SA’s climate-finance deal: opportunity or trap?
While it is imperative that this new energy deal be scrutinised, it should not be on Gwede Mantashe’s or Floyd Shivambu’s dishonest terms. Critique must be rooted in the agreement’s merits al…
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22 November 2021
At the 26th United Nations Climate Change Conference (COP26) in Glasgow, the South African government announced a major R130 billion deal with the United Kingdom, United States, Germany, France and the European Union. The climate-finance agreement aims to invest in a just transition to renewable energy and away from coal for South Africa.
The deal is the first of its kind, where Global North countries are helping to fund a just transition to renewable energy for a deeply coal-intensive Global South country like South Africa. It has been heralded internationally as “offering a model of how to end reliance on coal”.
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Back home in South Africa, the deal received a more mixed reception. Local energy and environmental justice groups have given it a cautious welcome. On one hand, they recognise that this might be a step in the right direction, helping South Africa build a cleaner, more reliable and just energy future. On the other, they worry about how exactly the deal will play out in practice.
More vociferously opposed have been defenders of coal, including the Economic Freedom Fighters (EFF), who have tried to paint the deal as an imperialist act of sabotage to South Africa’s economy. According to EFF Deputy President Floyd Shivambu, South Africa’s economy should run on coal for hundreds of years to come, and should not give in to a “colonial take-over engineered by the West”.
Faux anti-imperial outrage
Shivambu is not alone in brandishing anti-imperialism as a weapon against clean energy. Despite President Ramaphosa and the ANC leadership supporting the climate-finance deal, Minister of Mineral Resources and Energy Gwede Mantashe has come out against it.
At the largely oil, gas and coal company-sponsored African Energy Week in Cape Town, Mantashe gave his first address since the climate finance deal was announced. Seemingly singing from the same song sheet as Shivambu, Mantashe decried the “global anti-fossil fuel agenda”, and called on African nations to resist the supposedly imperial clean-energy agenda of the West.
It is a pity that critique framed in terms of anti-imperialism has been seized upon by the defenders of coal, gas and oil interests. There are relevant and urgent critiques of Western climate finance and interests that must be made. There are also important principles of climate justice guiding what the rich and polluting Global North owes to the Global South in climate reparations.
Those vitally important arguments, however, are being perverted by Mantashe and Shivambu, who are twisting the anti-imperialist tradition to defend one of the worst legacies of Western imperialism: the coal-fired minerals-energy complex that was largely forged under apartheid, and which has made South Africa both one of the most unequal and polluting countries in the world.
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Shivambu and Mantashe do not want to dismantle that awful colonial vestige. They want to change the elite that benefits from it. They are defending a new elite profiteering from a heavily polluting and highly corrupt energy and mining regime that has funnelled trillions of rands from the South African people into the hands of coal and mining magnates.
For example, the EFF’s energy agenda is informed by its partnership with Transform RSA – a shady pro-Zuma, pro-coal and pro-nuclear lobby that has been working to stop renewable energy. As a result, the EFF’s energy vision claims to be anti-privatisation, while being all for state-subsidised private nuclear and private coal, and only resisting private energy if it is renewable energy.
Rather than throwing off the yokes of oppression, the dream of Mantashe and Shivambu seems to be to install new oppressors at the helm of a corrupt, exploitative and dysfunctional neocolonial minerals energy complex. Decades ago, Steve Biko presciently warned us about this false phase of decolonisation:
“The whites have locked up within a small minority of themselves the greater proportion of the country’s wealth. If we have a mere change of face of those in governing positions what is likely to happen is that black people will continue to be poor, and you will see a few blacks filtering through into the so-called bourgeoisie. Our society will be run almost as of yesterday. So for meaningful change to appear there needs to be an attempt at reorganising the whole economic pattern and economic policies within this particular country.”
Coal’s economic suicide
To support their coal-fired spin framed in the language of anti-imperialism, the likes of Shivambu and Mantashe claim that transitioning away from coal will be “economic suicide” for South Africa. They argue that, like the West before us, we must fuel our economic development with coal.
