At the recent COP26 climate negotiations in Glasgow, the European Union, Germany, France, the UK and the US partnered to support South Africa accelerate its decarbonisation and help finance its migration away from its heavy reliance on fossil fuels. While the key details still need to be expanded on, the Just Energy Transition Partnership represents a first-of-its-kind agreement between a coal-intensive developing country and a group of donor governments to fund a transition away from fossil fuels. Collectively, the countries have pledged $8.5-billion (R129-billion) over the next three to five years in the form of grants, concessional loans, guarantees and private investments, and technical support.
South Africa depends on coal for 74% of its primary energy and 87% of its electricity. This large injection of funds will not only help finance the repowering and repurposing of old coal-fired power stations, but also encourage large-scale investments in renewable energy, aid the expansion of the transmission grid, and expedite the development of new sectors such as electric vehicles and green hydrogen. Consequently, the partnership is expected to prevent up to 1-1.5 gigatonnes of emissions over the next 20 years; in comparison, in 2019, South Africa emitted roughly 0.48 gigatonnes. This deal is therefore not just incidental to South Africa’s decarbonisation efforts – it has the potential to be transformative.
Yet, phasing out coal in a manner that doesn’t exacerbate existing inequalities is one of the partnership’s most pressing challenges. With incredibly high levels of poverty and unemployment, South Africa needs a new green industrial development strategy that builds capabilities in new sectors and protects livelihoods. In 2018, the coal industry accounted for roughly 87,000 jobs, and employees in the coal sector earned R24.7-billion that year. In response to the deal, trade unions assert that more than 100,000 coal miners will lose their jobs in the transition away from coal-based power, while another 100,000 people who earn a living from the coal value chain will need compensation when the mines are closed.
It is important to remember that employment in the coal sector means more than just a stable job; in addition to wages, employees are often eligible for non-wage benefits such as healthcare, accommodation and skills training. If we are to repurpose South Africa’s coal-fired power stations, and shift rapidly towards decarbonisation, displaced workers will need sound new jobs and social protection. No worker is going to accept going from a good, organised job to, for example, an informal job in agriculture.
The South African government does not have to navigate this transition without counsel. While the wide variation in country and company contexts means that there is no standard framework for a just transition, some international guidance exists.
The International Labour Organization’s (ILO) “Guidelines for a just transition towards environmentally sustainable economies and societies for all” is one key document. As a globally endorsed framework, the guidelines outline fundamental principles and potential policy entry points to manage an equitable structural transition away from fossil fuels.
One of the central guiding principles in the document is the need for social dialogue to be an integral part of the institutional policymaking framework and implementation at all levels. South African trade unions have vocalised their support for the partnership, provided that it protects jobs and livelihoods, and is inclusive of the affected workers and poor communities through social dialogue. This implies that trade unions and workers must have a seat at the negotiation table and should be consulted at all stages, from policy design to implementation and evaluation.
Underlying all of this is the requirement that the money gets to where it is needed the most. On the donor side, it is critical that the partnership is set up with good governance, traceability and accountability mechanisms from the outset. The challenge for the South African government is to develop the policies and plans to implement a just transition away from its reliance on coal.
Since the announcement of the partnership, Mineral Resources and Energy Minister Gwede Mantashe has already called on African nations to form a united front to resist global pressure to abandon fossil fuels. With him at the helm, it is difficult to imagine that the money will be spent wisely.
In the forthcoming years, it is critical that financial and political efforts to support coal phase-out in South Africa make a just transition as important as the phasing out of coal itself. The ILO guidelines state that “sustainable development means that the needs of the present generation should be met without compromising the ability of future generations to meet their own needs”.
While this is undoubtedly true, in a country with an unemployment rate as high as South Africa’s, the reverse must also remain true: sustainable development means that the needs of the future generation should be met without compromising the ability of current generations to meet their own needs. DM