Blog

Workshop on ESKOM alternatives

Today (21 October 2019) I’m at a AIDC event on Energy Transitions and the role of transformed Eskom. I’m delivering a talk on the current crisis and the transition to renewable energy. Interesting group, including many unionists and progressive organizations. Last Friday delivered a similar talk to the trade unions involved in Nedlac – SAFTU, FEDUSA, COSATU and NACTU. Very good discussion. The publication of the (correct) IRP late Friday has really redefined the terms of the conversation.

Defeating state capture

Speaking today (23 October 2019) at the Civil Society Conference on Defeating State Capture and Rebuilding the State hosted by Ahmed Kathrada Foundation and PARI. I’ve been asked to sum up at the end on ‘Mapping the way forward for civil society – charter detailing focal areas of work for civil society’. Many notables here – the ‘who’s who’ of the anti-capture movement. Derek Hanekom doing the opening now. Sense of confidence in the room that ‘we are winning’. Hope is important, after all. As the Old Testament Proverb says: ‘Without hope the nation perishes.’ Without courage, there can be no hope.

Snapping the connection between renewables and climate science….

I was on a TV panel this morning with Hilary Joffee and Azar Jamime interviewed by Karima Brown about ‘lowest cost option for South Africa’s future energy mix’ – the focus of my Daily Maverick article a few days ago that seems to have hit a nerve across many different circles! I am beginning to realize something: I should do what Gwede Mantashe did when he spoke in Australia recently about the discovery in SA of a new metal that did not exist (because the speechwriter did not realize that the report was a April fool’s joke). I should say we found the Wakanda rock that generates unlimited energy and it only costs 60c/KWh, and guess what it is spread out all around the country so everyone can benefit by setting up their own energy generator. If could prove it existed and ran countless models proving it works, I could convince South Africa to give up on coal and adopt the Wakanda rocks. It would be easy, actually. But when you mention renewables, immediately people think climate change, and then they secretly say they don’t “believe in the science” – as if it is a matter of belief or not. This is why in this interview I said forget about the science – just focus on the money. Price, price, price. Maybe that is what we need to do – snap the connection between renewables and climate science!

Facebook post from 9 September

Brilliant article that confirms my own reservations about the standard feminist explanation for why us men rape, kill and beat women, ie it’s because of patriarchy. It’s far more complex and sinister than that. Yes, of course it is patriarchy; but misogyny (hatred of women) is rooted in shame, according to this article. And shame easily turns into fury. This makes so much sense. We men, she argues, fear being mocked by women not because we care what women think, but because of what other men may think of us. We fear other men! And so to prove we can be men to other men, we boast about how much we hate women. For some this is explicit and physical, for others it is ever so polite and subtle because it works insidiously at the psychic level. Yes, it’s horrifying, but this rings true. We men have to face our demons. Women are making sure of that.

Facebook post from 10 September on GBV

Every woman knows a man who abused her and every woman knows a woman who was abused. But no man knows a man who abused a woman. What does that tell us? That men are too ashamed to admit to other men what they have done.

Facebook post from 13 September

It’s been quite a week. Started off last Friday with 2 talks at the Reframing Economics conference at Wits – one on the green transition and the other on non-equilibrium Economics. On Tuesday i did a keynote at Africa Powerweek in Sandton on investment trends in the African power sector. Then on Wednesday I spoke on a panel at the Financing the Future conference at the Two Oceans Aquarium in Cape Town (amazing group from 40 countries, mainly activists and progressive finance people) during the day, and then that night a talk to an activist audience at AIDC on SA’s energy transition. Last night my men’s group met and we had an amazingly intimate 3 hour session facing – in Sandile’s words – “our collective shadow” at a time when men are destroying all around us almost everything that is precious. Such a privilege being with such a diverse group of men who trust one another and are prepared to be vulnerable with each other. Deeply, deeply moving. And so transformative.

