The IPP Project Fails the test for a Just Transition
30 July 2018
As Eskom consolidates the move towards Renewable Energy Independent Power Producers (REIPP)’s, 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 REIPP’s, (more commonly known as IPP’s), signals the dangerous continued neo-liberalization of the productive economic sector; the increasing privatization of public resources, resulting in mass unemployment and the consolidation of elite rule over productive economic forces.
NUMSA has been calling for a Just Transition from fossil fuels to renewable energy. In the 9th National Congress Resolutions of 2012, we define the renewable energy sector as a “socially owned renewable energy sector”. This is a sector where the community and workers are direct beneficiaries of the sector. 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 which is sustainable and ultimately, does not impact negatively on the next generation and their ability to survive. We have no choice – if the human race is to prevent its own extinction then we must transition from fossil fuels to renewable energy as soon as humanly possible. The International Labour Organization (ILO) formulated the Just Transition principles which give meaning to the 2015 Paris Accord on Climate Change.
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 criticized 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 impact 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 that are likely to suffer the worst impact.
In South Africa, working class communities are suffering from the impact of fossil fuels. Workers and their families who live in communities such as the Masakhane settlement in Emalahleni in Mpumalanga, which have been built near coal power stations suffer the harmful effects of air, soil and water pollution.
For NUMSA, a Just Transition means recognizing 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 unions position in the Daily Maverick when he wrote:
“We stated that in organizational terms this should involve some level of decentralized 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 Capitals 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 cover for the brutality they inflict on the working class and the environment. Lofty phrases such as “Corporate Social Investment” or “socio-economic development” are used to fool the unsuspecting public while hiding 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 in his article:
“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 Terry is saying is that it is naive to believe that corporations can solve the climate change crisis. This 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 2015 Paris Accord on Climate Change which the South African government ratified, and which is the justification for the IPP project. Below 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 finalization of the IPP contract would result in the closure of several coal power stations in Mpumalanga. At least 92 thousand jobs will be lost and this would impact negatively on the GDP of the local economy. In comparison, the minister of energy Jeff Radebe said that the project would create 114 thousand ‘job years’. The Minister is contradicted by the South African Renewable Energy Council which said that the IPP Agreements would only lead to 13 000 construction jobs. It makes no reference to the 144 thousand ‘job years’ mentioned by Radebe.
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 per cent 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. This is hardly surprising considering that President Cyril Ramaphosa’s extended family stands to benefit directly from this project. Once again, the working class is being sacrificed to benefit the elite.
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. The state is investing in this expensive technology when Eskom has an oversupply of electricity. Furthermore, what Eskom can produce at 42 cents per kWh, it buys it at R2,22 cents per kWh from the IPP’s and sells it to the consumers for 85cents per kWh. These expenses are passed onto the consumer. Zuma has been removed and the nuclear deal is on ice, but the costlier IPP project has replaced it. But there is barely a murmur from the media because it is being promoted by Ramaphosa.
A Just Transition puts workers and the community at the center of any Renewable Energy Program.
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 also did not consult the coal transporters who represent some of the business people whose existence is based on the work they provide to Eskom. And they did not consult the community of Mpumalanga about the closure of power stations; and about the benefits of IPP’s 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 workers to believe them when they tell them it is for their benefit.
ONLY THE WORKING CLASS CAN PROVIDE SOLUTIONS FOR THE RENEWABLE NERGY 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 IPP’s can only exist if Eskom gives up its market share. Eskom has to prioritize the sale of electricity from IPP’s before it can make any profits. And for every contract which is finalized it means Eskom has to cede more and more of its share. This is the privatization 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 privatization of SOE’s. 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 recognize that what is required is a permanent solution which 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.
By Irvin Jim, NUMSA General Secretary, 30 July 2018
This article first appeared in City Press, 29 July 2018
