US Agency for International Development (USAID), which administers the country’s civilian foreign aid and overseas development assistance (ODA).
The suspension is initially for 90 days, but many watchers are expecting the suspension to become permanent. The USAID website was unavailable over the first weekend of February, but then returned providing a one-page statement.
The statement, which has now been removed to leave a blank webpage, said that by the end of the day on February 7 “all USAID direct hire personnel will be placed on administrative leave globally, with the exception of designated personnel responsible for mission-critical functions, core leadership and specially designated programmes”.
Personnel designated as “essential” and who are expected to continue working were due to be “informed by Agency leadership by Thursday, February 6, at 3:00pm (EST),” it continued.
“For USAID personnel currently posted outside the United States, the Agency, in coordination with missions and the Department of State, is currently preparing a plan, in accordance with all applicable requirements and laws, under which the Agency would arrange and pay for return travel to the United States within 30 days”, and arrange for the cancellation of any contracts deemed “non essential”, the statement added.
A temporary “restraining order” was granted by a US court blocking the move for about 2,200 of USAID’s 10,000 employees after two unions filed a lawsuit. This restraining order lasts until February 14, with an in-person preliminary injunction hearing to be held on February 12.
Ani Dasgupta, president and chief executive of the World Resources Institute, said in a February 6 statement that the US is responsible for about 10% of global climate finance. “It’s still too early to tell what the US cuts will mean for reaching the $1.3 trillion climate finance target that developing countries need by 2035, but the gap will likely be harder to fill,” he said.
“In this critical year for finance and with aid budgets under pressure everywhere, it’s even more vital we look at how to maximize multilateral development bank finance, international taxes and attracting private finance,” Dasgupta added.
Here Quantum takes a look at the impacts the new US administration could have on programmes, initiatives and organisations beyond its borders.
Energy Transition Accelerator
The Energy Transition Accelerator (ETA) initiative was launched in 2022 at the COP27 climate talks in Egypt by the then US climate envoy John Kerry, alongside the Bezos Earth Fund and Rockefeller Foundation.
It is a sector-wide plan to help poorer countries wean themselves off fossil-fuel generated electricity. The aim is to issue carbon credits to companies that finance the building of alternative cleaner power generation that help retire coal or gas plants early. Chile and the Dominican Republic had expressed an interest in being pilot countries for the ETA, with the Philippines as an observer country.
The ETA launched a so-called senior consultative group chaired by former US climate envoy John Kerry in April last year, and held a roundtable during New York Climate Week last September. However, the Washington-based Center for Climate and Energy Solutions (C2ES), which runs the ETA’s secretariat, told Quantum that the initiative is not funded by any government.
“The ETA was launched last year as an independent initiative, with the ETA Secretariat headed by C2ES and continued philanthropic support from the Rockefeller Foundation and Bezos Earth Fund,” a spokesperson said. “It is not funded by any government and the transition to a new US Administration does not impact our mission to leverage carbon finance to support electricity sector transition strategies.”
Just Energy Transition Programme
The Just Energy Transition Partnership (JETP) is currently being implemented in South Africa, Indonesia and Vietnam, having been unveiled at COP26 in Glasgow in 2021. Although it is not explicitly a carbon finance mechanism, the JETP aims to mobilise public and private finance to end countries’ reliance on coal.
Some $20 billion has been pledged to the initiative in Indonesia, $8.5 billion in South Africa, $15.5 billion in Vietnam, and $2.7 billion in Senegal, with Nigeria and India are also thought to be interested in being in the programme.
Questions had already been raised over the type of finance, conditions, rate of interest, and the social impacts of transitioning away from coal. Support comes from the International Partners Group (IPG) of countries, which is co-led by the US with Japan, and also includes a number of other countries including the EU, Canada, UK and Norway.
Local media in Indonesia reported that the JETP Secretariat in Indonesia as saying another IPG member, Germany, would take over the US leadership role with Japan remaining as the co-lead. However, the same reports expressed Indonesian government concern that it has not seen any money for JETP yet. President Prabowo Subianto’s younger brother Hashim Djojohadikusumo, Indonesia’s special envoy for climate change and energy, was reported as saying the US government had not disbursed a single dollar of the JETP aid to Indonesia.
The JETP Secretariat in the country confirmed to Quantum that Germany had taken over as the co-lead, but that the US remained a member through its IPG membership.
Quantum also contacted the South Africa and was told by the Just Energy Transition Project Management Unit that any formal communication on the JETP would be via the Department of International Relations and Cooperation (Dirco).
At press time Dirco had not responded to a request for comment. However, Trump has threatened to cut aid to South Africa over legislation signed into law last month by the latter country’s President Cyril Ramaphosa. The law allows the seizure of land without compensation in some circumstances.
In addition, US Secretary of State Marco Rubio announced, via social media, in early February that he will not be attending a G20 meeting in South Africa, which currently holds the G20 presidency. “South Africa is doing very bad things. Expropriating private property. Using G20 to promote ‘solidarity, equality, [and] sustainability.’ In other words: DEI and climate change,” Rubio said in a post on X.
South Africa responded to the tweet with an official statement from Minister of International Relations and Cooperation Ronald Lamola.