President’s message to the UN Climate Summit in 2019

(This is the version that was online on 23 September 2019 – the next day an edited version appeared.)

The President has just sent this message to the UN Secretary General – the clearest commitment ever made to the South African energy transition. I’m blown away! Next step is to remove the constraints on renewables in the IRP in line with what the recent National Treasury Economic Strategy recommended.

Statement of H.E. President Cyril Ramaphosa of South Africa handed to the United Nations Secretary-General on the occasion of the Climate Summit, 23 September 2019

Mr Secretary-General, Excellencies

South Africa shares the sense of urgency expressed by you, Secretary General, for addressing the climate emergency, and welcomes this great initiative to gather the world’s leaders in New York. This ahead of the UNFCCC meeting in Chile this year and looking forward to 2020, the year in which all of us are expected to enhance the ambition of our Nationally Determined Contributions, and communicate long-term low emissions development plans to put the world on a path to meet the goals of the Paris Agreement.

Although they have historically contributed the least to global emissions, developing countries are and will continue to be most affected by climate change and its impacts.

The world depends on us. We have seen the disastrous effects of climate change across the globe in the increased incidence and severity of extreme weather events such as flooding and droughts.

In fact, the recent IPCC Special Report on Global Warming of 1.5 °C has identified southern Africa as a climate change hot spot. Our region is likely to become drier and drastically warmer even under 1.5 or 2 °C of global warming.

Moreover, recent events have clearly demonstrated the vulnerability of the region to extreme weather. In March 2019, more than 1000 people died across four Southern African countries in the devastation caused by tropical cyclone Idai. This is the worst flood disaster in the recorded history of the region, and the second worst in history in the Southern Hemisphere. Also still fresh in the minds of South Africans is the Cape Town drought of 2015-2017, which brought the city to the verge of an unprecedented water crisis.

Climate change science is clear that the risk for flooding originating from intense land falling tropical cyclones and for prolonged drought in Southern Africa is increasing under continued global warming. Extensive research is ongoing in South Africa to quantify the likelihood of major climate change impacts occurring in the region over the next several decades, including multi-year droughts that compromise water security and heat-waves impacting on human health, livestock production and crop yield.

The view of South Africa and Africa, as developing countries and as global citizens, is that the climate crisis cannot be solved outside of a development context. We see the crisis as an opportunity to strengthen global governance and that in addressing the crisis, we can meet the aspirations of the UN Agenda 2030 for Sustainable Development and the Sustainable Development Goals.

South Africa’s National Development Plan 2030 identifies poverty, inequality and unemployment as our most serious national development challenges. Overcoming these triple challenges fundamentally informs our approach to addressing climate change.

Building resilience must strengthen development. In shifting to a low-carbon, inclusive, climate change resilient development path and embracing the global energy transition, we must ensure that we leave no-one behind. At the same time, we must create new opportunities for all in our economy.

South Africa considers itself a good global citizen and our National Climate Change Response Policy requires us to make a fair contribution to the global effort in the context of our national development priorities. This is what informs our Nationally Determined Contribution.

South Africa places a high priority on the role of all countries to enable and support adaptation to the adverse effects of climate change, and build economic and social resilience to these impacts, particularly for those most vulnerable.

The mitigation challenge posed to South Africa is considerable. About 80% of our emissions are from our energy sector.

Like all countries of the world, we recognize the urgency with which we must reduce our dependence on fossil fuels and move towards a carbon-neutral future.

The rapid fall in prices of renewable energy technologies, coupled with our immense renewable energy resources, has created a massive opportunity for us to make this shift.

We are already doing so. South Africa’s Renewable Energy Independent Power Producers Procurement Programme (REIPPP) is considered one of the world’s leading Renewable Energy programmes.

South Africa’s blueprint for energy security, the Integrated Resource Plan (IRP) will soon be finalized. It calls for an energy mix that includes a significantly increased component of energy from renewable sources, as well as from traditional sources that includes coal, natural gas and nuclear energy.

