JUST WEEKS BEFORE THE BEGINNING of COP27, Inger Anderson, executive director of the United Nations Environment Programme, made a staggering assessment of the global response to the climate crisis: “We had our chance to make incremental changes, but that time is over. Only root and branch transformation of our economies and societies can save us from accelerating climate disaster”.
Now more than ever it appears that heads of state, international institutions and even some captains of the fossil fuel industry, are appreciating the severity and scale of climate change. And it will only intensify if the earth warms beyond the dreaded 1.5 degrees threshold.
And the slow destruction unleashed by climate change converges with and compounds the global crisis of neoliberal capitalism. In the South African context, this means that if we break beyond the ceiling of 1.5 degrees, a population already terrorised by systemic unemployment, mass destitution, rising inequality and a nearly incapacitated state, will be shattered by the calamities of scorching heatwaves, droughts, floods and famine.
Unfortunately for the working class and poor, within South Africa and around the world, the danger posed by climate change has not compelled world leaders to initiate “root and branch transformation of our economies and societies”. The expressed commitment by governments, such as our own, to lower fossil fuel emissions and transition to renewable energy, has not entailed a transformation of the capitalist system which birthed and sustained the climate crisis. Instead, “Just Transitions” have unveiled a new horizon for profit-seeking in the renewable energy industry. And they have provided opportunities for international institutions, such as the International Monetary Fund and World Bank, to impose neoliberal ideology through macroeconomic policies on developing nations.
Crucially, progressive environmental scholars and activists have noticed with alarm that there is not a real shift to renewable energy, or tangible efforts to decarbonise economies. Instead, there is an energy expansion, as fossil fuel use and greenhouse gas emissions accelerate.
On the same day that the UN released its shocking climate report, calling for the “rapid transformation of societies”, the oil titans Shell and TotalEnergies reported a combined $20 billion in profits for their third quarter.
A transition led by political and economic elites
Following the disappointment of COP26, as the world’s wealthiest economies failed to make commitments to keep global warming to 1.5 degrees Celsius, the South African government was hailed for launching the Just Energy Transition Partnership. $8.5 billion, funded by Britain, France, the United States, Germany and the European Union, was secured to assist in South Africa’s transition to a low-carbon economy and boost the investment in and production of renewable energy. However, only 3% of that $8.5 billion is in grants; most is in investment guarantees and concessional and commercial loans.
In October, the World Bank approved the South African government’s request for a $497 million loan to decommission and repurpose the Komati coal-fired power plant, using renewables and batteries. According to the World Bank, this loan would “create opportunities for the affected workers and communities… in line with the government’s efforts to transition the country toward a low carbon development path with reliable, affordable, and sustainable energy for all”.
Early November saw South Africa signed into another climate finance deal with France and Germany. Both nations agreed to a loan of €600 million (currently R10.6 billion) to help South Africa reduce its reliance on coal and shift to cleaner energy. Ahead of COP27, the South African government handed over its R1.5 trillion Just Transition Investment Plan (JTIP) to the International Partners Group (a collection of wealthy countries). The primary targets for the JTIP are the electricity sector, infrastructure investments, new energy vehicles, the green hydrogen sector and a “just transition” dimension focused on ensuring communities and workers in the fossil fuel industry are “not left behind”, according to Daniel Mminele, head of the Presidential Climate Finance Task Team.
A lack of democratic transparency The financing of these climate deals has occurred over the past 12 months in secretive negotiations unfolding behind doors barred to the public. The climate crisis poses a threat to all South Africa’s citizens. The transformation of the energy sector is a tremendous task requiring thorough consultation with critical formations such as organised labour, communities vulnerable to climate change, civil society and other stakeholders. These climate finance deals have been negotiated, their terms settled and resources mobilised, in the absence of any public consultation or input. That undermines the presidency’s own principles of procedural justice highlighted in its Just Transition Framework.
How will it be possible for South Africans to meaningfully engage with the Just Energy Transition Partnership or the Just Transition Investment Plan, if the priorities and terms of these agreements have already been set in secret by a collection of powerful actors?
Energy expansion, not transition
Over the last the 20 years, neoliberal economists and environmentalists, alongside heads of states in the Global North, have continually described the transition to renewable energy as “inevitable” and “unavoidable”. They assumed that market-centric strategies could facilitate less reliance on fossil fuels. Public subsidies of renewables were an attempt to allow profit from what would conventionally not be profitable. Yet in 2017, BP’s group chief economist, Spencer Dale, stated that “despite extraordinary growth in renewables…there has been almost no improvement in the power sector fuel mix over the past 20 years…I had no idea that so little progress had been made until I looked at these data”. Agreeing with Dale, the United Nations Environment Programme and Bloomberg Energy Finance stated: “Even though there was a lot of solar and wind capacity installed in the last decade, its impact on the electricity mix has been gradual, not dramatic”.
These pronouncements may not invite shock, but they should provoke deep concern. They remind us why capitalism cannot be relied on to facilitate a truly just transition.
So far, renewable power is only a small fraction of energy produced and utilised. According to Sean Sweeney, from Trade Unions for Energy Democracy, renewable energy has barely impacted transport systems, industrial processes or the heating and cooling of urban infrastructure and housing. One should not be surprised that global emissions and pollution continue to escalate. Many climate scientists predict we will push past the 1.5 degrees threshold by 2030.
Although slightly slowed by the Covid-19 pandemic, the overall demand for electricity has been rising drastically in the past 20 years. And energy from renewables has not been supplanting fossil fuel power but has expanded alongside new coal and gas fired capacity. Renewable energy follows the same path in the South African context, as its deployment is dictated by private sector players. Wind and solar power installed between 2013 and 2019 only generated 3-4 percent of the nation’s electricity.
Europe, praised as a global leader in the transition to renewables, has also undergone an energy expansion. Between 2008 and 2016/17 the region witnessed a remarkable rise in renewable power and a notable decrease in fossil fuel generation. However, this trend stalled in 2018 and the region’s power system is still mostly dependent on fossil fuel energy. Coinciding with Europe’s energy expansion was a decline in global investment in renewables, due to falling profits and risk-averse investors.
A public path to a truly Just Transition
South Africa’s climate finance deals, and its current vision for a “just transition”, will entail the surrender of economic sovereignty and only exacerbate the burden of foreign debt. As AIDC economist Dick Forslund has highlighted, the social cost of repayments and debt service will be placed upon the South African citizen. We will endure harsher austerity measures, such as cuts to education, health and social services – a favorite instrument of the government in reducing its spending.
Moreover, the elite “just transition” heralds the dawn of green structural adjustment, as international institutions see South Africa’s transition as an opportunity to softly reinforce and extend neoliberal economic policy. According to the World Bank, to achieve a just transition “there must be structural reforms (such as increased competition, including in sectors dominated by state-owned entities) a more flexible labour market and improvements in fiscal/financial policies”. Undoubtedly, such measures will cultivate a landscape of hardship and suffering for the South African people.
Segments of organised labour, progressive civil society, grassroots movements and environmental activists have for many years rejected the attempts to start a just transition led by political elites and the private sector. To protect the environment, adapt to climate change and ensure the socio-economic well-being of fossil-fuel industry workers, the transition to renewable energy and a low-carbon economy must be planned and coordinated by the state. Not the current neoliberal state, committed to facilitating extraction and accumulation, but rather a state accountable to the interests of South Africans and the principles of democracy.
Andile Zulu is a political writer and Energy Democracy Officer at the AIDC.