Does South Africa deserve climate reparations?

There is something morally peculiar about a rich white South African demanding reparations. Yet, that’s what happened at COP27, the 27th annual UN Climate Summit, which took place in Egypt 2022. There, Environment Minister Barbara Creecy took to the global stage demanding climate reparations from wealthy nations most responsible for climate change.  

In all fairness to Creecy, she is a public official representing a majority poor and black country, so it’s not that she is claiming reparations for herself as a white South African. Creecy argued, rather, that wealthy nations most responsible for causing the climate crisis must pay reparations to those least responsible yet most harmed. 

Yet, her demand still raises a perplexing question: 

In a country as deeply unequal, polluting and unjust as South Africa, who really deserves climate reparations, and who should pay for them? 

This is not a mere question of woke identity politics gone wild (as Helen Zille might rant about as she descends further into reactionary right-wing, colonial apologetics). Rather it goes to a core question about what it means to serve climate justice: who are the victims of climate change, deserving reparations, and who are the perpetrators of the climate crisis, who owe victims reparations? 

South Africa: victim or perpetrator, or both?

On the global stage, South Africa often likes to sneak itself in with other African countries, claiming that the Global North owes it climate reparations and climate finance. However, unlike other African and developing countries, who have mostly done very little to cause the climate crisis, South Africa is one of the world’s most polluting countries.

South Africa is the 12th-biggest climate polluter in the world in absolute terms and the worst in Africa. When measured by the amount of climate pollution produced per unit of GDP, it is worse than China and ranks behind only a handful of countries including Turkmenistan, Palau and Mongolia. Of the major economies, our energy sector is the most polluting of all G20 nations, thanks to our incredibly heavy dependency on polluting coal. 

Being such an awful climate polluter, South Africa arguably owes its own climate debt to the world, especially to its African neighbours who have mostly done little to cause the climate crisis and yet are suffering devastating impacts. Perhaps then, rather than chasing foreign Africans away in violent xenophobic pogroms, South Africans should be welcoming them and apologising for their role in the devastating climate disasters that are driving so many from their homes.

Of course, it’s not fair to say all South Africans owe climate reparations. Indeed, for the majority of South Africans who are poor and black, they are in a similar boat to their fellow African compatriots, having contributed little to climate change themselves. If anything, they too are owed reparations both for apartheid’s very much alive legacy and for the growing climate devastation that has made South Africa poorer, more unequal, and devastated so many of our communities. 

So, if the majority of South Africans have done little to cause the climate crisis, then who owes climate reparations in South Africa? 

Two principles of climate justice

To help answer this question, we can turn to two principles of climate justice. One is the “polluter pays” principle, which says that those responsible for pollution should pay for the harm caused. 

Another is the beneficiary pays principle, which says that those who benefited from unjust and harmful systems morally owe compensation to those harmed by those systems. Let’s apply them to the South African context. 

In South Africa, in addition to the heavily polluting state-owned energy utility Eskom, wealthy corporations and individuals are the biggest polluters in the country. They are also the main beneficiaries of the country’s deeply extractive, unequal and polluting economic system forged in the coal-powered fires of apartheid. That rapacious extractive economy has hardly faded away or transformed after apartheid either. Rather the billionaire-led ANC has facilitated a new black elite to profiteer from it, alongside the white elite. As a result, inequality has not shrunk but grown. South Africa is the world’s most unequal country, where 10% of the population owns 80% of the wealth. 

If we follow the logic of the polluter and beneficiary pays principles in this context, then South Africa’s wealthy and polluting individuals and corporations should pay climate reparations. It is on good grounds then that the Congress of South African Trade Unions (Cosatu) is calling for South Africa’s just transition to be funded through a range of progressive taxes, such as a wealth tax, a resource rent tax, and taxes on environmentally damaging activities. Implementing such progressive taxation could be a form of not only climate reparations, but also apartheid reparations. 

Some might recall that the Truth and Reconciliation Commission also recommended a wealth tax as key to apartheid reparations. It’s no surprise that measures to serve apartheid and climate reparations overlap, as a key element of apartheid (and colonialism more broadly) was dispossessing people of their land, so that colonial forces could exploit both people and nature. Doing so not only helped build South Africa’s polluting and exploitative minerals-energy complex. It also displaced black South Africans to suboptimal land, often making them more vulnerable to climate change. 

