Will President Zuma support or hurt South Africa’s low-carbon trajectory?

By the time of South African elections in May 2014, Zuma’s given re-election made the process seem like a formality. A cabinet reshuffle has taken place since, with Zuma wanting to focus on the delivery of domestic policy on social services and new employment opportunities. The question is whether these priority actions will include concrete steps toward a cleaner, inclusive and stable economy.

Confident and strained, the African National Congress (ANC) is back in power with its age-old positioning that South Africa knows well. The basis of the ANC’s confidence is the continuous support that they receive from the majority of voters who have, since 1994, stood behind the party. The source of ANC’s strain is increasing from having to put the economy back on track, while doing it visibly so as to avoid losing people to rival political parties.

The storm clouds gathering over Zuma’s presidency are growing thicker and darker, with Zuma stuck with stubbornly low economic success. The International Monetary Fund (IMF) downgraded South African growth projections, and the country faces a number of eroding progress indices, with, for example, the lowest Gini coefficient amongst BRICS countries (Brazil, Russia, India, China, and South Africa). South Africa also presently sits with historically low levels of credit ratings, making borrowing money conspicuously expensive and small businesses are hurt particularly hard. Then there is the energy crisis, which could cripple the economy as new coal fired power plants have had long delays and costly budget overruns. The public sees a very tarnished image of a corrupt government, unable to deliver on its promises to the poor. Workers are unhappy as well, with Zuma facing the longest strike in South African history led by the Association of Mineworkers and Construction Union (AMCU), a recently created platinum industry union.

In this convoluted political environment, low-carbon strategies are considered a second or third order priority in South African politics, and especially so in the energy sector. The question that should be asked is whether Zuma’s second term will worsen the prospects of a low-carbon transition.

The political context to Zuma’s second term

One could argue that South Africa – or at least the ANC – has not recovered from the Marikana massacre. On 16 August 2012, the South African Police killed 34 mine workers who had gone on strike for wage raises and safer working conditions. What is extraordinary is that these killings happened under ANC rule.

The National Union of Mineworkers (NUM) has been a key ANC ally. Both South African Deputy President Mr Cyril Ramaphosa and the ANC’s own Secretary General Mr Gwede Mantanshe have roots with NUM. Perhaps NUM senior union officers had become too cozy in their political relationships with the mining sector bosses and investors, blinding them to the plight of ordinary mine-workers and facts of their own failings. Following the massacre, platinum mine workers switched en masse from NUM to the newly created AMCU, which is why it is no exaggeration to suggest that the Marikana event single-handedly reshaped the South African political landscape.

Few countries see trade unions shaping the national political scene as much as in South Africa. Unions’ abilities to mobilize workers and their families is a reality that no South African political party underestimates. National political parties have traditionally sought to keep labour unions close, as their vote can make or break prospects for a majority stake in the country’s political affairs. For that reason, the creation of a worker party is the biggest threat to the ANC. The ANC in turn is making every effort to slow down what might be an inevitable split between workers, especially within its major ally the Congress of South African Trade Unions (COSATU). New left-leaning political formations have also emerged post-Marikana, seeking to attract unions and workers to a new and stronger left constituency that might grab power from the ANC in future elections.

The platinum industry and prospects of a clean shift

Labour and political troubles in South Africa’s platinum belt have wider ramifications beyond the economy, particularly in further diversification of the national clean energy mix.

South Africa has the world’s largest share of platinum and other related minerals, holding about 75% of global supply. Platinum has a number of applications besides jewelry, such as in automotive catalytic converters, laboratory and industrial equipment and uses in fuel cell production. The platinum industry therefore employs the highest number of workers in the South African mining sector, thus replacing gold as the majority source of incoming foreign currency.

Given that platinum is the main source of foreign earnings, the question of whether it can also be a driver of a cleaner future remains. At present, it has no status within the national energy plan, despites a call for a hydrogen economy from some quarters of the state, platinum’s role in fuel cells can be an additional mix to cleaner South African energy solutions.

