SA’s energy future should centre on its people
This second response in our New Frame, New Economy forum on minerals and the climate argues that efforts to decarbonise the economy cannot be the preserve of green capitalists.
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1 September 2021
South Africa faces deep structural crises. The freedom dreams of yesteryear have been arrested by private securitisation and callous fiscal austerity, and the country is engulfed in the persistent flames of protest. Ours is, by all reasonable accounts, an unviable, divided and criminally unequal society.
Sam Ashman’s piece offers an important reminder of the colonial roots of South Africa’s carbon-intensive economy, which has facilitated tremendous wealth extraction for local and international elites for centuries.
The fossil fuels powering heavy machinery, vehicles, homes and armaments of war played a key role in the birth of the modern industrialised world and all its excesses. Consensus in the global scientific community now affirms that the by-products of these fossil fuels have given rise to the climate crisis. The crisis is contributing directly to a rise in extreme weather events, severe long-term climate shifts that threaten livelihoods and increased forced migration.
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It is widely acknowledged that these issues will have a disproportionate impact on the Global South, where the capital and capacity required to implement appropriate mitigation and adaptation measures are lacking. There is less consensus, however, on the importance of “delinking” from the long-standing relations of uneven exchange between the Global North and South, which produced the conditions for the crisis itself.
The persistence of these dynamics undermines attempts to form the “Green New Deal” based on principles of equity, justice and reparation invoked by Ashman. In fact, on the eve of the looming climate catastrophe, international finance institutions like the World Bank and International Monetary Fund as well as an array of multinational energy companies – Shell, BP, Total and others – are pushing rapid transition and decarbonisation plans that, without intervention, will likely maintain entrenched inequities.
The ‘new dawn’ economy
Ashman’s critique of the economic status quo is rooted in an appreciation of the proliferation of neoliberal market reforms, decay in the existing industrial manufacturing base and an increasingly financialised economy.
The inflated costs of local coal, sharp rises in public-private corruption at virtually every level of government, and the mismanagement of state-owned enterprises have become a permanent feature in the energy sector. As a result, the working class has faced unaffordable electricity increases year on year as municipalities buckle under the weight of debt, with little hope of meaningfully expanding service delivery to those locked out of decent housing.
All of this undermines appeals for expanded public ownership and control of new emerging industries.
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In the meantime, private renewable energy plants benefitting from state procurement under the Renewable Energy Independent Power Producer Procurement Programme now enjoy 20 power purchase agreements with Eskom, each backed by the National Treasury. The programme offers attractive interest rates – as high as 15% – to local banks and has enabled local and international private equity partners to profit from selling on debt, increasing the levels of financialisation in the sector.
Local manufacturing has failed to kick off, in large part due to inconsistent and inadequate demand for renewable energy by the government over the past decade, along with the lack of appropriate industrial policy to encourage and protect local industry. Private developers tirelessly prepare exemption letters to bypass regulations and benefit from cheap imported goods, lowering their project risk and, along with it, South Africa’s opportunity to meaningfully develop industrial capacity.
Despite the insistence that the renewables industry will create jobs, the sector continues to fall short of state employment targets, making use of every opportunity to increase levels of casual, low-wage work.
New energy, old capital
The recent publication of the sixth assessment report of the United Nations Intergovernmental Panel on Climate Change has again raised the alarm to urgently decarbonise the world economy.
In the most optimistic scenario, sweeping – and unlikely – moves away from fossil fuels will keep the rise in global temperatures to 1.5℃ above their 1850 to 1900 levels. But, if the necessary divestments do not take place, the rise in temperature will turn catastrophic. Each additional 0.5℃ increase will bring profound consequences. In South Africa, the immediate cost will be increased flooding, drought and extreme heat events.
So, the need to decarbonise the economy and transition to different technologies is clear and urgent. But under South Africa’s current paradigm of fiscal austerity, with diminishing spending on social services, the high profits demanded from asset managers, private equity partners and multinational energy utilities remain a decisive feature. How long can they be sustained? And at whose expense will it come?
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Enthusiasm from the business lobby for green industries has ebbed and flowed with the availability of state subsidies and incentives for their use. But the falling costs of renewable energy technologies have now created a wide array of opportunities for energy transitions.
Mines, together with a growing list of other enterprises including manufacturers, are exploring the potential of signing private power purchase agreements with solar power utilities. The effort to compensate for the poor reliability of Eskom’s electricity comes at the same time as these companies look to leverage their connection to the national grid for storage and stability benefits.
The rush to decarbonise has also caught the interest of multinational companies, notably General Electric, that see potential in natural gas to compensate for wind and solar energies’ variability. There is perhaps an uncomfortable potential emerging for the new green capitalist entrants to provide a lifeline to sustain and expand southern Africa’s faltering minerals-energy complex.
The public builds the ark
In the face of this creeping green capitalist tide, calls to socialise the emerging industries must be taken seriously. For public ownership to meaningfully change the power relations in the renewables and other emerging sectors, the focus needs to shift decisively from small community projects to becoming the dominant form of ownership on every scale.
The urgency of the need to move away from fossil fuel-based industries has opened a narrow window of opportunity to transfer power and control into public hands and prioritise basic service provision over profit motives.
This kind of approach will not be possible without an active attempt to build state capacity beyond the project management of procurement processes for private projects. This path would need to accompany mechanisms to discipline existing international capital, control the levels of economic rents collected and steer external investment to labour-intensive productive industries.
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The answer to Ashman’s provocative question, “Who builds the ark?”, may lie in the calls from progressive platforms in climate-conscious sections of civil society and the labour movement to advance a state-led platform. If implemented, such an approach would introduce the most complex, large-scale, redistributive economic programme South Africa has ever experienced. This at a time when the leading factions in the ruling ANC are jointly responsible for shifting the national political landscape decisively rightwards.
Ashman’s challenge must be accompanied by an interrogation of which actors are currently building arks, and in whose interests? Who will be left behind or washed away? And, finally, what is to be done by those who have no other choice but to swim and fight to survive?