If the wealthy and polluting elite in South Africa owe dual climate and colonial reparations, then it leaves South Africa in a bit of a morally compromised situation on the international stage since it demands the world send it climate finance and reparations. After all, wouldn’t a country such as Pakistan or Niger be more deserving of those funds? They have done much less to cause the climate crisis and yet they have been terribly devastated by it.

Climate criminals demanding climate reparations

What makes South Africa’s elite even less deserving of demanding climate reparations, is the fact that while President Cyril Ramaphosa’s administration demands climate reparations and finance on the international stage, back at home his energy minister, Gwede Mantashe, is intent on continuing to destroy the climate. Indeed, while South Africa tries to portray itself as a climate champion, Mantashe is working to deepen the climate crisis by ramping up polluting fossil-fuel power and production. 

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At COP-27, Ramaphosa announced a major investment plan aimed at attracting international climate finance for South Africa to shift to renewable energy, green hydrogen and electric vehicle production. The R1.5-trillion investment plan for 2023-27 goes by the title, Just Energy Transition Investment Plan (JET IP). On the face of it, the plan appears progressive and makes it seem as if South Africa is starting to move towards climate action. 

However, on the very same day that Ramaphosa announced his plan, Mantashe put out a call for proposals to kick-start the heavily water-intensive process of fracking for polluting fossil gas in the drought-stricken Karoo. That forms part of Mantashe’s aggressive push for massive amounts of new oil and gas, which he has described as a “game changer” for South Africa. It also happens alongside his attempts to build two new coal power plants and ramp up coal production.

This push for new coal, oil and gas, is happening even though the evidence clearly shows that a rapid transition to renewable energy that moves away from coal and relies very little if anything on polluting fossil gas, would be more prosperous for South Africa. It is also happening despite the fact that the climate science shows that the world must pursue a rapid and transformative transition away from fossil fuels to avert the most devastating impacts of climate change, and have a chance of staying anywhere near the 1.5°C target agreed to under the Paris Climate Agreement. 

South Africa is clearly trying to have their cake and eat it too. Demanding climate finance from the international community, while wanting to continue destroying the climate through new fossil fuels. It’s for this reason that South Africa’s Climate Justice Charter Movement is petitioning the international community to make an end to new coal, oil and gas investments a condition of financial support for South Africa. 

Doing so seems like a sensible move if the aim of climate finance is to slow the climate crisis. 

Perhaps one of the most important things Ramaphosa could do to show the international community that he is serious about delivering on his climate promises, is to fire his fossil fuel-loving energy minister, Mantashe, and update South Africa’s energy plans to accelerate climate action. Replacing Mantashe with someone forward-thinking and dedicated to climate action, would be a massive signal that South Africa is legitimately committed to action. 

Firing Mantashe would also be an important move towards solving the country’s devastating energy crisis, which Mantashe has made worse during his tenure as energy minister — through a combination of corruption, incompetence and seemingly deliberate slowing of the roll-out of desperately needed new renewable energy, in favour of trying to push through expensive, polluting and corruption scandal-mired projects like the powerships. 

Ramaphosa may be going in the opposite direction and putting Mantashe’s department in charge of Eskom — following a resolution by the ANC NEC which said Eskom should be put under the Department of Energy. Ramaphosa may be giving Mantashe Eskom in exchange for Mantashe having wielded his significant political power in the ANC to both protect the President from the Phala Phala corruption scandal and help him secure victory at the ANC elective conference. 

This also came after Mantashe successfully agitated against Eskom CEO André de Ruyter, leading him to step down. De Ruyter, who pioneered Eskom’s Just Energy Transition initiatives, was also allegedly poisoned. That raises major questions around who would want to take over Eskom’s (quite literally) poisoned chalice, apart from perhaps a coal lacky, who would toe Mantashe’s line and not disrupt the corrupt fossil-fuelled forces devouring Eskom, most likely behind De Ruyter’s poisoning. 

