SA’s climate crisis is embedded in coal and exports

The New Frame, New Economy forum on minerals and the climate looks at how South Africa exhibits an extreme form of the global crisis because of its minerals-energy complex.

The scale of interlocking crises we face today is so enormous as to become overwhelming. We face crises of ecology, health and public healthcare systems, food and hunger, social reproduction, economy-society politics, poverty, unemployment, inequality, livelihoods and insecurity. Social, economic and racial issues intertwine and are exacerbated by the climate crisis.

South Africa demonstrates all the features of this global crisis, but in extreme forms. Around 85% of the country’s energy is generated by Eskom burning coal, making it the largest emitter of greenhouse gases in Africa and among the top 20 in the world.

As has been said, it is now easier to imagine the end of the world than the end of capitalism.

And all social forces, including the authoritarian and populist Right, are seeking solutions. Before we envision a progressive departure from South Africa’s economic crises, however, we must first unpack the country’s arrival.

Skewed structure

Historically, South Africa’s economy has been structured by colonialism, and the needs of mining capital in particular. Colonial conquest turned swathes of land over to private control and monocropping. Land alienation and enclosure, with the violent expansion of the frontier and the destruction of commons by Dutch, British and Afrikaner settlers, had massive consequences for land use and ecology.

Following the discovery of minerals, capital and the state established – over time and through trial, error and war – a migrant labour system whereby Africans migrated from “reserves” to work on the mines. African labour was also “allocated” to farms and later to the new urban centres. Land dispossession underpinned this, and the entrenchment and expansion of the reserve and then Bantustan systems meant systematic underdevelopment, further deepened by apartheid spatial planning.

With its barrage of racist legislation, forced removals and the continuation of a forced labour system, apartheid further skewed a South African industrial structure dominated by strong mineral and connected sectors, but with otherwise weak manufacturing, especially in labour-intensive sectors.

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Three key state-owned enterprises were at the centre of a development project aimed at industrialisation for the benefit of a minority. Eskom generated cheap electricity from coal, providing cheap power to the rest of mining and industry – and to the white minority. Iron and steel corporation Iscor helped develop industry and infrastructure. And Sasol, established much later, developed liquid fuel from coal, and is today South Africa’s second-largest greenhouse gas emitter.

The system – predicated on a large supply of cheap Black labour excluded from circuits of production, distribution and much of consumption – aimed to raise Afrikaners out of poverty and agriculture, and into mining and other industry. Given the scale of funding required for the mines, finance capital was central to South Africa’s specific mode of accumulation. Over time, the project produced a skewed economy dominated by big conglomerate groups with mining, finance and other manufacturing interests under their wings.

A heart of coal

Coal has been a critical commodity throughout, as a source of lucrative export revenues as well as cheap power, which benefitted large corporate consumers.

The mining and carbon-intensive core of the economy was extended further when the government established Sasol in 1950. The state extended subsidies as it pursued economic development for the white minority and later, in the 1970s, became increasingly concerned about energy security in the face of possible sanctions against the apartheid regime.

This historical state support created a system of “cheap” fossil fuels. Eskom and Sasol continue to benefit significantly from state subsidies, while oil companies operating in South Africa – including Shell, BP, Total, Chevron and Engen – have received similar support. This has locked the country into a chronic dependence on carbon.

South Africa’s annual C02 emissions (millions of tonnes)

The conglomerates are still around today, though radically restructured. As mining, banking, finance and insurance interests have been joined by rapidly expanding retail and telecoms, so Anglo American’s dominance of the JSE stock exchange has lessened. But despite the swings of commodity cycles, mining continues to make up 50% or more of export earnings.

The economy has changed since 1994, but it has not transformed. The ANC’s adoption of a neoliberal economic framework, alongside voluntary trade and financial liberalisation, has undermined already skewed production structures. The economy has undergone widespread deindustrialisation and growing financialisation, which has resulted in dramatic wage increases for the wealthy that have only been matched by the spiralling debt of workers as work has become increasingly precarious and wages and total employment have plummeted.

The economy has shifted from one flawed system to another. Apartheid’s state-led minerals-energy complex has morphed into a neoliberalised and financialised one.

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This shift, and its connection to the climate crisis, is nowhere better encapsulated than in the trajectories of those three state-owned enterprises.

Sasol, whose Secunda plant is the world’s biggest single-point emitter of carbon and nitrogen dioxide, according to Greenpeace estimates, was privatised in 1979 and is now a private-industry “success story”. 

Steel production, also privatised, has been broken by the exposure to international markets that privatisation facilitated. Steel is a dirty industry, but unlike energy, there are no substitutes for steel.

And Eskom’s crisis is now deep and multilayered. Corporatisation from the 1980s followed by adopting the World Bank’s full-cost recovery model means that the previously excluded majority now face hefty and often unaffordable electricity prices. Massive underinvestment and lack of planning now combine with rising debt and corruption, and, almost ironically, a crisis of supply to business. Medupi and Kusile further embed coal-generated power and accumulate debt.

The crisis of the economy is the crisis of the minerals-energy complex. South Africa has failed to diversify out of this core. Instead, financialisation and internationalisation have driven the country’s deindustrialisation, making it more dependent on mining. All the while, social services have been commodified, producing a crisis of basic needs.

Who will build the ark?

The crisis, then, is deep. And it is only being compounded by a climate crisis that goes well beyond greenhouse gas emissions and air pollution. Drought, land degradation and food security are critical dimensions of the issue.

The southern Africa region is considered a climate change hotspot, a region more vulnerable than average to climate change. Temperatures here have risen at twice the average rate of global warming over the past 60 years. And while much of the world is getting warmer and wetter, southern Africa is getting drier. At the same time, flooding is likely to be heavier as a larger portion of the declining rainfall (South Africa is already among the world’s 30 most water-stressed countries) will come in the form of destructive storms, during which the rainfall exceeds the capacity of the land to soak up the water.

South Africa’s annual contribution to global C02 emissions, measured in percent

While the energy mix is certainly changing, coal remains central, as do minerals as a whole to export earnings. Many now clamour to add offshore oil and gas to the mix.

So, while climate politics have moved to the centre of the global stage, they have not come far or swift enough in South Africa. And market-based solutions, innovative entrepreneurial efforts to drive “green growth” and mainstream approaches that emphasise incentivising individual consumer behaviour will get us nowhere slowly.

The kind of rapid decarbonisation that South Africa needs can only be brought about with structural change. It means rapid, far-reaching and economy-wide change.

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For a transition to be just, it must mean the creation of public-sector climate jobs, and the extension and deepening of economic democracy and planning. The Green New Deal under discussion in the United States and elsewhere aims to mobilise resources for the environment in a way previously only undertaken for war, to tackle climate change, inequality and economic diversification through economic planning and industrial policy.

Such climate jobs could contribute to meeting the basic needs of communities in an equitable and sustainable way, with linkages focusing on jobs created in renewable energy, especially wind and solar power, retrofitting buildings, new construction and methods, expanded public transport run on renewable energy, the expansion and densification of public housing, and re-employment or grants for those in coal and other sectors who would lose their jobs.

The last point should perhaps be our first point of departure: none of these pressing issues can be addressed until austerity and fiscal contraction are reversed.

Neva Makgetla responds:

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