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From their debut at the COP 26 conference in November 2021, the Just Energy Transition Partnerships (JETPs) have made frequent appearances on the stages and sidelines of major international gatherings, comprising part of the G7’s post-pandemic infrastructure and influence-building initiatives.
The JETPs are climate-centred development finance packages, brokered between the International Partners Group (IPG)—consisting of the G7 and smaller European partners—and host countries in the Global South. They are tied to decarbonisation objectives and are contingent on policy reform and the liberalisation of energy sectors to enable a greater private sector role therein. Thus far, they have been signed with South Africa, Vietnam, Indonesia, and Senegal, with Nigeria and India in the running as future signatories.
Our recent report, Just Energy Transition Partnerships: Market Capture Or Climate Justice?, analyses the South African JETP—the first, and most mature of the agreements, which produced a detailed investment plan for the USD 8.5 billion in start-up finance pledged by the IPG. Mapped out in the investment plan are the—deeply controversial—steps toward “unbundling”—or fragmenting—the state-owned Eskom electricity company as part of reforms to better enable privately generated renewable energy to be sold through the grid. Other components of the partnership include building an electric vehicle industry and developing a green hydrogen sector.
The private sector and private capital are allotted pride of place in the development and implementation of the JETPs—at the expense of organised labour.
As detailed in the report, the dangers inherent in the JETPs include their reliance on loan financing and public–private partnerships (PPPs), as well as the overdetermined role of the private sector and finance in shaping the supposedly pro-worker “just transition” to which the JETPs owe their name. The private sector and private capital are allotted pride of place in the development and implementation of the JETPs—at the expense of organised labour, which has been reduced to token appearances in the process and largely kept in the dark. Even more strikingly, the Vietnam and Indonesia JETP agreements outsource the role of attracting private sector finance to the financial sector itself through the Glasgow Financial Alliance for Net Zero (GFANZ)—an umbrella alliance comprising 500 banks, asset managers, financial service providers, and other financial institutions.
A dangerously anachronistic vision?
A full 10% of the earmarked USD 8.5 billion financing for the South African JETP comes in the form of loans and is being delivered through Western development finance institutions, including the U.S. Agency for International Development, the U.S. Development Finance Corporation, British International Investment, and France’s AFD, which operates predominantly through PPPs, to the benefit of their respective national private sectors. Belying its “just transition” credentials, a mere 0.14% (USD 12 million) of the JETP financing is allocated to skills development, USD 16 million (0.19%) to social investment and inclusion, and USD 22 million (0.26%) to economic diversification and innovation.
Furthermore, the IPG’s USD 8.5 billion still pales in comparison with the required USD 98.7 billion estimated by the South African government to see a green transition through—all but guaranteeing that the “just energy transition” will, effectively, become a market-driven process financed overwhelmingly by private capital.
Compounding this, the JETPs are an example of the emerging “Wall Street Consensus” paradigm of de-risking development—whereby the state’s role in development is narrowed to that of an agent guaranteeing, protecting, and burdening the risk of financialised investment. The emphasis on privatisation weighs heavily on the JETPs, threatening to undermine state control over energy assets even further, and with it, undermining energy security for some of the world’s population at greatest risk from climate change.
A full 10% of the earmarked USD 8.5 billion financing for the South African JETP comes in the form of loans.
The plans to “unbundle” the Eskom electricity company—the largest utility on the African continent and exporter to numerous neighbouring countries—fit in the classic mould of neoliberal sell-offs of under-resourced state assets. Little doubt remains on the need for major overhauls of the beleaguered utility, which has already been forced to implement debilitating rolling blackouts across the country. Yet the solution advanced by the JETP amounts to, as social movements and trade unions in South Africa have pointed out, an asset transfer to the private sector, threatening much-needed energy subsidies for the country’s impoverished and raising the cost of energy provision while exacerbating energy poverty in the country.
Finally, the burdening of the South African treasury with further debt comes in the shadow of a brewing debt crisis across the Global South, while the conditions placed upon South Africa to liberalise its energy sector contain more than an echo of the Structural Adjustment Policies imposed on countries of the Global South during the original Third World debt crisis of the 1980s. Amid calls across the Global South for a more just approach to development and finance, such as those articulated in the Bridgetown Initiative, the JETPs offer a dangerously anachronistic vision.
Democratic erosion in the guise of climate policy
As the JETPs have progressed over the last 2 years, the picture has become increasingly clear: in their current form, JETPs are a “green” mechanism to bake in neoliberal practices in the Global South by wresting vital resources and utilities away from state control to the benefit of private industry and consumers in the North. JETP-induced privatisation is likely to usher in associated risks, including reduced labour rights and greater informalised/casualised employment patterns, weakening the collective hand of workers—which points to the danger of far deeper democratic erosion packaged in the guise of climate policy.
It is for this reason that the curious silence of Europe—most notably the European press, workers, and social movements—on the JETPs stands out as particularly concerning. As climate denial has fallen largely out of vogue, the threats of greenwashing and, as in the case of the JETPs, neoliberal capture of “green” policy grow ever more salient. And with the approach seen with JETPs likely to be reflected in climate proposals closer to home, action by movements in Europe around the JETPs are as much acts of solidarity with counterparts in the Global South as they are measures of self-preservation.
Union of Justice is a European, independent, people of colour-led organisation dedicated to racial justice and climate justice. Azfar Shafi is the Senior Researcher at Union of Justice, and author of the report Just Energy Transition Partnerships: Market Capture or Climate Justice?
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