Apparently though, the backlash against Mantashe being handed Eskom was so (justifiably) strong that the ANC is now considering moving Eskom into a new energy department, which will be separated from Mineral Resources and led by a more forward-thinking minister. It’s unclear whether that will happen. Until it does, with Mantashe still likely to be at the helm of energy policies for the foreseeable future, and Eskom in serious limbo, South Africa remains a hypocritical and conflicted presence when it comes to climate action, and also stuck with leadership unable and/or unwilling to solve its energy crisis.

Transformational climate finance

So, if South Africa’s rich and ruling elite both owe their own climate reparations and are working to unlock even more climate-polluting fossil fuels, then does South Africa really deserve international climate finance or reparations? 

While it would be tempting to simply say no, we cannot allow the sins of South Africa’s ruling elite to rob the majority of South Africans, who are poor and black, of their righteous claim to both climate and colonial reparations. 

It seems to me that in order for climate finance to be morally justified and serve climate justice in the South African context, it should meet at least two conditions, although other principles are important too. 

First, climate finance should work to accelerate climate action and do so in line with South Africa’s fair share of climate action. Second, it must help to transform our deeply unjust country and bring benefits not to the rich elite, but to the majority of the people, especially the poor, black and working class. 

As we’ve seen, unless Ramaphosa manages to rein in the polluting interests in his party, his deal may not meet the first of these conditions. So, does it pass the second condition? To answer this question, it is worth examining Ramaphosa’s investment deal more closely. I will here only focus on the electricity sector element of the plan, since it is the biggest, most detailed section of the investment plan — although similar questions should be asked of the green hydrogen and electric vehicle investments too. 

By way of overview, the electricity sector will receive most of the funding, about R1-trillion. Of that, about R650-billion would be for infrastructure — such as to decommission coal-fired power stations, expand and strengthen the transmission grid, and bring online new renewable energy generation capacity. A current example of this is Eskom’s work to repurpose the retired Komati coal-power station into a clean energy hub, with solar, wind and battery storage capacity. The site will also house a microgrid manufacturing facility and an agrivoltaic project, where crops will be grown alongside solar panels.

Further investments of R320-billion are also slated to strengthen municipalities’ participation in distribution networks and accommodate increased penetration of renewable energy at all scales. That is supposed to include “the establishment of a financially sustainable service delivery model that provides for equitable access by the whole grid community… including small businesses and low-income and energy-poor households.” 

Finally, roughly R65-billion will be directed to just transition programmes, mostly in Mpumalanga, where the country’s coal value chain is concentrated. Those “just transition” components consist largely of a range of measures to protect coal-reliant communities, including retraining programmes, financial assistance, relocation options and alternative economic development models for those areas. An example is a R180-million grant for a training facility for workers at Grootvlei Power Station, which Eskom secured. 

While all of these investments on the surface seem quite progressive and important for South Africa’s energy future, major questions arise around who will see the majority of the benefits of these investments, whether the just transition elements will be truly just in practice, and how questions like energy poverty and access will be addressed. It is worth spending a bit of time on these questions to see how the President’s plans may not meet the second condition of being transformative, and instead may help retain South Africa’s unequal status quo.

A disorderly, market-driven transition

When it comes to understanding who will benefit from the JET IP’s proposed investment in the electricity sector, significant questions arise about who will own renewable energy. Investing in renewable energy typically requires secure access to land to site renewable energy — somewhere to put up solar, wind and battery technologies. It also requires capital — even though renewable energy is now much cheaper than fossil fuels, there are still significant up-front costs. 

In the South African context, both land and capital are concentrated in the hands of a minority. As such, in a country as unequal as ours, if the energy transition is largely left to the private sector or the market, then the benefits are likely to be concentrated in the hands of corporations and the wealthy — those already with access to wealth, land and capital. Meanwhile, the majority of South Africans who face a cost-of-living crisis, piled on top of already widespread poverty and unemployment, could be largely excluded from the benefits and ownership of renewable energy.

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To address the question of ownership, the President’s JET IP includes funding to test various “social ownership models”, so that communities benefit financially amid the transition. 

While that might seem encouraging, the allocated funding is a mere R1.65-billion, which is about 0.01% of the overall investment plan. This tiny amount seems quite tokenistic, particularly when set against the backdrop of Ramaphosa’s unprecedented moves to privatise energy generation in South Africa. 

