South Africa is on the way to a just transition. But does it make sense? (Getty Images)
I was talking to a friend last week about why South Africa agreed to a just energy transition. So, let’s talk about it.
First, what does this mean for South Africa? The International Partners Group, consisting of the United Kingdom, France, Germany, the United States and the European Union, agreed to give South Africa $8.5 billion. The money “aims to accelerate the decarbonisation of South Africa’s economy to help achieve the ambitious goals set out in South Africa’s renewed national contribution emissions targets”, a joint statement read.
But the problem is that the money is mainly a loan. Write in Live Business, Louise Naude said, “Only 2.7% of the offers are grants, and the other 97% are loans.”
Electricity utility Eskom has debt problems and South Africa’s gross debt has increased over the past few years from R2.5 trillion in 2017-18 to R4.3 trillion in 2021-22, Finance Minister Enoch Godongwana said in a News24 article.
Can South Africa afford its climate loans? What about people who work in the coal sector – what will happen to their jobs?
During his State of the Nation address last month, President Cyril Ramaphosa said the transition must happen as quickly as the country can and “must prioritize workers and communities in vulnerable industries and ensure no one is left behind”.
But there are certain points that cannot be ignored – the climate crisis and the international pressure to decarbonise to reduce global warming.
The climate puzzle
Nationally determined contributions are efforts by countries to reduce emissions and adapt to the effects of climate change. Essentially, the money is to help the country achieve its net-zero carbon emissions target by 2050.
Write for Mail & GuardiansJoanne Yawitch, chief executive of the National Business Initiative, says net zero means no carbon emissions will be emitted into the atmosphere.
South Africa is a major carbon emitter – the 12th highest in the world and the highest in Africa, based on 2019 data, according to the Global Carbon Atlas. Worldometer, using 2016 data, ranked South Africa 15th worldwide. There is an urgent need for countries to reduce greenhouse gas emissions, including CO2methane, nitrous oxide and fluorinated gas.
Climate change and global warming are serious risks for African countries, as noted in the World Meteorological Organization’s report titled Climate Countries in Africa. Some of the main consequences are droughts, floods, agricultural destruction, sea level rise and erosion.
The goal is to keep global warming to 2°C. Failure to do so can be disastrous. A study published in April last year in the journal nature found that “a world two degrees warmer still represents what scientists call a severely damaged climate with more violent storms, higher seas, animal and plant extinctions, disappearing coral reefs, melting ice and more people dying from heat, smog and infectious diseases”.
It is clear from the evidence that South Africa needs to stop using coal-fired power plants. Money from the International Partners Group is crucial to helping countries move away from carbon-emitting energy. But coal supplies almost 80% of the country’s electricity.
It seems there is a double-edged sword: take money and increase the national debt or not and mess up the climate.
There is a little more
In 2015, countries signed the Paris Agreement, a legally binding international agreement on climate change. But the agreement is largely toothless and there are no real sanctions for countries that don’t comply.
In Yawitch’s article, he noted, “As a developing country, South Africa needs access to financial support, trade and international capacity. If we do not have a bold commitment and a strong plan to make a fair contribution to global net-zero with the goal of 2050, our access to these support options will be limited.
This view is echoed elsewhere. In February, the Center for Sustainable Development at the Brookings Institution released a paper titled Keys to Climate Action. Chapter 7: South Africa’s “Only Transition”: Total Economic Transformation. The paper discusses how, if South Africa does not take climate mitigation measures, it could jeopardize the country’s investment grade sovereign rating, which determines the risk of investing. This can only damage the economy.
Yawitch also notes how countries that make the low-carbon leap will be reluctant to jump into bed with carbon-intensive countries, such as ours.
Also, who wants to be an enemy of progress and contribute to climate change? If the whole world is talking about fighting the climate crisis and saying, “Here, take your money and fund your carbon emissions,” then it can be asked whether we should say “no”, even if the money is usually in the form of loans.
The cynic in me
On the new Calvin Harris and Ellie Goulding song A miracle, they asked: “Are you too cynical to believe in miracles?” I don’t. I watched the team I support – Liverpool – win the English Premier League a few years ago, I was convinced it would never happen.
But I digress. I am too cynical to believe in energy transition only. I think the money from the International Partners Group is seen by some leaders in South Africa as an opportunity to pocket dollars. With the country’s history of corruption – particularly at Eskom, which involved the state-captured Gupta family, and more recent sabotage and theft adding to the burden – this view is not surprising.
Former Eskom executive André de Ruyter’s explosive interview on eNCA in February revealed how a cabinet minister told him that “to achieve the greater good, you have to let some people eat a little”. This fills my cynical cup to the brim.
Ramaphosa also said in his State of the Nation address: “This year the government accepted the first tranche of the $8.5 billion offer from JET. [just energy transition] partnership from Germany and France. This money has been transferred to the state treasury.”
Let’s wait and see what happens – and if someone “eats”.
In the meantime, I will leave you with the following from the Center for Sustainable Development paper: “Carbon-intensive economy, socio-economic precarity and chronic energy insecurity are the main starting points for the exploration of South Africa’s economic transition. . They not only create and support orders for a fair transition, but it makes the task more difficult.