Home / Business / Fin24.com | IPPs fail test for ‘just transition‘ from fossil fuel – NUMSA

As Eskom consolidates the move towards independent power producers (IPPs), the working class finds itself in an increasingly difficult position with this unjust transition in energy resources.

Not only is it caught between a fossil fuel and a hard place, the move to IPPs signals the dangerous continued neoliberalisation of the productive economic sector, the increasing privatisation of public resources – resulting in mass unemployment – and the consolidation of elite rule over productive economic forces.

The National Union of Metalworkers of SA (Numsa) has been calling for a just transition from fossil fuels to renewable energy.

In the Numsa 9th National Congress Resolutions of 2012, we define the renewable energy sector as a “socially owned renewable energy sector”. This is a sector in which the community and workers are direct beneficiaries – they own and control it.

The transition from fossil fuels to renewables will come at a cost, but that cost must be shared by all stakeholders. It must be a transition that is sustainable and, ultimately, does not negatively affect the next generation and their ability to survive.

We have no choice – if the human race is to prevent its own extinction, we must transition from fossil fuels to renewable energy as soon as possible.

The International Labour Organization (ILO) formulated the Just Transition principles which give meaning to the 2015 Paris Accord on Climate Change.

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When the state confirmed that it would finalize the IPP contracts this year, NUMSA rushed to court to interdict the roll out. This was because Eskom, the state owned entity, confirmed in March last year, that the conclusion of the IPP project would mean the closure of several coal fired power stations in Mpumalanga.

We were severely criticised by the media and so-called experts for taking this position on the IPP project. They wrongly accused us of being opposed to renewable energy and defending fossil fuels.

The rise in the global temperature and its affect on rainfall patterns and sea levels means that climate change poses a direct threat to the livelihoods of hundreds of millions of people.

It is the people from the poorest nations – those who have contributed the least to the problem – who are likely to suffer the most.

In South Africa, working-class communities are suffering as the country continues to rely heavily on fossil fuels. Workers and their families who live in communities that have been built near coal power stations, like the Masakhane settlement in Emalahleni, Mpumalanga, suffer the harmful effects of air, soil and water pollution.

For NUMSA, a Just Transition means recognising the fundamental contradictions that face workers today. On the one hand, workers depend on the jobs created by the existence of the coal mine, but on the other hand, workers are also victims of the pollution produced by the mine.

This is an expression of capitalist accumulation at its worst and it is at the heart of the climate change crisis. The IPPs are not confronting the very system that produces the need for renewable clean energy.

NUMSA’s definition of a Just Transition proposes to completely change the basis of economic production, away from that which infinitely exploits human kind and the natural environment on the basis of infinite profit accumulation.

The NUMSA deputy general secretary Karl Cloete articulated the union‘s position in the Daily Maverick when he wrote:
“We stated that in organisational terms this should involve some level of decentralised ownership and operation integrated into a coherent, national center. We made it clear that the national grid must be publicly owned and must remain the backbone of energy provision.

“We also made it clear that the mandate of renewable energy (RE) projects must be to achieve service provision, meet universal needs, decommodify energy and provide an equitable dividend to communities and workers directly involved in production and consumption of energy. We stressed that socially owned RE enterprises should be non-profit entities.”

The earth’s natural resources have been decimated because of capitalist dependence on greed and rampant profiteering, therefore any solution to climate change cannot be resolved separately from the resolution of the capitalist crisis, which is a global class war.

Simply put, capitalism is incapable of finding solutions for climate change because it is responsible for the Earth’s destruction. Capitalism as a system is based on accumulation.

Corporates use PR jargon to gloss over the brutality they inflict on the working class and the environment. Lofty phrases such as “corporate social investment” or “socioeconomic development” are used to fool the unsuspecting public while the companies hide their cold, calculating ambitions.

For any capitalist enterprise, profit is the only motive and it must be obtained at all cost. In this case, the environment and the future of the planet has been sold to the highest bidder.

Terry Townsend, author of A Marxist Analysis of Climate Change, says: “For capitalists, profit is an end in itself. It does not matter to them whether the commodities they produce satisfy fundamental human needs – such as food, clothing, shelter – or are devoted to pointless or ostentatious consumption, or are even destructive to human beings and the planet. A buck is a buck, whether it comes from mung beans, Lamborghinis or cigarettes.”