In 2022, Ramaphosa announced that his administration would remove licensing requirements from the private sector, so that they could invest in energy generation without requiring a licence from the national energy regulator. This has resulted in an unleashing of the private sector to invest in energy generation. Even the state-driven renewable energy investment programme (the REI4P) has been displaced by the torrent of private-sector investment buying up Eskom’s limited grid capacity. 

The forces of privatisation have been unleashed, and we are now in the middle of a disorderly, market-driven transition. 

This also has major implications for energy poverty and access. For, while the private sector is making a dash for cheap renewable energy, Eskom, which provides energy for the majority, is being run into a state of disrepair, with unreliable electricity, skyrocketing energy tariffs and crumbling generation infrastructure. 

The result so far has been energy poverty going up, with nearly half of South Africans now considered energy poor. Such widespread energy poverty can hardly be called a just transition. 

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It is in large part to address energy poverty, that a central campaign of the Climate Justice Coalition is for a Green New Eskom to drive “a rapid and just transition to a more socially owned, renewable energy-powered economy, providing clean, safe and affordable energy for all”. And, while some investments in the JET IP are meant to help Eskom invest in the transition, one wonders how much of that will materialise given the utility’s current state of dysfunction and the widespread privatisation of generation. It’s particularly difficult to see Eskom leading the way under coal fundamentalist Mantashe — who strongly criticised Eskom’s already limited efforts on this front. 

So, when seen against the backdrop of the President’s privatisation agenda and Mantashe’s obstinance, one worries whether the funds to pilot socially owned renewable energy is just a tokenistic mention of the idea to placate proponents of social ownership, rather than a real commitment to delivering on a more just energy future with benefits and ownership concentrated in the hands of the many, rather than the few. 

It is for good reason then that Lebogang Mulaisi, head of policy at Cosatu, was lukewarm about the plan, saying that “we have an ownership crisis in our country… and I just don’t feel we’ve addressed the issue of addressing inequality decisively.” 

Owning the renewable means of production

Ownership also extends beyond just who owns the finished renewable energy technology — the solar panel or the wind turbine. It also has to do with who owns and benefits from the production of those technologies. This is vitally important, since although renewables do create more jobs than fossil fuels, much of the job creation in renewable energy comes from the production of the technologies. Sadly, again, the President’s JET IP allocates a mere R1.6-billion to manufacturing and localising of the clean energy value chain — a mere 0.01% of the investment plan. 

As the Institute for Economic Justice pointed out, the investment needs for the localisation of the renewable energy value chain are estimated at R418-billion to meet the energy build in South Africa’s Integrated Resource Plan. However, the JET IP has apportioned only R1.6-billion for localising the clean energy value chain, a meagre 0.4% of the total needed. They thus conclude that the plan “reinforces South Africa’s existing capital- and energy-centric growth path, decreasing the chances of absorbing hundreds of thousands of workers along the coal value chain into the new clean energy system”.

Here is where we need to be critical of the motives behind the countries who aim to provide international climate finance to South Africa. 

The main contributors are the International Partners Group (IPG), made up of the European Union, the US, France, Germany and the UK. When they offer financing to South Africa, it would be naïve to think they do so simply out of the goodness of their hearts. There is, after all, no such thing as a free lunch. 

Consider, for example, that under the Biden administration the US is in the middle of a major attempt to ensure that it becomes a dominant player in the manufacture and production of clean energy. Under their recently passed Inflation Reduction Act, they are putting forward a range of major subsidies and tax incentives to ensure clean energy is made in America. To help them in those efforts, it would certainly be useful if other potential competitors like South Africa were locked into importing renewable energy technology, rather than manufacturing their own. 

Anti-renewable energy campaign

In response to the role of Western powers in driving South Africa’s climate finance deal, the likes of Mantashe and EFF deputy president Floyd Shivambu have been on an anti-renewable energy propaganda campaign. They claim that the climate finance deal and renewable energy are part of a Western imperialist plan to undermine South Africa’s energy sovereignty by stopping us from investing in technologies like nuclear, coal, gas and oil. Shivambu even argued that South Africa’s economy should run on coal for hundreds of years to come and should not give in to a “colonial takeover engineered by the West”. 

