As the negative economic effect of the Covid-19 crisis becomes increasingly clear, many countries have announced stimulus measures to steady their economies. International leaders, including the United Nations Secretary-General António Guterres and the International Energy Agency (IEA), have warned that if these measures lock in fossil fuel use, then the immediate threat of Covid-19 could undermine efforts to address climate change. South Africa, like many countries, appears to be making such a mistake. This has prompted 14 global organisations to collaborate to track real-time data on public finance for energy around the world.
Initial data from this research project made public last week shows that, in South Africa, stimulus directed at fossil fuels exceeds stimulus directed at clean energy sources by a large margin. The research, led by the International Institute for Sustainable Development, seeks to provide government, media, nongovernmental organisations and others a searchable, neutral and nuanced database of government policies committing public money to fossil, clean or other energy in response to the Covid-19 pandemic. This is available on EnergyPolicyTracker.Org and will be updated as governments continue to approve stimulus and recovery packages.
At the global level, researchers found that between the start of the coronavirus pandemic and July 22, G20 countries had cumulatively committed about $160.95-billion to fossil fuels, at least $123.75-billion to clean energy and $27-billion to “other energy”. Analysis of the data shows that the Covid-19 pandemic largely cemented policy trends that predate the pandemic. For example, countries on a fossil fuel-intensive trajectory (and heavily subsidised the associated industries) continued to follow this trend in their post-Covid-19 recovery and stimulus packages. In contrast, many countries that were already shifting to clean energy have capitalised on recovery packages.
In South Africa there have been a wealth of proposals but few confirmed policies and measures. As of the end of July 21 the tracker has identified only one that was readily quantifiable, namely the overpayment for coal contracts leading to R5-billion ($302-million) of payments to coal producers. Other pro-fossil policies included Eskom curtailing wind energy (despite a Government Notice issued in March classifying renewable energy producers as essential services during lockdown), the deferral of the first carbon tax payment and Minister Barbara Creecy lowering minimum emission standards for sulphur dioxide, which primarily benefits Eskom and Sasol, at the cost of public health. This is a crucial misstep for South Africa, as our actions today will either usher in a new course of sustainable development or further entrench the already carbon-intensive economy at the cost of equity, human health, the environment and long-term economic stability.
To date only one approved measure, an announcement increasing access to information on industrial pollution, can be said to support clean energy in South Africa. A number of other measures have been proposed but not yet implemented. One such example is the proposal for a green infrastructure bond to the value of R1.5-trillion to kickstart investment in energy projects (among other infrastructure projects), which President Cyril Ramaphosa announced last month at the inaugural Sustainable Infrastructure Development Symposium of South Africa.
Outside the energy space, the majority of stimulus and recovery packages have been fiscal measures providing support to the unemployed, grant beneficiaries, employees who have lost a portion of their income, and small and medium-sized enterprises.
The tracker shows that on the whole, there is a failure to recognise the economic benefits of a green recovery plan. The business-as-usual approach to fossil fuel intensive recovery packages is not only detrimental to the future of South Africa’s energy sector, but is also incongruent with the 2019 Integrated Resource Plan and the National Development Plan 2030, which place renewables and decarbonising the economy at the forefront of the energy agenda. Although a green recovery post-Covid-19 is not a panacea for all of our country’s challenges, recovery must address the energy crisis. The rhetoric of a green recovery is already prevalent in the country, and has been endorsed and supported by The South African National Energy Development Institute, The South African Wind Energy Association, civil society and commercial banks. It’s time for stimulus policies to live up to the rhetoric and reflect a commitment to supporting clean energy over fossil fuels.
Chido Muzondo is an energy policy consultant and Richard Bridle is a senior policy adviser at the nonprofit International Institute for Sustainable Development.