Unjust energy transition’s myths and reality: SA caught in climate change limbo

Siyabonga Hadebe

Siyabonga Hadebe

Published Sep 25, 2024

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Siyabonga Hadebe

The discourse surrounding the energy transition has taken on a narrative that is both compelling and, at times, misleading.

As we delve deeper into the complexities of this transition, it becomes increasingly clear that the optimism prevalent in many industry circles may gloss over critical challenges, as underscored by the Amsterdam-based Transnational Institute (TNI) analysis in 2023.

Unjust energy transition is shrouded in myths, primitive accumulation and deceit. Bloomberg New Energy Finance reported that global investments in low-carbon technologies surged to approximately USD 1.1 trillion in 2022.

The view is that this figure underscores the significant role that private investors and liberalised markets are expected to play in steering us towards a sustainable energy future.

Advocates of this market-driven approach boast that these investments and the plummeting costs associated with renewable energy indicate that fossil fuels are on the verge of obsolescence.

However, this perspective tends to elevate financial capital as the primary engine of change.

It also sidelines the interests of marginalised communities and developing countries through mechanisms like intellectual property rights and trade protections, all while advocating for minimal governmental oversight. The push for Eskom’s collapse and replacement with independent power producers (IPPs) is about profits, not decarbonisation.

What is worrying is that undue reliance on private sector solutions diminishes the nuanced realities of the energy transition. The TNI research cautions that overly optimistic portrayals may perpetuate “myths” that ultimately lead to inaction and social inequities.

Notably, fossil fuels still accounted for 82% of global energy consumption by the end of 2022. Wealthier nations, including Germany, depend on coal imports from developing countries such as South Africa and Colombia. This situation raises questions about the long-term sustainability of their environmental commitments and the fair distribution of responsibilities.

As South Africa faces ongoing energy shortages and economic instability, it paradoxically remains a vital supplier of critical raw minerals essential for both fossil fuel and renewable energy technologies.

The situation is further complicated by ongoing geopolitical factors, such as the conflict in Ukraine and the US-China rivalry, which aggravate the complex interplay between immediate energy demands and longer-term sustainability goals.

Economic imperatives overshadow the urgency emphasised in climate discourse and pressure nations like South Africa to accelerate their decarbonisation efforts. Oxfam International points out that these countries have to simultaneously grapple with the burden of costly loans from corporations and multilateral development banks.

South Africa’s external debt averaged USD 117,299.93 million from 2002 to 2024. It peaked at an all-time high of USD 185,358.00 million in Q4 2019 and reached a record low of $33,262.00 million in Q1 2003.

Government borrowings are supposed to help pay for public goods, enhance people’s standard of living and improve the economy, but not under the climate change craze.

Climate change initiatives are not only unjust and unrealistic but also are deepening inequalities and promoting economic subordination of the Third World and its subalterns.

Oxfam International estimates that climate finance reached USD 83.3 billion in 2020, with only USD 13.1 billion sourced from mobilised private financing.

Much of this funding is allocated to private, state-backed initiatives, revealing the contradictions inherent in a market-driven approach that exacerbates global inequalities.

Contrary to the neoliberal belief that private enterprise will lead the charge in clean energy innovation, governments are economically strangulated at the expense of their traditional role as suppliers of goods and services.

The reality is that the growth of renewable industries and technologies heavily depends on public subsidies and tax incentives. For instance, the abrupt removal of "Feed-in Tariff“ (FiT) subsidies in Germany and China led to a marked decline in renewable investments.

Consequently, some experts conclude that a truly free market in renewable energy has never existed, given its reliance on public support.

Furthermore, climate change’s profit-centric paradigms governing energy distribution have intensified global energy disparities, leaving countless individuals without reliable energy access.

According to the Global Gas Outlook 2050 report, approximately 675 million people in the Global South lacked electricity, and an additional 2.3 billion relied on harmful cooking methods in 2021.

Despite the escalating investments in renewable energy, these initiatives fall short of achieving the critical goal of limiting global warming to the 1.5°C target.

Profit motivates companies to be involved in the climate change fiasco, turning COP meetings into significant business events larger than Davos. Nevertheless, the Vienna-based International Energy Agency warns that a purely market-driven approach may not suffice for a successful energy transition.

South Africa’s Renewable Energy Independent Power Producer (REIPP) programme, which also leans heavily on governmental backing, is proving unsustainable.

In June 2024, for example, the National Treasury acknowledged the untenable nature of state guarantees for renewable projects, casting doubt on the transformative potential of IPPs as a panacea to the country’s energy challenges.

Neoliberal policies heighten energy crises and economic instability in South Africa. The government has resorted to capacity payments for fossil fuel producers to stabilise electricity supplies, entrenching reliance on unsustainable energy solutions.

Public funds carry Eskom to keep the lights, which has to conclude power purchase agreements (PPAs) with IPPs at a considerable cost.

Furthermore, the market-driven strategy for the energy transition is fraught with contradictions, such as the consolidation of renewable technology production among a select few companies due to stringent intellectual property laws and the utilisation of investor-state dispute settlement mechanisms by fossil fuel enterprises.

China is producing electric vehicles like toys and “printing solar panels like newspapers”, while South Africa is falling rapidly in industrialisation rankings due to climate change fundamentalism, which ensures unsteady energy supplies.

Without a stable baseload, the country is quickly being eliminated as a global competitor, and any hopes of beneficiating “green” minerals (platinum and manganese) are long dead.

Instead, South Africa is entangled in “agreements” like the Just Energy Transition Partnership and the South Africa-EU Strategic Partnership that stifle its economic prospects.

For example, the EU’s Green Deal package, encompassing Fit 55, the Critical Raw Materials Act and carbon border adjustment mechanisms, is framed as a necessary climate action initiative but is essentially a commercial venture. South African coal-powered exports have been declared persona non grata in the EU.

South Africa has no plan to escape the dollarised climate change festival.

Hadebe is an independent commentator on socio-economic, political and global matters.

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