As many other countries around the world including developed countries are experiencing, we have to minimize the impact of such a transition on workers, communities and our economies as a whole.

As part of ensuring a just transition we will need to put measures in place that plan for workforce reskilling and job absorption, social protection and livelihood creation, incentivising new green sectors, diversifying coal dependent regional economies, and developing labour and social plans as and when ageing coal-fired power plants are decommissioned.

Taking all of these factors into consideration, it is clear that strong and durable social compacts will need to be forged between government, labour, business and civil Society.

Your Excellencies, South Africa has already done much to address the challenge of climate change. So far, we have introduced a Carbon Tax and have implemented voluntary carbon budgets systems for large emitters.

We have also finalised a Green Transport Strategy and are implementing a national Green Economy strategy and an Energy Efficiency in Industry Strategy.

As of end of March 2019 we have procured 6 422 Megawatts of electricity from 112 renewable energy Independent Power Producer (IPP) projects including from wind, solar PV, concentrated solar power, landfill gas, hydro and biomass.

We are also pursuing a largescale energy and climate change research and development programme geared towards mitigation solutions such as the use of fuel cells, using South Africa’s abundant platinum resources.

In addition to these and up to the end of 2020, we will be completing a number of key national processes:

Our National Planning Commission will update our National Development Plan (which was adopted in 2012 before the Paris Agreement), providing an integrated basis for our shift to a low-carbon economy, climate-resilient society;
We will also be finalising our Just Transition Plan, including defining a vision compatible with the 1.5 degree Paris temperature goal;
We are currently in the process of finalising our long-term low emissions development strategy, which will be submitted to the United Nations Framework Convention on Climate Change in 2020;
We will be finalising our Climate Change Bill, which will provide a legislative basis for comprehensive climate action, provide for the updating of our long-term national emissions trajectory, the allocation of sectoral emissions targets, and the regulation of large emitters;
South Africa’s land sector is a net emissions sink, and we are currently developing programmes to enhance this, including through the restoration of subtropical thicket and grasslands, expanding forestry and reduced tillage.
We will also publish the final National Adaptation Strategy to assist all provinces, towns and cities to face adaptation challenges ahead.
Using own domestic resources, we have already implemented measures to help us cope with extreme weather. These include; the working for water programme, the working for fire programme and the restoration of wetlands.
In 2020, South Africa will be updating its adaptation NDC in 2020, to reflect national progress on implementing a comprehensive adaptation response, and updating international support requirements.

South Africa remains committed to meeting its obligations under the Paris Agreement, under the UN Framework for Convention on Climate Change (UNFCCC).

Excellencies, having heeded the warnings of the IPCC, considered the current inadequacy of international mitigation efforts and the urgency of further emissions reductions by 2030, having heard the pleas of citizens and in response to the urging of the Secretary General, we are announcing the concrete actions as South Africa.

We will be enhancing our current mitigation NDC by the end of 2020. Additional mitigation ambition by 2030 will require a bold programme which targets our key emissions source, the electricity sector, and goes beyond current plans to invest further in renewable energy.

To this end, a proposed 11 Billion US dollar Just Transition Transaction is being developed under the auspices of the Eskom Sustainability Task Team. The 11 billion dollars would consist of a blended finance facility and would be the largest climate finance transaction to date, having a significant emissions impact.

The plan we will develop will focus on the next decade.

It will include the process of decommissioning old coal powered plants. South Africa’s national power utility Eskom is already implementing a decommissioning plan for plants over 50 years old.

We will continue with this process in consultation with various social partners and importantly, at a pace that allows us to still meet our key development goals. It will also be taking place in the context of the problems currently besetting our electricity sector.

It will furthermore include adding significant additional renewable energy capacity, the funding of large-scale regional programmes to offset adverse impacts on workforces through economic development, and the financial stabilisation of our electricity sector.