Like most propaganda, such critiques take a kernel of truth and distort it, in this instance to serve a pro-fossil fuel agenda that benefits elites connected to polluting industries. Such rhetoric is particularly harmful, because it obscures real issues of how South Africa’s ability to drive forward a homegrown, job-rich, truly just transition to clean energy is potentially being eroded by international interests who would prefer to see South Africa as a country to export their products to rather than as a competitor. We must look past such faux anti-imperial outrage, to the real issues at hand. 

Mantashe and Shivambu could be better categorised as Freedom from Economic Reality Fighters. In reality, the countries who invest heavily in polluting and expensive coal, nuclear and gas, will be left behind by those who invest in cheaper, cleaner industries. Even the typically very fossil fuel-friendly International Energy Agency points out in a recent report that “the energy world is at the dawn of a new industrial age — the age of clean energy technology manufacturing”. As we enter that new age, we are in a struggle over who dominates the industries of the future, and climate finance, far from an innocuous form of aid, is a tool that can be used to serve particular interests in that struggle.

Here it may be poignant to reflect on the words of Kwame Nkrumah, who warned that: “The result of neocolonialism is that foreign capital is used for the exploitation rather than for the development of the less-developed parts of the world. Investment under neocolonialism increases rather than decreases the gap between the rich and poor countries of the world.” 

The task of social movements committed to climate justice is to ensure that climate finance is not a tool for neocolonialism, but rather advances true economic, environmental and social justice. 

Financial strings, indebtedness and austerity

We must recognise then that foreign countries are not going to give South Africa money simply out of the goodness of their hearts. At the same time, South Africa does need significant amounts of funding in order to finance its energy transition. Knowing this, it is vitally important that we critically examine what conditions we should be willing to accept and in exchange for what type of funding, versus when we should say no to onerous conditions that may cause more harm than good. 

To help understand the finance flows, let us unpack them a bit more, starting with the amount of funds officially pledged from international funders. Of the President’s R1.5-trillion investment plan from 2023-27, the IPG’s initial JET partnership at COP26 pledged $8-billion, which provides about 12% of the five-year plan. Then, at COP27 the IPG pledged an additional $10-billion. As such, the pledged international finance makes up close on a quarter of the proposed investment plan. 

Only 4% of the pledged funds so far are grants, with the rest being loans and guarantees, according to analysis by the Institute for Economic Justice. As such, we must not be under the false impression that the international community is offering us mostly free money — if there were such a thing. The vast majority will come in the form of loans, although Ramaphosa says he is trying to secure more grant funding, and in conversation with the IPG has “stressed that the component of the grant funding is far lower, much lower than what we need to fund our transition”.

If most of the pledged international funding is loans, we must scrutinise the terms of those loans. 

Some of the first loans in the pipeline come from France and Germany, who will send €300-million each to South Africa. The French loan is priced at 3.6% and the German one 3%. Both are 20-year loans, including a five-year grace period. That is far cheaper than if the South African government raised the funds in the debt capital markets, where the interest rate is 8% to 11%. However, if the rand continues to depreciate against foreign currency, those savings may erode.

The foreign loans make up about 10% of the Ramaphosa broader JET IP funding plan. By crowding in further investments from pension funds, philanthropic organisations, development finance institutions and other entities, the aim is to invest R1.5-trillion by 2027. The financial model here, as the Institute for Economic Justice points out, is to rely heavily on using the loans and guarantees to “de-risk” investment by the private sector and on “blending” public financing with private financing to attract foreign private finance.

In its assessment of the funding mechanism behind the JET IP, the institute concludes that “the deal prioritises a highly problematic market-centric approach to financing the energy transition, one that guarantees profits for the financial elite and limits local economic development”. If that is indeed the central model of the JET IP, then it must be asked whether it is worth indebting everyday South Africans further to serve such a model.  

The possibility that debt payments on loans may grow significantly if the rand weakens should be a major cause for concern. Already South Africa’s indebtedness is being used as the reason to justify the harshest austerity in post-apartheid South Africa. That rather brutal austerity is driving widespread privatisation and cutting back vital public services upon which the majority of South Africans deeply depend. If the debts incurred by the JET IP drive a worsening of that situation, then it’s not clear how the transition can be seen as just.

