A Game Changer for South Africa’s Economy?

Just transition, a concept developed by the trade union movement to describe securing employment and material prosperity for workers during the transition to a sustainable economy, has become an important issue in international climate negotiations. After all, jobs in heavy industry are often better paid and protected by workers’ organizations. The phasing out of destructive, non-sustainable modes of production and power generation will inevitably eliminate many of those jobs, making secure alternatives crucial to a socially just and environmentally sustainable future.

At the last Climate Change Conference in Glasgow in November 2021, COP26, the European Union, United States, Germany, United Kingdom, and several other Western countries announced the first partnership for just transition in the Global South, announcing 8.5 billion US dollars for South Africa to decarbonize its energy system. The project, widely viewed as a potential model for other countries, has sparked an intensive debate within the country.

Juliane Schumacher spoke with Roland Ngam, a project manager at the Rosa Luxemburg Foundation’s Southern Africa Office, about the opportunities, challenges, and conditions for a just transition in South Africa and beyond.

Over the last years, just transition has become a major buzzword in international climate policy. First coined by trade unions in the 1980s, it entered the Paris Agreement in 2015 and also appeared in the latest Intergovernmental Panel on Climate Change (IPCC) report that came out this year. Is just transition also widely known in South Africa?

There has been an evolution. Before the conference in Glasgow last November, mostly NGOs talked about just transition, specifically NGOs that have been involved in international climate negotiations for a long time. Their idea was to talk about a just transition from a very broad perspective: greening the economy and improving the situation of women, youth, and other less-privileged groups.

Then the conference in Glasgow happened, where the government of South Africa and several industrialized countries negotiated a huge deal on what they called the “Just Energy Transition in South Africa”. It changed everything. Now, the mainstream debate on a just transition in South Africa is really about decarbonization of the power grid, especially the South African electricity system, because over 94 percent of our electricity still comes from coal.

So, it is not primarily about the need to involve workers and the entire economy in the transition away from fossil fuels? In Europe and North Africa, for example, the concept primarily originated with the trade unions.

It is not necessarily the case for a very specific reason. Even before the deal, trade unions in South Africa had conducted many studies about just transitions, but for them, a just transition was something in the distant future. It wasn’t imminent.

In other words, they weren’t expecting a just transition to happen very soon.

They weren’t, so just transition was discussed in very broad terms: the economy would be greener, transport systems would be more integrated, buildings would be more weatherized, more green electricity, better irrigation and water use in agriculture — in the future!

But unions wanted to postpone the transition process for a very specific reason: the workers were not sure that this just transition was going to take them along. The fear was about jobs, you know. The trade unions had always thought that this thing is going to happen down the road, and suddenly the government says: we’ve got only five years!

Because the project agreed on in Glasgow is intended to be a five-year project?

In Glasgow, Germany, France, Great Britain, the US, and the EU put together a package of 8.5 billion US dollars to help South Africa start decarbonizing its economy, mainly through taking part of its coal fleet off the grid and greening its electricity fleet over the next five years.

South Africa has witnessed rolling power outrages lately because our electricity fleet is very old. The grid is very limited. Right now, South Africans all over the country are facing about three hours of power outages every day on average. That slows down economic activity and really dampens the public mood.

The COP money has been welcomed by many because Eskom, South Africa’s state-owned power company, owes a lot of money, so it cannot raise new funds on the international market very easily. This COP package is a major opportunity for the country, but at the same time, it also poses threats.

The money will only go to South Africa?

Yes, but South Africa is a case study for what might happen elsewhere. Discussions have already started to move this kind of funding to other countries like Vietnam, Indonesia, India, or other South Asian countries. Everybody is looking at South Africa now, because what happens here will serve as a lesson for other countries and the world in general.

How is the deal discussed in South Africa? Do people know about it?

They do. When I started tweeting about it in Glasgow my Twitter page really lit up. Suddenly I was getting calls from trade unionists, NGOs, and other groups.

There are two key debates happening now. The first one concerns the role of fossil fuels in the country’s economy. South Africa is a fossil economy, it was built by fossil fuels. South Africa is among the top 25 economies in the world, and it still has vast reserves of coal. More recently, it’s also discovered vast reserves of gas.

Offshore, close to the harbour city of Durban.

Right. Energy minister Gwede Mantashe, who comes from the Congress of South African Trade Unions (COSATU), is hell-bent on exploiting these resources. In his words, the countries that are saying that South Africa should keep it in the ground are promoting “apartheid of a special type”.

On the other hand, the president of the country, Cyril Ramaphosa, is wary of climate change and South Africa’s development imperatives. He has created a presidential climate change commission, which has really spearheaded the selling of this just transition project as one of the best deals that ever happened to South Africa. The commission has done a tour through the country to sell not just the deal, but also a climate bill on why South Africa needs to go green.

The president has indicated why we need to green the coal fleet: because it is dirty, it is old, it is holding the country back. He is fully on-board with expanding green installed generation capacity, whereas Mantashe, who comes from fossil fuel trade unions, wants dirty fossils to play a major role because South Africa still has vast coal and gas reserves.

But aren’t they both from the same party?

In the South African political system, the party in power is also the party in opposition. Mantashe comes from a different faction than the president. But at the same time, both of them are former trade union bosses from the same union, the National Union of Mineworkers (NUM).