South Africa’s reserves of platinum, manganese, chromium, nickel, vanadium, titanium, gold, fluorite are amongst the best in the world, with sizeable reserves of cobalt and copper. Our focus will also be on recirculation technologies for these minerals towards minimising the costs and environmental impacts of mining.

Mr Secretary General, we cannot overemphasise your call that this transition should not lead to winners and losers, and deepen global inequalities amongst and within states.

To ensure equity in the energy transition, we call upon you to champion initiatives that ensure not only that investment in renewable energy technologies is fast-tracked in developing countries, but that a large share of the value chain is located in these countries to support national development objectives. Especially in Africa, which is endowed with mineral resources critical to the production of renewable energy technologies. In addition, consideration should be given to the consideration of a global regime for investment in relevant patent pools – technology buy-outs for the global common good.

Meeting these commitments will be very challenging for South Africa. We need our partners in developed countries to step up and do their fair share by enhancing their NDC’s in line with the 1.5 degree Paris temperature goal.

They will also need to fulfil their obligations to provide the Means of Implementation for developing countries to enhance their climate actions through technology and skills transfer, financing and others.

They have an immediate opportunity to do so by committing to double their contributions in the second round of replenishment of the Green Climate Fund that is currently underway.

To conclude, let me emphasise that South Africa stands ready to contribute to the global climate change effort, and being a developing country, reiterates the importance of multilateralism and of global cooperation and support as we contribute our fair share.

I thank you.

Issued by the Presidency of the Republic of South Africa
Pretoria

Elected by the Board as Deputy Chairperson of the DBSA

This is my sixth year on the DBSA Board, serving as Chair of the Board from Jan to Sept 2019. At the AGM last Friday my position as Deputy Chair for the next three years was confirmed. I will also be the Chairperson of the Infrastructure Delivery and Knowledge Committee (IDKC) of the Board. The DBSA has traditionally played a major role in development finance in general, but infrastructure funding in particular. It came through the state capture years unscathed, with clean audits every year and no reports of wasteful or unwarranted expenditure. It has R90 billion worth of assets, and it lends around R15 billion per annum. In 2018/2019 we disbursed R9 billion, which is low because of adverse economic conditions. At its AGM on Friday 27th we announced a net profit of R3.1 billion (which we re-invest in development projects) and a pipeline of approved projects of R39 billion for the forthcoming year. We employ about 600 staff, and our cost to income ratio is a remarkable 23% (which is way below a commercial bank). My personal agenda has been to promote green investments and the adoption of what we now call our “development position”. With regard to the former, we now have nearly R20 billion invested in renewable energy and we have become a designated agency of the Global Climate Facility that has made available $100 million for green investments, which we have matched. With regard to our newly adopted ‘development position’, DBSA has shifted from being a purely infrastructure investment bank to a proper development bank, i.e. the ‘D’ in DBSA is no longer a small ‘d’. To this end we have established an Angel Investment Fund to make high risk low interest investments in SMMEs, in particular women-owned businesses; as well as a Social Impact Fund for generating social and environmental returns on financial investments. We are also seeding a new generation of local “D-Labs”, i.e. innovative development labs for promoting entrepreneurship and employment in poor rural and urban areas. We are managing the National Infrastructure Fund announced by the President, starting off with a R400 million project preparation facility provided by National Treasury. This is a strategically important initiative because it is a blended finance vehicle whereby private sector funding is attracted into infrastructure investments by public sector investments that take on more risk and require lower rates of return on investment. As Deputy Chair I will have more time to focus on the strategic guidance of these new green and developmental activities via the appropriate board committees (in particular the IDKC), with less time spent on the wider stakeholder management that is the responsibility of the Chairperson.

Debating economic policy

On Thursday I was invited by the Economics Department at Stellenbosch University to come discuss my controversial article in Daily Maverick on macro-economic policy (see link below).

