Thursday, May 11, 2023
This Opinion article by Courtney Morgan (African Climate Reality Project), Leanne Govindsamy (Center for Environmental Rights), and Boitumelo Masipa (350Africa.org) representing the Fair Finance Coalition of Southern Africa originally appeared in Mail and Guardian on 1st May 2023.
In December, a year after the $8.5 billion Just Energy Transition was first announced, South Africa’s Just Energy Transition Investment Plan (JET-IP) was approved by cabinet and then published for public comment. The Fair Finance Coalition Southern Africa, together with the Life After Coal Alliance, submitted comments, which follow below. We hope these will help guide and re-prioritise our Investment Plan as per the principles outlined in our Just Transition Framework.
The plan outlines a much larger financial package for our Just Energy Transition, estimating that $98.7 billion would be needed over the next three to five years. The investment plan is meant to provide a roadmap for decarbonising South Africa’s economy to ensure a truly just transition that works for people and planet.
“The JET-IP provides a real and transformational opportunity to address our climate, energy and inequality crises while realising aspirations of decent work, dignity and equality. The Just Transition is a crucial moment in our history, but the right choices and priorities must be determined now,” says Courtney Morgan from the African Climate Reality Project, a member of FFCSA.
The investment plan focuses on three main areas — decarbonising the country’s electricity sector, electric vehicles, and the green hydrogen economy. While we support the plan and believe in its transformational role in our just transition, we have questions and concerns about its key priority areas and implementation. The supportive but critical role of civil society has been recognised over decades and can enrich the nature and scope of the Investment Plan and its implementation.
The PCC has described the plan as a “living document”, and civil society has been invited to comment on it; however, we are uncertain about whether and how our comments will be taken into consideration.
In our submissions, we highlighted key lessons which could be learned from the processes that led to the decommissioning of the Komati Coal Power Station (a World Bank-financed decommissioning project). Four days after the power station shut down, a meeting on the environmental, social and impact assessment took place, leaving little to no room for proper and meaningful public engagement and participation.
Disregarding meaningful public participation processes can only lead to an unjust transition for people affected by the closure of the power station.
We are highly sceptical about the inclusion of the green hydrogen economy as a key priority area. There was no consultation on determining the priority areas, and the plan does not contain sufficient information to justify the inclusion.
Green hydrogen primarily serves the speculative plans of major emitters and is not required for electricity decarbonisation purposes. An entire green hydrogen economy, primarily for export purposes, appears to be built around a few companies, while social protection and investment measures are heavily underfunded.
Incoherent decision-making on electricity planning
It is well-known that we need to transition away from coal and rapidly move towards large-scale socially-owned renewable energy supported by sufficient battery storage capacity.
Moving away from coal-fired power for electricity is not just a climate imperative. It is required to address ageing coal infrastructure that can no longer meet South Africa’s energy demands. Given the hugely expensive maintenance that is and will continue to be required for coal-fired power plants, renewable energy is clearly cheaper and more sustainable in the long term.
Recent comments by our Electricity Minister on extending the life of coal-fired power plants beyond Eskom’s decommissioning schedule are alarming.
The JETP and JET-IP are based on Eskom’s Just Energy Transition plan, which only provides for the youngest coal plants, Medupi and Kusile, to keep running beyond 2030.
“To advance our Just Energy Transition, our government needs to make clear, coherent, and economically justifiable decisions about our electricity planning. If not, we will fail to address load-shedding and risk losing international financial support for our decarbonisation efforts and our Investment Plan, for which $90 billion is still required,” Leanne Govindsamy from the CER and a member of the FFCSA said.
The coalition is aware that the JETP financing will come into the country through various channels involving several external stakeholders. We believe that Public Finance Institutions (PFIs) will play a critical role in South Africa’s JET-IP. However, the nature and extent of their role is not made clear.
As FFCSA, we believe that PFIs have a publicly accountable mandate to support sustainable and inclusive development and could play an immense role in tracking, monitoring, and oversight of the implementation of the JET-IP. In our comments, we have illustrated how we could play a role in supporting and overseeing their mandate. In this regard, members of the coalition have invested resources, taking an interest in development finance and investment projects of development and public finance institutions alike.
Another important question we have raised is how the further negotiation of Investment Plan financing (approximately $90 billion) will contribute to South Africa’s national debt.
The fact is that South Africa cannot afford to take on more debt. The issue of how debt risks arising from the JET-IP are negotiated and managed is in the public interest, and we have therefore submitted that all loan agreements and conditions should be made publicly available and accessible to enable transparent decision-making.
We have concerns about the projects identified to receive priority funding and the minimal emphasis on community-based approaches to decentralise the energy sector.
For example, the plan heavily lends to the private sector and makes little reference to the involvement of local communities. Only R1,65 billion is available to pilot social ownership models, while R128 billion and R319 billion are made available to the electric vehicle and green hydrogen sectors, respectively.
More attention must be placed on crucial social investment issues, including a social protection safety net for those who will be negatively affected by the transition and an emphasis on the creation of local green jobs.
We expect the transition to a low-carbon economy will inevitably affect communities, particularly coal workers. The social impacts can be offset by prioritising social investments with more significant funding for socially owned projects. If the plan leads with socially owned projects, it can potentially uphold the economy, positively impact people’s lives and empower local communities to shape the just transition.
Thabo Sibeko from EarthLife Africa, a member of the FFCSA, says that: “Local communities need social protection through investments in socially owned renewable energy, solar-powered public schools and transport, and new manufacturing hubs to replace the coal economy. The Investment Plan can only deliver a just transition if proper financing is made available for this.”
With electric vehicles as an investment focus area receiving a significant portion of the funds, we believe there is an opportunity for the investment plan to invest in local manufacturing hubs, which can contribute to job creation in the electric vehicle industry.
There can only be a transition with justice.
Those directly affected by a shift from coal — workers and communities — must be involved in, and not just consulted on, the JET-IP.
Meaningful civil society and community participation must be embedded into the JET-IP processes. Not only will this ensure proper oversight if the information is made available, but it will also ensure that the intended outcomes of the JET-IP are genuinely just.
Courtney Morgan (African Climate Reality Project), Leanne Govindsamy (Center for Environmental Rights), and Boitumelo Masipa (350Africa.org) represent the Fair Finance Coalition of Southern Africa – a civil society coalition working towards ensuring Public Finance Institutions invest in a socially and environmentally responsible manner in South Africa and Africa.
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