Writing in the Financial Times last week, Cyril Ramaphosa argued that “(humanity) faces an unprecedented climate crisis, with the welfare of our planet and its inhabitants at stake’.

He went on:

‘In South Africa, we must contend not only with these primary dangers, but also with potential economic and social damage should the global community fail to deal with the crisis in a way that works for developing as well as developed markets. The latest report from the UN’s climate scientists warns that the pace of global warming is increasing, with Sub-Saharan Africa experiencing temperature gains well above the international average. Many South Africans are already feeling the effects through drought and flooding. Parts of Mpumalanga province are registering high levels of air pollution…Fish stocks have declined….As South Africa’s trading partners pursue the goal of net zero carbon emissions, they are likely to increase restrictions on the import of goods produced using carbon-intensive energy. Because so much of our industry depends on coal-generated electricity — coal is currently the source of 77 per cent of South African energy— products we export to these countries might face trade barriers. Consumers there may be less willing to buy our exports. These trends mean we need to act with urgency and ambition to cut greenhouse gas emissions and transition to a low-carbon economy.’

The first parts of that paragraph are probably nonsense.

Climate does change and man has some influence on it, but whether any of that translates into a problem let alone a crisis threatening mankind is quite unclear and, to be frank, something we doubt very much.

We don’t think climate as much as pollution, poor resource management, and tender corruption threaten local fish stocks. Drought and floods are really only a problem in South Africa because of poor infrastructure and the reluctance to invest in irrigation technology, given expropriation without compensation threats. Air pollution is a problem but one that can be lessened by allowing poor people to move to cities outside of coal belts and raising living standards fast enough that greatly lessen dependency on fires for heating and cooking.

The latter bit about climate-crazed Western nations punishing fossil fuel-reliant emerging markets is a serious problem and if the ‘climate emergency’ delivers any serious humanitarian consequences it will be for these reasons alone. 

Harmful Western position

But instead of taking a stand against such a harmful Western position against emerging market economies, Mr Ramaphosa goes on to write that his government intends to meekly comply with their threats.

‘Many of our peer countries have already begun. But the only way for a transition to be successful is if there is broad commitment to a transition that is just — a journey to net zero that leaves no one behind. The needs of workers and communities in industries and geographies that will be hurt by such a transition must be carefully considered. Organised labour, business and government need to develop programmes of reskilling, employment, compensation for loss of livelihoods, and other support to ensure workers are the major beneficiaries of our shift to a greener future. South Africa is developing plans to enable a just move to net zero. Our electricity sector, which contributes 41 per cent of our greenhouse-gas emissions, will be the first phase. We will be decommissioning and repurposing coal-fired power stations and investing in new, low-carbon generation capacity. We will also pursue green industrialisation opportunities such as electric vehicles and fuel cell production that stimulate job creation and economic growth. South Africa is endowed with abundant natural and mineral resources. These can be harnessed to build a new economy in such areas as renewable energy and green hydrogen.’

This is pipe-dream stuff. South Africa cannot keep the lights on with coal energy. To get South Africa to net-zero via renewables will mean a very unstable grid subject to the vagaries of the wind and the sun.

My colleague John Kane-Berman writes that European countries can fiddle with renewables, assured of their ability to import coal and nuclear power as well as Russian gas when their grids wobble.

South Africa has no such option. The education system cannot even teach kids the skills to find a job in our fossil-fuel economy, let alone in a new high-tech green economy complete with electric cars. It’s as mad as the ANC’s smart-city building plans even as the cities they used to run fall apart. Industrial production has slumped under BEE rules and collapsing infrastructure and power shortages (and costs), and what remains (such as the car industry) is so heavily dependent on subsidies that it serves probably as a net cost to the economy.

No turn in South Africa’s industrial output levels is possible with present policies in place. To decommission any working power station from such an already vulnerable position is truly crazy, although what we suspect the government has in mind is a partial sleight of hand to declare stations that break down as having been de-commissioned.