Needless to say, they did not agree with my critique of ‘expansionary contraction’ (i.e. austerity) and conservative monetary policy. I summed up the consequences of their position as follows: a well-managed retarded collapse, that in the end triggers a massive deficit as the government spends more to stave off a revolution. Come on, when push comes to shove, do you honestly think an ANC Government would choose a low deficit before a revolution? Oh yes, I forgot – maybe it is assumed that the revolution can be headed off my repressing it with force. Is that good for growth? Well, it can be – after all, Pinochet pulled it off. (Maybe that is what was meant by countering the ‘threat of populist demands’. Well, not by intent, but that would be the consequence.) But in today’s world? Really? I doubt it. But then I got sent this article from the FT on South Korea’s expansionary fiscal policy. Worth considering. Never thought I would see the FT punting support for economic heterodoxy.

South Korea’s fiscal boost is a model for others

How should an export-driven economy with a strong attachment to fiscal discipline, an ageing population and a bitter dispute with an island trading partner react when it is under economic pressure? As regional industrial powerhouses, South Korea and Germany both face similar challenges from the tensions in the global trading system: growth has collapsed, inflation is well below target and monetary policy has already done what it can.
Yet there is one important difference. Despite ample space for easing in both countries, only South Korea has broken with orthodoxy and delivered a radically expansionary budget to boost its flagging economy. Germany, which is set to make a big announcement on how to tackle climate change this Friday, might take note of the speed with which South Korean leaders have been able to adapt to new economic realities.
Seoul’s longstanding commitment to fiscal discipline could put even Berlin to shame. The overall budget for South Korea has been in surplus for more than 20 years. Loosening during the financial crisis was not large enough to tip the government into the red. No other major economy has such a lengthy record of
prudence. Though Germany has been consistently in the black since 2014, its deficit exceeded 3 per cent of national income in seven out of the 10 years from 2001 to 2010.
Now both countries face similar problems. German industry specialises in automobiles, South Korea’s in smartphones and semiconductors. Both these sectors face structural shifts as drivers look to electric cars and phone users fail to find newer models such a draw. The two countries are likewise both at the sharp end of the trade war between the US and China, as well as more localised disputes with Japan in the case of South Korea and the turmoil over Brexit for Germany. They may avoid a recession, but both countries are certainly heading for a
slowdown. Low consumer confidence and falling investment have prompted economists to forecast the slowest rate of growth in South Korea for a decade. Germany, meanwhile, is expected to register its most sluggish pace of expansion for six years because of falling export orders and a construction sector that is
stagnating. In response to the deteriorating economic outlook, Germany has begun to flirt with a more expansionary stance but is yet to commit. Last week, finance minister Olaf Scholz said that if an economic crisis breaks out “thanks to our sound finances we will be able to counter it with many, many billions”. Yet the planned 1 per cent increase in spending still appears lacklustre compared with the action taken elsewhere. In Seoul, fiscal conservatism has come to a decisive end. South Korea has planned increases related to job creation, welfare payments and research and development. Spending is being increased by 8 per cent — on top of a supplementary budget passed in August — despite sluggish tax receipts. This South Korea’s fiscal boost is a model for others means government borrowing is expected to reach a record high. An overall deficit next year, which includes the social security fund, would mark a big shift from a 2018 surplus of 2.8 per cent of national income.Fiscal easing will take longer to transmit to the real economy than monetary policy, but that does not make it any less important. The effects on business and consumer confidence may be meaningful as companies look to a new source of orders. Expectations for inflation and economic growth could improve. South Korea is right to act swiftly before the outlook deteriorates further. The global backdrop has changed: Berlin can learn from Seoul’s willingness to change, too.

20 year anniversary of the Sustainability Institute

It is really hard to believe that it was twenty years ago that a small group of us started dreaming and imagining what eventually emerged as the Lynedoch EcoVillage and the Sustainability Institute. It always amuses me when people assume there was some sort of grand vision or plan at the start. Herewith two videos that capture the origins beautifully: