PATRICK BOND AND DESMOND D’SA: Thorny questions for Just Energy Transition Partnership negotiators
No-one should oppose the project if questions about odious debt, World Bank involvement, methane gas and energy racism are answered
In SA the worlds of high finance and climate justice are colliding, with unfortunate results expected to manifest at the UN’s COP27 climate summit taking place in Sharm El-Sheikh, Egypt, next month.
At COP26 in Glasgow a year ago Western firms promised $8.5bn (R155bn) for a Just Energy Transition Partnership (JETP) that would serve as the world’s decarbonisation model. But persistent delays and nontransparent processes mean crucial details have been hidden from view ever since. That leaves us with a number of critical questions.
Will the JETP provide Eskom CEO André de Ruyter with new foreign loans that in part encourage the parastatal to repay existing “odious debt” — that is, loans from the same countries’ financiers, which it really should not be repaid on sound anti-corruption and also climate grounds?
Specifically, two fragile coal-fired power stations — Medupi and Kusile — cost not the original R163bn estimate but closer to R450bn. Then Eskom chair Valli Moosa awarded the main boiler procurement contracts to Hitachi in 2007, just after the Tokyo firm had gifted 25% of Hitachi Power Africa to the governing party’s funding arm, Chancellor House.
That act was termed “outrageous” by Corruption Watch, because at the time Moosa was also an ANC finance committee member, resulting in Hitachi’s 2015 successful bribery prosecution (and R340m fine) under the US Foreign Corrupt Practices Act.
Should new JETP loans enable repayment of interest on such odious debt, instead of challenging these lenders to take a haircut for funding these fraud-filled, skorokoro, ultra-polluting power plants?
Why give the World Bank a central role in JETP management? A protest at the bank’s Illovo office two weeks ago drew scores of community and environmental activists insisting on the cancellation of odious debt, since a 2010 Medupi credit of $3.75bn was the lender’s largest ever project loan. Protesters against the World Bank also demanded an end to its financing of a Richards Bay liquefied natural gas terminal.
Last month former US vice-president and environmentalist Al Gore called for the World Bank’s president, David Malpass, (a Donald Trump appointee) to be fired due to his “ridiculous” climate change denialism, and the problem is evident when other staff push methane gas projects or demand Medupi debt repayment.
Will the JETP allow De Ruyter to use 44% of incoming funding for methane gas-fired power plant construction, even though it is expected to be up to 85 times more potent as a greenhouse gas than carbon dioxide over the next 20 years?
Given that JETP funding for Eskom is “fungible”, finance needed for De Ruyter’s two preferred methane gas power plants — 3,000MW at Richards Bay and 1,000MW at Komati, together costing R85bn — will be freed up as it comes from the same pool to be used for solar and wind generation.
Will JETP partners permit Eskom’s meth addiction because they believe — as does the EU’s “sustainable finance taxonomy” — that gas (and nuclear energy) can be considered “green”?
Does the JETP turn a blind eye to — thus rewarding — De Ruyter’s many unjust energy policies, such as “load reduction” energy racism, which disconnects black townships more frequently than the suburbs? Or his requested 32% increase in 2023 tariffs, plus his phase-out of residual pro-poor cross-subsidies to black homeowners?
Or Eskom power plants’ violations of Air Quality Act regulations (by a factor 3,200 times accepted levels), which kill 2,200 Mpumalanga residents annually and produce the world’s worst sulphur dioxide pollution?
Will the JETP come in the form of loans, instead of grants that would be far more appropriate given SA’s existing $174bn foreign debt? And will such JETP loans be denominated in dollars, pounds or euros? If so, with the rand having crashed from R14 to R18 to the dollar in recent months, what effective real interest rate should be assumed for repayment into a future with further depreciation?
Indeed, what hard-currency spending is truly required for core just transition mandates, such as re-employment opportunities and climate adaptation? That is, climate-proofing infrastructure and housing to withstand rain bombs or irrigation to beat the droughts, when workers are paid in rand and most materials are acquired locally, not imported?
Did Western JETP negotiators conduct any genuine consultation with the most vigorous community, labour and environmental critics of Eskom? Will JETP funding partly aim to kick-start an elite electric vehicle market, for subsidised auto exports to wealthy customers abroad, as is desired by trade, industry & competition minister Ebrahim Patel (on top of R30bn worth of existing subsidies for petrol and diesel cars?
In advance of the UN’s COP27 climate summit, will the long-delayed conclusion of the JETP artificially boost the (generally fake) green credentials of the main Western polluters — as happened in Glasgow in November 2021 — at a time when Germany is importing millions of tonnes of SA coal for its rebooted power plants due to Russian sanctions, and the UK is going back to fracking methane gas?
Speaking of hypocrisy, is Pretoria’s not glaring in deploying 1,200 SA National Defence Force troops in northern Mozambique to defend Paris-based Total, Houston-based ExxonMobil and other multinationals drilling to tap into 125-trillion cubic feet of gas, in a war zone that has left 1-million people displaced and thousands dead, just as climate-fuelled cyclones on the coast become more intense?
Given these contradictions, should South Africans committed to climate justice consider endorsing a February call by the Climate Justice Charter Movement to support sanctions against financing the JETP?
No-one should oppose a JETP if these questions are resolved, especially if the Western super-polluters concede the $8.5bn is simply its down payment on long-overdue “climate reparations” to Africa. The polluters should compensate poorer countries for leaving fossil fuels underground, as well as covering growing climate-proofing adaptation costs and extreme weather loss and damage expenses.
Given the balance of forces, we realise these reasonable questions will not even be considered by establishment negotiators, much less answered satisfactorily.
• Bond is distinguished professor of sociology at the University of Johannesburg. D’sa co-ordinates the South Durban Community Environmental Alliance.
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