He said: “We are a sovereign and democratic country committed to human dignity, equality, and rights, championing non-racialism and non-sexism while placing our constitution and the rule of law at the forefront.
“There is no arbitrary dispossession of land / private property. This law is similar to the Eminent domain laws. Solidarity/Ubuntu promotes collective problem-solving. Our G20 Presidency, is not confined to just climate change but also equitable treatment for nations of the Global South, ensuring an equal global system for all. These are important principles that we remain open to pursue and engage the United States on.”
Corsia
The UN’s aviation decarbonisation scheme Corsia was first adopted by the International Civil Aviation Organization (ICAO) in 2016 and ran a pilot phase between 2021 and 2023, followed by the current 2024-2026 ‘first phase’ compliance period. ICAO lists the US as one of the 115 countries participating.
However, there is no legislation in place in the US to implement Corsia and so nothing for Trump to overturn, said Nikita Pavlenko Programs Director, Fuels and Aviation at the International Council on Clean Transportation, a US-based non-profit public policy think tank.
Any attempt by the administration to stymie US participation in Corsia “would essentially be an Administrative decision on how to direct FAA [Federal Aviation Administration]”, he said referring to the US government agency that regulates civil aviation in the country. He noted also that during Trump’s first term as president many US airlines voluntarily committed to Corsia.
Others agree that US airlines may make their own decisions on Corsia. “We think US airlines are sophisticated enough to understand that the problem of emissions in international airspace will outlast this administration and that ultimately the choice will be Corsia or application of the EU ETS [emissions trading scheme] and indeed similar schemes around the world,” said Lev Gantly, a partner specialising in climate change law and policy at law firm Philip Lee: “Logically, US airlines ought to therefore be supportive of Corsia and not lobbying for US withdrawal from the current phase,” he said.
Leaf Coalition
Funding for the Leaf Coalition carbon credit buyers’ group has been hit by US President Donald Trump’s suspension of overseas development assistance, Quantum has been told.
“US funding for the Leaf Coalition has been suspended as part of the broader 90 days suspension of all foreign development assistance announced by the White House,” Emergent, Leaf’s administrative coordinator, said in an emailed statement to Quantum.
“The US Administration will complete a comprehensive review of ODA over the coming months. We will await the outcome of this review before providing further comment,” the statement said.
The Leaf Coalition was set up in 2021 as a public-private initiative to buy large volumes of carbon credits from jurisdictions around the world and support efforts to tackle deforestation in the fight against climate change.
The US, together with several other governments including Norway, South Korea and the UK, are donors to Leaf, providing funding for forward contracts to finance so-called ‘results-based payments’ to forest countries to help reduce deforestation.
Emergent told Quantum that the governments of Norway, the UK and South Korea “continue to support Leaf”.
The coalition also includes corporate carbon credit buyers such as BlackRock, Burberry, EY, Walmart, Amazon, Airbnb and Bayer.
Last month, a $30 million agreement was struck between Leaf and Ecuador for 3 million carbon credits from a jurisdictional avoided deforestation (REDD+) scheme in the South American country.
Leaf also has agreements in place with Costa Rica and Ghana, as well as the Brazilian state of Pará. Emergent did not comment on how these agreements might be affected by the US decision.
Others
Northern Rangeland Trust (NRT), a Kenyan enterprise that manages the 2 million hectare Northern Kenya Grassland Carbon Project (VCS1468), lists on its website USAID as one of its supporters. The US organisation holds or held a seat on NRT’s board of directors, Quantum understands. “Obviously their exit has a huge direct impact on the organisation,” said a source.
In January, a court in Isiolo County in Kenya ruled in favour of an indigenous people who challenged the legality of conservancy land titles in some areas covered by VCS1468. The January 24 ruling issued a permanent injunction on the developer or people acting on its behalf from carrying out any activity in areas under the court’s jurisdiction.
NRT told Quantum it is still analysing the ruling, but contested the assertions on insufficient consent made in a case brought on behalf of indigenous nomadic herders. The developer said that its reading of the judgment is that Isiolo County did not maintain adequate records of the public participation, rather than specifically stating there was not adequate public participation. However, NRT had not responded to questions about the impact of USAID on the project at press time.
Quantum also contacted Washington, DC-based non-profit Forest Trends pioneers, which helps finance conservation, healthy forests, sustainable agriculture, clean water, climate action, and biodiversity around the world, and has also been a recipient of USAID funding.
Forest Trends latest available financial report for 2023 – posted on its website – states that in 2017 it received $17 million from USAID’s Peru mission for a New Infrastructure for Water Security (NIWS) programme over five years in the South American country. The scheme aims to scale up investments in natural infrastructure in Peru to safeguard water supplies and increase resilience to natural disasters.
The financial report notes that a further $12.5 million was added to the previous funding in 2018, and that in May 2023 an additional $24,681,653 for a four-and-half year period, ending December 5, 2027, was granted. Of the total $52,181,653, some $33,348,386 had been dispersed and $30,042,867 by the end of 2023.
Forest Trends has been asked by Quantum about the remaining funding and its impacts on the organisation’s projects. However, we had not received a response at press time.
that the water project and an initiative to tackle deforestation in Peru are impacted by the loss of US funds.