What is the unions’ position?

The role of the unions is an interesting part of the debate. You have to understand that the coal sector employs about 90,000 people. But it is not only about the miners — it is also about their families, hawkers, teachers in the nearby schools, transport workers who take all these miners to work and back, and so on.

We organized a series of consultations with trade unions on just transition last year and the year before. The unions were all adamant that South Africa has to transform, that it needs to green its economy. For internal reasons, but also because the EU is introducing the adjusted carbon border taxes, they fear that this will have a negative effect on the South African economy and jobs. Still, they worry a lot about the 8.5 billion dollars because they don’t know if they will get the green jobs that are going to be created, and they also wonder whether they will be involved in the implementation of the project.

So, it’s a top-down project.

Exactly. One of the key weaknesses of the just transition project set up in Glasgow is that it is an apartheid arrangement that excludes most of the social partners from the room.

On the one hand, you have the South African government, and then you have the trade unions — the biggest ones are COSATU and the South African Federation of Trade Unions (SAFTU) — and business. They meet at the National Economic Development and Labour Council (NEDLAC). But NEDLAC only consists of the representatives of labour, business, and government. Where are the local communities, the NGOs, the transport workers unions, the street worker’s unions, other unions like the Association of Mineworkers and Construction Union (AMCU)? These people are affected, but they are not represented.

On the other hand, you have the NGOs and the various social actors excited to have this major project come to South Africa’s shores. Civil society organizations are very nervous, because we just emerged out of a very corrupt administration, the Jacob Zuma administration, which was captured by private business investors. The prospect of so much money coming to South Africa is thus really scaring the general public. Is the government going to invest all this money in the just transition, or are they going to use it as a conduit to give each other big contracts? That is the key worry.

There is also a lesser concern: are they going to do serious environmental impact assessment studies where these new projects are going to happen? Are local communities going to be involved in these studies?

Are the 8.5 billion dollars a grant, or a loan?

Only a very small fraction, less than 15 million dollars, is grant money. Most of it consists of concessional and non-concessional loans.

And all of it will go into the energy transition? Or can part of it be used for adaptation measures?

The way this just energy transition project has been put together is that a town in the biggest coal producing region of South Africa has been identified, Komati, where two coal power plants are going to be taken off the grid. The project is meant to ensure a just transition for this area, focusing on all the links in the chain around the coal power plant as well as the coal power plant itself.

We are not only talking about solar and wind projects replacing the coal power plants, but also about education, re-skilling of the workers who used to work in the coal power plant, finding alternative employment for informal hawkers, and so on. They are going to launch integrated projects to make sure that the town does not become a ghost town, trying to set up opportunities for women — because most of the hawkers are women — and for youth.

These two are very important constituencies, because there are more women than men in South Africa. At the same time, the official unemployment level is about 36 or 37 percent, while among youth it is even higher, almost 60 percent. They have to be taken care of.

What about the other countries in the region? Were they in favour of the project?

Oh yes, because with this project it means there will be more stability in the entire sub-region. Southern African unfortunately relies heavily on South Africa for power. Eskom is the biggest utility company on the continent, so when it suffers, the entire region suffers.

Why does the just transition project only apply to coal?

In Glasgow it was said, “We are giving you money to keep coal and gas in the ground.” But after Ukraine, that changed. In the beginning it was about coal and gas, but they are not talking about gas anymore.

German Chancellor Olaf Scholz visited South Africa in May. Was the just transition project discussed during his visit?

When Chancellor Scholz visited South Africa, there were two key discussions. One was about helping South Africa improve its kerosene capacity for its air-fuel uses. Due to the shocks on world markets and the difficulties in transport at the moment, South African reserves for airplanes were really threatened. Germany promised South Africa to help build capacities, and support it with technology and knowhow.

But they also talked about a more important and much bigger project worth almost 1 billion dollars: Germany has announced plans to help South Africa improve its technology in the areas of hydrogen, and also promised to put together a programme of transferring skills, training power sector workers, and so. After all, Germany has been involved in transitioning to low-carbon energy sources for much longer than South Africa, and it can transfer experiences to help navigate this process in Komati.

So, the government is trying to create opportunities in green technologies like solar and wind?

Mainly solar, wind, and hydrogen. South Africa has some of the best-proven capacities in the world for these.

The new project will create a lot of skills if it succeeds, because you will have not only the renewable energy providers, but also suppliers, subcontractors, etc. It can show there are opportunities and that it can create more jobs than the unions are afraid of losing. This could really be a game changer for the South African economy. So, despite all the problems, many organizations working on these issues are excited about the COP project.

Are they trying to get involved in shaping it?

Yes, they are. It has mostly been the various unions that are involved in environmental activities. They play a strong role in South Africa. Many NGOs and grassroots organizations are very active. People from organizations like GenderCC, COPAC, AIDC, and others are talking a lot about it and making a lot of noise in the media.

It is unfortunate that the really decisive debates are happening behind closed doors. The General Secretary of SAFTU, Zwelinzima Vawi, recently said that just transition has become a kind of code for “Yes, yes, we understand that workers are anxious, but leave it to us.” This captures very clearly how the whole process has unfolded. That there are so many things that need to be discussed for people to be at ease, but these things are not being litigated properly, either within society or within unions themselves. That has to change.