The outdated idea that coal is our most economic mode of development has been blown out of the water by the reality that renewables now provide the cheapest power across most of the world. South Africa has not harnessed that reality, because years of delay and regulatory sabotage meant that we have failed to greenlight any new large-scale renewable energy projects for many years now.
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Now we finally have a small amount of new renewable projects which were approved by the mineral resources and energy department in October. Quite contrary to Mantashe’s economic suicide narrative, the projects announced saw new solar- and wind-power projects delivering power at half the price that new coal does.
Our ageing, unreliable and polluting coal-power fleet plunges us into load shedding and has seen the costs of energy rise by over 400% in the past decade. Meanwhile, multiple studies, real world evidence and economic modelling show a renewable energy future provides our most job-creating, affordable and economically prosperous and inclusive future.
Worker worries
Of course, the success of renewable energy must sound like economic suicide for coal workers. They are right to worry, and many have been demanding for years that the government put in place just-transition plans to protect workers and communities dependent on coal, like countries across the world have done.
Yet, for all Mantashe’s pro-worker, nationalist and anti-privatisation rhetoric, his department did not use the years of delaying renewables to roll out any just transition plans or ensure any social ownership. Instead, all projects are privately owned and are majority foreign-owned. Local ownership tends to be concentrated in the hands of a few companies and elites – like President Ramaphosa’s brother-in-law Patrice Motsepe who benefited significantly.
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Mantashe’s emergency procurement power programme also saw the vast majority of tenders going to a foreign-owned Turkish powership company, Karpowership, which has been mired in corruption scandals, both in South Africa and across the globe.
It is only thanks to Eskom’s renewable energy plans, which it is implementing despite Mantashe’s resistance, that we see any socially owned renewable-energy projects coming forward at all. Unlike the department of energy, Eskom is also forging ahead with actual and concrete just-transition plans and projects. Of course it will be imperative to watch these closely to ensure that that pro-worker rhetoric is translated into effective and sustained action.
Money for nothing?
That the majority of the renewable-energy projects in South Africa are privatised, foreign-owned and foreign-built does raise an important anti-imperialist critique of the proposed international climate-finance deal. With UK, US and European money promised to South Africa, what strings will be attached? The history of the allocation of money to the Global South by the West does not augur well in this regard.
The finance could, on one hand, be a fulfilment of the climate debt that the Global North owes to the Global South, to pay for a just transition away from coal and unlock a renewable-energy future that is more owned by, and to the benefit of, the South African people.
A robust green industrialisation strategy for South Africa, with strong localisation policies, could bring more manufacturing and production of renewables to our shores. Coupled with a strategy for more social ownership, this could unlock vast job creation and economic opportunities much greater than a coal-dominated future would.
On the other hand, there’s no such thing as a free lunch, and it would be somewhat naive to dismiss the realpolitik that goes on behind climate negotiations. The West can very well use this money to advance its own interests. So, we certainly need to ask whether the terms of the deal will be used to favour the interests of foreign corporations and governments. The problem is that at this point we just don’t know.
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The rush by some to unconditionally denounce or celebrate the climate-finance deal is premature, because the details of exactly how the deal will play out are still very thin. The announcement itself was merely a political declaration to develop a plan rather than the signing of a concrete agreement. The devil will mostly be in the details that are yet to be decided and agreed.
What the declaration does say is that the money from global north countries will come as a “range of instruments, including grants and concessional finance” which will give South Africa favourable, below-market rates of finance. Eskom and the Presidency have also both said that, should the terms of the finance be too onerous, they will not take it on.
However, what the Presidency and Eskom deem too onerous should still merit significant scrutiny. The ANC has been more than willing to drive forward a neoliberal, austerity paradigm which happily toes the line to the agenda of multinational corporations and international lenders. On this score, a credible anti-imperialism critique is acutely necessary.