It is important to bear in mind though that South Africa’s austerity is selective, as our budget is providing lots of funding to subsidise polluting industries. Programmes such as the coal-export rail Strategic Infrastructure Programme (SIP1) are spending hundreds of billions building polluting infrastructure — the opposite of what’s needed in a climate crisis. 

Trillions have also been spent on coal and diesel in the past decade, which could have built out a world-class homegrown renewables programme. There is lots of money flowing through the fiscus, but it is not going to the right places. 

Current indebtedness

It’s also worth critically examining some of the sources of South Africa’s current indebtedness. The people of South Africa are paying for corrupt ANC deals, such as the billions of dollars in World Bank loans that brought us dysfunctional and polluting disasters such as the Medupi and Kusile mega coal-power plants — despite resistance from South Africans. 

It’s a tragedy that South Africa is paying billions in (odious) debt to the World Bank for massive, dysfunctional and corrupted new coal-power projects, while the World Bank tries to lock South Africa into more debt to fund a transition away from coal. 

So, with all the concerns around a market-centric, debt-funded transition, delivered by the corrupted ANC, is the JET IP worth it? 

There are, of course, important pieces of funding in the JET IP, including grants for vital just transition measures and building a renewable energy future. As such, we should be careful about throwing the baby out with the bathwater. However, if the ANC or the international community insists that the baby comes with the dirty bathwater, then perhaps we should buy our own cleaner baby, so to speak. 

After all, South Africa has much wealth within it, which could be used to fund a just transition, if that wealth was better distributed and directed towards a just transition. Perhaps rather than playing the pauper on the global stage to secure climate finance with strings attached to it, we could, as the Climate Justice Coalition is demanding, get serious about taxing rich and polluting individuals and corporations, and building out a transformative transition at home. 

Perhaps as the Alternative Information and Development Centre (AIDC) suggests, we could prioritise borrowing domestically. As it highlights, the Government Employees Pension Fund, with more than R2.3-trillion in accumulated reserves, is well placed in this regard. It can redirect large levels of speculative investment in the JSE into more sustainable investment in the real economy towards reindustrialising the South African economy.

In a constrained fiscal environment, it is important to ask whether those domestic resources could be better used to fund other important measures, which international finance would not help fund. It is also important to ask whether there are domestic resources we could reclaim from other spaces to fund the just transition — such as clawing back the trillions that have been spent on corrupt coal contracts. The reality of corruption should also lead us to be hyper-vigilant about how the ANC spends the JET IP funds. 

Ironically, World Bank president David Malpass, who once admitted that the Medupi project and World Bank loan were deeply corrupt, has now said he is confident in South Africa’s ability to meet its just energy transition targets. 

What justifies his newfound confidence? 

I am not sure, as the ANC has hardly become a bastion of good governance since Medupi. Big questions should loom in our mind as to whether the ANC will deliver on the projects it is locking South Africa into more debt to fund. 

Indeed, as financial journalist Peter Bruce points out, “by 1994 Eskom had not borrowed a single cent from the state. It had been entirely self-financed, mainly through the issuance of its own bonds, which were wildly popular in fixed interest markets around the world. Since then the ANC has broken virtually the entire industrial edifice it inherited, Eskom included. Had it taken more care it would today be more than capable of financing its own decarbonisation.” 

In the end, the biggest problem with the JET IP is likely to be not the role of international financiers. It is more likely to be the ANC, whose corruption, incompetence and failed governance are plunging South Africa deep into turmoil and dysfunction. The urgent task ahead to deliver a just energy transition will be to wrest control from corrupted ANC cadres and vest it instead in capable leadership and governance structures.  

The ruling ANC elite deserves our scorn and anger, not our vote. The people of South Africa deserve better. Unlike the wealthy and ruling elite, the average South African deserves climate reparations. They deserve a transformative climate and energy justice programme that brings benefits to the many, not just the few. A programme that transforms our deeply unequal and unjust country and builds a more socially and ecologically just future.

We cannot allow the current perilous state of our country to set our bar so low, that we will accept just any transition. We need a transition that is truly just. We will only get that just transition though, if we take to the streets and demand it. It is not enough to cry foul, point fingers and simply make demands of the ANC either. We must work together to build the political and social structures that can truly deliver on a just energy transition and a better future for all. DM/MC

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