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South Africa’s energy crisis shows the need for climate finance

In the lead up to Cop28, the developed world must deliver on its commitments.

By Samir Jeraj

South Africa is basking in its dramatic Rugby World Cup victory over New Zealand. Following the end of apartheid, Nelson Mandela famously drew on the national obsession with the sport to bridge the racial divide and forge what he called the “rainbow nation”.

Thirty years after its first free elections, however, South Africa still suffers long-term structural problems created by decades of apartheid and 300 years of colonialism. South Africa may be Africa’s most industrialised economy, but it has an unemployment rate of over 30 per cent and a youth unemployment rate of 60 per cent. In recent years, problems have been exacerbated by the Covid-19 pandemic and “load-shedding”, where the power supply cannot meet demand, leading to unplanned blackouts (I experienced several of these in just my first day here).

The blackouts are a legacy of underinvestment in power infrastructure and maintenance, and they cause further disruption throughout the industrial and technology economies. The impact of high unemployment and inequality, meanwhile, can be seen in the pervasive phenomenon of de facto segregation and securitisation: houses with solar panels can be glimpsed from the road behind electric fences adorned with “armed response” notices.

A transition to renewables is sorely needed – and desperately wanted – here, in a country where electricity production is still heavily dependent on coal, a point made to us press trip journos by Peter Van Binsbergen, the CEO of BMW South Africa. The company has recently invested $224m in its factory near Pretoria to build battery electric and hybrid vehicles.

The factory, contained in large warehouse-type buildings, currently assembles cars for export (mainly to Europe). It has the feeling of something like an airport, with an array of parts being moved around the roads within the site by small utility vehicles. Inside the paint shop, the car bodies are conveyed by machine and gracefully dipped into a series of tanks containing the necessary chemicals and paints to protect against corrosion before being heated in an oven to dry.

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[See also: Setting the stage for action on climate finance]

The move to electric vehicles is part of a wider push for sustainability, which ranges from efforts at reducing waste to landfill by an impressive 100 per cent, to improving biodiversity on BMW’s estate and using biogas to generate 30 per cent of its energy needs, with the ambition to become fully renewable. However, within South Africa, the lack of charging infrastructure and the vast size of the country have led the company to look also at hydrogen fuel cell cars – with the hydrogen coming via the abundant solar energy in the Eastern Cape. Whether the government and industry can work together to put the new infrastructure in place for this is, however, still in question – the ruling African National Congress party’s record on infrastructure and upgrades is patchy, at best.

As the academic and commentator Dr Ongama Mtimka told us at an event, “The All Blacks took us to a dark place,” drawing a comparison between the struggle against New Zealand in the World Cup final, and the fact that South Africa has endured and survived dark periods of its history. The energy transition here is as much about how it can heal the inequalities created by apartheid as meet the energy needs of industry and consumers. To do either of these, the country will need access to billions in climate finance – an issue that will be high up the agenda the Cop28 climate conference, beginning at the end of the month in Dubai.

At 2009’s gathering in Copenhagen, developed countries committed to mobilising $100bn dollars a year by 2020 for climate action in developing countries. That promise was not kept. In 2020 $83bn was mobilised, according to the OECD, and Oxfam said the figure was inflated by overstating loans and climate benefits – really, they said, it was just $24.5bn. In any case, the United Nations Conference on Trade and Development (Unctad) said that even the $100bn target was a fraction of what was needed – poor countries face sky-high interest rates and debt servicing charges when compared with their richer equivalents, and are sometimes resistant to lectures from the wealthy, industrialised, and post-industrial West about over-reliance on fossil fuels.

In a partnered article by Unctad in New Statesman Spotlight last month, a representative of the UN agency said that “developing countries face a gap of $4trn a year to fund the achievement of the sustainable development goals, up from $2.5trn in 2015”. Those goals extend beyond just climate targets to broader social and economic agendas, but the figures give an idea of the scale of the challenge.

When world leaders from a newly net zero-sceptic Rishi Sunak to South Africa’s president Cyril Ramaphosa, meet for Cop28 in just under four weeks’ time, they will certainly have a lot to talk about.

Samir’s trip was funded by BMW Group. The New Statesman Spotlight has retained editorial independence throughout.

This article was originally published as part of Spotlight’s weekly Green Transition newsletter. Subscribe here.

[See also: Five things to watch out for at Cop28]

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