What Townsend is saying is that it is naive to believe that corporations can solve the climate change crisis, which is why tackling climate change must involve the destruction of the capitalist system as the basis for any solution.

Any renewable energy project must measure up to the principles of a just transition. This principle cannot be ignored because it forms the backbone of the Paris Agreement, which the South African government ratified, and which is the justification for the IPP project.

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What follows is a simple breakdown of why the IPP project fails to meet this principle:

The IPP project will destroy thousands of jobs

In March last year, Eskom announced that the finalisation of the IPP contract would result in the closure of several coal power stations in Mpumalanga.

At least 92 000 jobs will be lost and this would negatively affect the GDP of the local economy. In comparison, Energy Minister Jeff Radebe said that the project would create 114 000 “job years”.

The minister is contradicted by the SA Renewable Energy Council, which said that the IPP agreements would only lead to 13 000 construction jobs.

It makes no reference to Radebe’s 144 000 “job years”.

The state has not made any plans for how the economy of Mpumalanga will be affected by the closure of the power stations. No discussion has taken place about the social plan or alternative forms of employment, or plans to restructure the industry and the local economy so that it can recover from the closure of these power stations.

The state has effectively replaced decent work, with the promise of temporary jobs, whilst at the same time exacerbating unemployment and plunging the province of Mpumalanga into an economic crisis. They are doing this without any regard for the fact that our country is dealing with 37% unemployment rate and more than half the population lives in abject poverty.

It is irresponsible for the state to embark on this transition, without engaging deeply about the long-term implications for the broader community, and without making contingency plans to mitigate against disaster.

The IPP project is costlier than the nuclear deal

The recently signed IPP project is estimated to cost the state R1.4 trillion for the life of the projects in nominal terms, which is more than the nuclear power project.

The nuclear deal was rejected because it did not make financial sense to invest in such expensive technology when the state could not afford it.

There was outrage from the media because the deal was tied to former president Jacob Zuma and allegations of corruption.

And yet, bizarrely, the state is investing in this expensive technology when Eskom has an oversupply of electricity.

Furthermore, what Eskom can produce for R0.42 per kilowatt-hour, it buys for R2.22 per kWh from the IPPs and sells to the consumer for R0.85 per kWh. These expenses are passed on to the consumer.

Zuma has been removed and the nuclear deal is on ice, and the costlier IPP project has replaced it. However, there is barely a murmur from the media because it is being promoted by President Cyril Ramaphosa.

A just transition puts workers and the community at the centre of any renewable energy programme.

There is little communication around the IPP project

The ILO details how a Just Transition involves genuine engagement with all affected stakeholders.

It says the following: “Sustainable development is only possible with the active engagement of the world of work. Governments, employers and workers are not passive bystanders, but rather agents of change, who are able to develop new ways of working that safeguard the environment.”

The problem with the manner in which the state embarked on this project is that there was not enough engagement with affected stakeholders – they did not consult the unions who would be affected by the closure of power stations; they did not consult the coal transporters who represent some of the businesspeople whose existence is based on the work they provide to Eskom; and they did not consult the communities in Mpumalanga about the closure of power stations; and about the benefits of IPPs as well to detail the plans the state has in place to respond to the closure of power stations and its impact on the local economy.

Key stakeholders were excluded from this process and they want the working class to believe them when they say it is for their benefit.

Only the working class can provide solutions to Renewable Energy Sector

Only the working class can provide solutions to Renewable Energy, not business. If the IPP project is allowed to continue in its current form the crisis at Eskom will deepen.

The IPPs can only exist if Eskom gives up its market share. Eskom has to prioritize the sale of electricity from IPPs before it can make any profits. And for every contract which is finalised it means Eskom has to cede more and more of its share.

This is the privatisation of Eskom by other means and we reject it in its totality. We cannot allow the grid and the supply of electricity to be placed in private hands. We have learnt many hard lessons in the past about privatisation of SOEs. It ultimately worsens conditions for workers and their families, through increased tariffs and retrenchments.

Numsa will be embarking on a legal battle to overturn the decision to conclude the IPP agreements. It won’t be an easy battle and we may or may not be successful. Ultimately, we recognise that what is required is a permanent solution that can only be solved through class struggle. Climate change cannot be stopped without moving beyond capitalism and replacing it with socialism as a solution to the challenges facing our society.

* Jim is the general secretary of the National Union of Metalworkers of SA.

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