Building state capacity for a just energy transition

The idea of a just green transition has rightly captured imaginations and shaped political commitments globally. SA’s Just Transition Framework, adopted in August, is one of the most exciting of these commitments.

The framework is backed by an $8.5bn pledge from the US, EU, UK, France and Germany to help the country — the world’s 13th largest carbon dioxide emitter and the largest in Africa — accelerate its transition from coal to clean energy. This pledge was part of the 2021 Just Energy Transition Partnership, which has since become a model for similar partnerships around the world. Crucially, SA’s framework recognises the necessity of bringing social and economic goals into alignment with climate goals. This path is as challenging as it is vital.

A just energy transition is a global necessity, but the path will differ for each country depending on its social and economic conditions. SA’s history of exclusion, uneven labour market opportunities for different racial groups and high levels of unemployment make it particularly vital for the state to ensure that a green energy transition also leads to just and inclusive outcomes.

SA’s socioeconomic profile makes it impossible to leapfrog from coal to renewables without a credible transition plan. The country cannot afford to sharpen existing socioeconomic tensions through sudden job losses. Notably, to support the large number of labourers in coal and related industries, a significant investment in workforce reskilling is required. At the same time, investments aimed at promoting a shift in production patterns towards clean energy cannot wait. Trying to hold on to carbon-intensive economic sectors is a losing game in economic as well as environmental and social terms.

To maintain credibility, the framework must be translated into meaningful action in 2023. This will require a sustained commitment to bold goals, a new social compact between the state, business and society, and investments to bolster the state’s capabilities.

First, ambitious goals are key to shaping a greener, more inclusive economy. The government has set a clear direction for sustainable economic growth and can go further in establishing measurable and inspiring goals around which public and private investments can be oriented. Indeed, it is when government investments are bold, strategic and mission-orientated, providing long-term certainty to economic actors, that the most crowding in of private investment has happened.

States can direct public finance in line with bold goals, for example through investment and procurement that benefit green technologies and projects. An entrepreneurial state tilts the economic playing field in the direction of a just green transition, moving beyond the idea of the state’s role as restricted to levelling the playing field for the private sector. The state — including through state-owned enterprises — has a vital role to play in co-creating the markets and industries needed for a green transition, and in shaping energy markets through a range of tools that go beyond simply procuring electricity from independent power producers.

Second, the transition must be underpinned by a new social compact between government, business and civil society. While the government’s efforts to advance a new social compact have been fraught, a new compact offers an important opportunity to redefine the relationship between the public and private sectors. Specifically, it is an opportunity to define a new type of public-private partnership characterised by contractual conditions on firms that receive public loans, grants, guarantees and other benefits, designed to maximise public value — for example, through guaranteeing affordable access to goods and services; climate, labour and equity commitments; profit and IP sharing; and investments in research & development and worker retraining.

Third, the state must invest in its own dynamic capabilities to plan, implement and evaluate bold policy choices, work in a co-ordinated fashion across departments, and respond effectively to socioeconomic tensions. This is even more important in light of recognised and documented corruption challenges, and efforts to rethink the business model of SA’s public utility company, Eskom, which is struggling with rolling blackouts. These challenges have led some to consider privatisation of key state assets. But this would risk undermining the state’s ability to successfully realise the vision of a just green transition. On the contrary, these challenges underline the need for investments in stronger accountability and dynamic capabilities within the state.

SA faces intertwined climate, economic and social crises. The country’s commitment to a just green transition is a necessary response to these crises. Its success will demand a different kind of leadership, including investments oriented around clear and ambitious goals, underpinned by a new social compact and investments in dynamic state capabilities.

•Mariana Mazzucato is a Professor in the Economics of Innovation and Public Value at University College London (UCL). She is also an author of Mission Economy: A moonshot guide to changing capitalism

•Mzukisi Qobo is Associate Professor and Head of the Wits School of Governance, University of the Witwatersrand