Why international climate finance?
The perilous state of Eskom’s finances and the government’s commitment to selective austerity have been major drivers of the push for climate finance. However, while R130 billion in climate finance might seem like a lot, in the grander scheme of things, it is relatively small. Trillions of rands are needed to transform South Africa’s energy sector alone.
If done right, the international climate-finance deal could be a seed fund to kickstart that broader transformation. On the other hand, it could be a Trojan horse that puts in place structural constraints which inhibit our ability to pursue a much more transformative and radical transition – the sort that is needed, given the speed and scale required to adequately respond to both the climate crisis and the crises of inequality and poverty
We cannot allow South Africa’s perceived financial poverty to be used as an excuse to lock us into something which will inhibit greater transformation. After all, South Africa as a country is not poor. Most of our people are, but we are a country of immense wealth too, much of which has been funneled off through the exploitative minerals-energy complex.
Consider the 2019 Special Investigative Unit report, which showed that during the 2008 load shedding crisis R14.5 trillion in overpriced and irregular coal contracts were signed. That is trillions that went to supporting corrupted coal rentiers, which instead could have put South Africa well down a path of a just energy transition.
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Likewise, the nearly R500 billion we have spent on the disastrous, dysfunctional and extremely costly Medupi and Kusile plants could have moved us towards a renewable energy future, which provides much cheaper energy. Instead, we are stuck paying interest to the World Bank for expensive new coal power plants, while trying to get climate finance to wind down other coal power plants.
We could also consider that South Africa is planning to invest hundreds of billions in new coal, oil and gas infrastructure, through the likes of the Presidential Infrastructure Coordinating Committee. Perhaps the climate-justice movement needs to ask whether the country really deserves international climate finance, given all that it spends on polluting projects?
Another question that South Africans and the international community need to ask is this: Where will the funding go? Will it go to funding Mantashe’s hallucination of “clean-coal” power plants, or the large amounts of unnecessary and polluting gas-fired power plants that his department plans to build? Can we then qualify for international climate finance if we continue to build large amounts of polluting new energy while the climate science says the world must rapidly move away from coal, oil and gas?
Proof of the pudding
Big questions remain about how exactly this international climate-finance deal will play out. What we do know so far is that the funding is intended to be used towards a slate of measures to support South Africa to pursue a just transition to “low carbon economy and a climate resilient society”.
The central pillar is for South Africa to accelerate its transition to renewable energy and also invest in technologies like green hydrogen-production and electric vehicles. The plan promises to make all these investments in a way that ensures the economic inclusion of historically marginalised communities and sectors of society.
The deal also promises to invest in economic regeneration and supportive measures for workers and communities whose livelihoods and jobs depend on coal. Doing so aims to offset the negative impacts that the transition could otherwise have. That includes provisions for Eskom to repurpose its ageing coal power plants and retrain and redeploy workers in new sectors, as it is already doing at its “flagship” just-energy transition project: the Komati coal power plant.
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This all sounds like potentially positive progress. In the words of President Ramaphosa, the plan provides “proof” that we can take “ambitious climate action while increasing our energy security, creating jobs and harnessing new opportunities for investment, with support from developed economies”. The real proof though will be determined in how the deal is fleshed out and implemented.
At this point, It is not clear whether the deal will even materialise, given the resistance from the person who has the most power to block the plan: energy minister Gwede Mantashe. While there may be good reasons to block the deal if it proves too onerous or problematic, we cannot allow faux anti-imperialist posturing to be the reason why we would reject it if it does prove to be a positive step towards climate and energy justice.
If Minister Mantashe wants a home-grown African perspective on climate justice, perhaps he could listen to the people of South Africa. He could listen to the thousands of people in every province across the country who protested under the banner of #UprootTheDMRE. They called for him to step down and for his department to be transformed to ensure a socially, ecologically and economically just energy and mining future. And, yes, that includes a rapid and just transition away from coal towards renewable energy.