Due to the links between platinum, car emissions and recently fuel cells, South Africa has for a long time held visions of platinum as the future foundation of a hydrogen economy. The opportunity in a nutshell, then, is to help lower South Africa’s carbon intensity by stepping away from a national dependence on coal and fossil fuels while arguing that the future of the platinum industry epitomizes the character of South Africa: able to re-shape both political-economy and national direction. A problem already clearly being seen from within the country is how platinum resources are mostly exported, with few downstream benefit efforts in place.

A low-carbon trajectory for the energy sector?

Under the South African Strategic Investment Programme (SIP), about $200 billion is being sought for investment in infrastructure, and a program to mobilize these funds has been launched with much of it merely a revised form of fiscal spending leading to few industrial benefits. A good share of this infrastructure spend programme includes nuclear, coal, gas and renewable energy. The platinum example merely illustrates the opportunities that often go to waste when there is only focus on resource extraction or infrastructure spending without complementary incentivizing strategies.

The promotion of nuclear energy is the most controversial component, with its high cost of 50% of the infrastructure plan and the public’s fear of widespread corruption. However, it is not a push for nuclear energy for the sake of a low-carbon economy, but instead voices pushing for nuclear come from climate change skeptics.

Still, some might say that South Africa’s 9.8 gigawatts (GW) of nuclear energy capacity is the largest low-carbon investment ever undertaken. Vying for this lucrative deal are local “tenderpreneurs” – political actors leveraging their connections in tenders to secure generous government contracts – as well as major nuclear players from China, France, Russia and South Korea. Some insiders have stated that Russia is proposing to establish a bank in South Africa, while China already has an operational development bank plus a 20% stake in the large commercial bank Standard Bank. Establishment of the so-called BRICS Bank might also move in the direction of nuclear.

While coal has been on the agenda over the last two years, more recently there has been a major surge in the interest in gas, with the view that it should occupy a greater part of the future South African energy mix. Mozambique’s off-shore gas resources are estimated to be about 100 trillion cubic feet, and exploratory drilling for shale-gas in South Africa’s Karoo region will probably go also ahead soon.

The signs that coal might be coming to a dead-end are growing larger. Its use as a source of electricity will cost more money and will create negative externalities such as pollution and health problems. The best coal mines are reaching peak production and new coal deposits are in more remote areas of the country where infrastructure is not well enough established yet to make mining economical.

Shale-gas itself is under attack from anti-fracking groups, though the government still presses ahead with the notion that gas is a ‘game-changer’, a panacea to tackle poverty and economic decline. Neither shale-gas nor conventional natural gas will be part of the energy mix in the short term, but may be options in ten to fifteen years.

In the interim, there is no other option to tackle the problem of low reserve margins than to scale-up renewable energy technologies such as wind power, photo-voltaic and concentrated solar power. This could also be the opportunity to expand fuel cell use and increase domestic benefits from possession of the largest platinum reserves in the world.

Economic stability, energy security and climate change issues are converging and have the potential to favour more ambitious renewable energy programmes than the current 19GW that South Africa has allocated. Renewables, fuel cells and other cleaner energy source technologies can create jobs, cover energy shortages and mitigate climate change.

In practice, however, it is unclear that the Zuma administration will commit to a renewable energy mix transition. The nuclear and gas lobbies are growing stronger and positioning these sources as solutions for post-coal South Africa. While they are portrayed as low-carbon solutions, they will simply displace renewable energy and any real research and investment in fuel cell technologies, solar, wind and bio-energy are the silent victims of the wrong South African energy recipe.

Answers are needed that will work for the climate, the economy and the South African people, rather than energy policy defined by big money. President Zuma still has time to embrace a more visionary approach to energy, strengthening – not derailing – a low-carbon shift.

More importantly, South Africa’s problematic political-economy, so heavily invested in resource extraction and large-infrastructure projects that get fingers dirty fingers, has the potential to change to cleaner solutions.

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