State of the grid

Too harsh – to say the COP plan is crazy? Not when you examine the state of the grid this week. The current position is that, of an installed capacity of around 49 GW, around 20 GW are out of action (5 GW for maintenance and 15GW have broken down). That leaves 29 GW. But demand is nearer 30 GW, hence we have stage 4 load-shedding. And much of those 49 GW are set to be switched off, as we set out a few paragraphs below.

Mr Ramaphosa closed his argument by doubling down on the governments net-zero commitment via switching from coal to renewables:

‘[The] national power utility Eskom will be undertaking a pilot project at its Komati power station, which is due to shut down its last coal-fired unit next year, to produce power through solar energy. Komati will serve as an example of how the shift to renewables can be achieved. To signal our ambition, cabinet recently approved the updated Nationally Determined Contribution, which sets a target range for net zero carbon emissions by 2050.’

But Mr Ramaphosa’s piece in the FT was less about setting out an energy vision for South Africa than it was a funding proposal to bail out the bankrupt South African government. His piece was written just ahead of the C0P26 climate conference last week, where world leaders (sans Russia and China) got together to assuage the political pressure free-world leaders are under from climate activists who have whipped their countries into hysterics. They needed a big win to fend off the pressure, and South Africa was it. South Africa would commit to shutting down its coal stations and the West would give it foreign aid in exchange to develop renewables.

Bankrupt and running a forward-looking deficit a multiple of even the most optimistic economic growth forecasts, the South Africans agreed to the deal in order to free the government to continue focusing tax funds on politically important welfare and cadre deployment networks.

Just how much coal production has South Africa agreed to phase out? 

Eskom says it intends to retire 22 GW of coal over the next decade. All things being equal, the effect would be to reduce installed capacity to a figure below present demand. The deficit will be made up through the installation of 32 GW on new, largely renewable, power – the delivery of which hinges on the ability of the ANC to deliver over the next decade (assuming it stays in power) roughly five times the quantum of electricity infrastructure it has delivered over the past 25 years.

The deal struck at COP26 is nuts for South Africa and corrupt on the part of its funders.

Very long lead times

Emerging markets should be afforded very long lead times to transition out of fossil-fuel dependence and only if such a transition is assured not to worsen living standards, employment, and poverty levels.

If in the interim new fossil fuel capacity must be built, which is exactly what South Africa should be doing, then that should be supported with no punitive trade implications (we have no quarrel with wind and sun power other than doubting their ability to replace fossil-fuel baseload in countries that cannot import nuclear and coal power, and being worried about the human rights and socio-economic consequences of this).

The funders of this deal are ignoring that the present energy crisis is a reflection of a governance crisis and cannot be resolved via grants, loans, and aid payments. On the contrary, throwing money at the current corrupt administration will simply result in prolonging the corruption that is at the root of much of the misery facing the country.

Lastly, it is itself corrupt of Western democracies to assuage their climate guilt by throwing (by energy infrastructure standards) a pittance of cash at South Africa when they know the South African government is agreeing to the terms of the deal chiefly as a consequence of its disastrous financial position.     

The outcry at this piece will be immense, as it always it when we write sceptically on climate hysterics. Think before you write, and remember that the IRR is often around a decade-plus ahead of the pack in getting calls right about the consequences of what at the time were very popular consensus-type policies. We will keep the screenshots and as South Africa’s energy crisis deepens over the next decade – and the socio-economic disaster this causes becomes understood – we will remind the public who egged it all on right in the beginning.  

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Frans Cronje was educated at St John’s College in Houghton and holds a PHD in scenario planning. He has been at the IRR for 15 years and established its Centre for Risk Analysis as a scenario focused research unit servicing the strategic intelligence needs of corporate and government clients. It uses deep-dive data analysis and first hand political and policy information to advise groups with interests in South Africa on the likely long term economic, social, and political evolution of the country. He has advised several hundred South African corporations, foreign investors, and policy shapers. He is the author of two books on South Africa’s future and scenarios from those books have been presented to an estimated 30 000 people. He writes a weekly column for Rapport and teaches scenario based strategy at the business school of the University of the Free State.