State Corruption Threatens to Impede South Africa’s Transition to Renewable
Coal power plants burn amidst a polluted sky in South Africa. (Siphiwe Sibeko, Reuters)
Sweltering heat waves. Deadly forest fires. Widespread hunger and droughts. The atmosphere at the 2021 Conference of Parties (COP26) was undeniably more cynical, harrowed, and enraged than previous conferences. Once a distant threat for future generations, climate change is now a lit match, ready to fall into a precarious powder keg. From deadly floods in China to submerged cities in Indonesia, it spares no country. Indeed, climate change is the single issue that every nation — whether rich or poor — must tackle before Earth sleepwalks off a precipice. Combating the global scourge now requires developed countries to assist developing countries on the path towards environmentalism. Western nations at the COP26 understood the exigency of the situation and pledged $8.5 billion for South Africa's transition toward renewable energy, seeking to use the African powerhouse as a pilot for future environmental financing. Such a deal comes at an imperative time since South Africa depends on coal for 90% of energy production — an unsustainable statistic amidst the onset of climate change. While this renewable energy deal for South Africa has virtuous intentions and achieves environmental and economic sustainability, political corruption may impede its efficacy.
To tackle a goal as detailed yet broad as decarbonization, one must start at the roots: the power grid. Without a stable power grid, solar panels and wind farms have no benefit or purpose. The COP26 understood this vital information by not only pledging billions for renewable energy but also calling for private investment into South Africa’s power grid. The power grid is over 40 years old in some regions, leading to massive blackouts that cost the country 1.1% of GDP. Civilians even once had twelve different power shortages in four days. Such blackouts hinder economic activity and prevent renewable energy sources from delivering inputs to consumers. But, the COP26 seeks to pair their $8.5 billion with increased awareness about the World Bank’s goal to stimulate private investment in the energy deliverance sector. Since 2014, the World Bank has already dedicated $14 billion to the project.
The renewed awareness surrounding energy deliverance not only benefits South Africa but developing countries as a whole. Renewable energy remains an elusive goal in developing countries because of unstable power grids. The time-sensitive nature of solar and wind power leads to long periods of inactivity, but also occasional rushes of power — burdening the power grid. To integrate renewable energy, developing countries must update their power grids. The galvanized calls from the COP26 give these countries a direct answer to their problems.
But, climate change is not only an environmental or economic conflict of values — it represents a battle between different social and political beliefs. The southwest region of the African nation economically depends on coal. Simply put, many communities, especially in poorer regions, view coal as their economic lifeline. 2,000 South African coal workers even protested after President Cyril Ramaphosa planned to shut down fossil fuel plants. In a country where millions depend on coal, job losses inevitably spark tension and riots, especially when COVID-era unemployment holds a record-breaking 34%.
Thus, environmentalists must appeal to the fossil fuel sector to smoothen decarbonization efforts — and the COP26 funding tackles this with surgical precision. $500 million of the funding package goes toward the Accelerating Coal Transition (ACT), supporting retraining programs and temporary income welfare to former coal workers. The retraining programs plan to teach former coal workers to apply transferable skills, such as emission potency or carbon combustion, into renewable sectors. Not only does this achieve both environmental and economic sustainability, but it communicates to coal workers that they are not relegated to a bygone era. Additionally, the policy tackles a broader issue that even developed countries face. Indeed, Poland, India, and even the United States have faced protests from laborers who worry about their employment in industries that new climate reform is trying to move away from, such as hydraulic fracturing.
However, the funding package attempts to spur change through existing mediums instead of restructuring South Africa’s energy scene — a scene that often relies on debt, corruption, and impunity. Part of the funding goes toward investment, grants, and loans to Eskom, a state-owned energy agency plagued by inefficiency. The company was even termed the “most corrupt power company in the world” after investigators discovered that business officials manipulated the construction cost of two power plants, eventually stealing $50 million from state coffers. Massive mismanagement and misconduct left Eskom with over $31 million in debt: a staggering sum that, paired with interest, shaves 2-3% of South Africa’s GDP per year. But, instead of investing in transparent energy businesses or even providing anti-corruption mechanisms, the COP26 decided to accept a duplicitous status quo and funnel resources toward a company with a clear history of mismanagement. Eskom's overt inefficiency retains a possibility of cracking the rose-tinted glasses of the COP26 and their funding plan. On a global level, green finance in state-owned energy companies has the same peril: that corruption, inefficiency, and kickbacks tank well-meaning policies. Indeed, this issue exists globally, with other state-owned companies, including Saudi Arabia’s Aramco, Russia’s Rosneft, and Brazil’s Petrobras, suffering from corruption. The $8.5 billion funding package and the possible replications in other developing countries have righteous intentions but are threatened by state-energy behemoths running amok with no accountability.
Nevertheless, South Africa’s funding package represents a pivotal rejection against climate inaction. Lethargy may be a political opiate, but the passion at the COP26 proves one notable fact: 2022 is not the year to cry alligator tears. But, caught up in fervency, it seems Western nations and their policymakers are hastily ignoring the complications of rampant corruption that may impede their lofty goals in order to get this deal done. Environmental policymakers must heed these concerns of accountability. If they choose to ignore the cries, then South Africa will not be the COP26’s successful pilot program but a harbinger of the harrowing impacts of corruption.