Fossil fuel industries still have an unfair advantage in South Africa: the economy externalises the costs of carbon emissions, the state subsidises the biggest emitters, and financial institutions still invest in high-carbon industries. How can the country level the playing fields for a greener economy? Leonie Joubert takes a look
South Africans were reminded recently of just how much of their taxpayer money is used to prop up the fossil fuel industry here. Two searing articles in a local online newspaper, the Daily Maverick, zeroed in on the state’s subsidies of the coal industry in general, and one of the country’s biggest emitting industrial players, Sasol.
In the first article, journalist Kevin Bloom showed how South Africa’s coal industry is the fourth most subsidised of all the G20 countries.
The second piece took aim at the various ways that the South African government supports Sasol, the country’s coal-to-liquid fuel producing giant, which receives a helping hand in various forms of pre- and post-tax subsidies. One of Sasol’s plants is the single biggest point-source emitter of carbon dioxide on the planet. Sasol also ranks amongst the top 100 fossil fuel companies linked to 71 per cent of global industrial greenhouse gas emissions since 1988, according to the Carbon Majors Report as reported by The Guardian newspaper in London.
For South Africans to get this reminder now, following a three-year drought that was the worst in over a century of record keeping, is a bit like a car crash victim getting the expensive medical bills for her hospital stay, at the same time as being reminded that she’s also paying for the upkeep and running costs of the car that caused the accident.
How is South Africa responding?
The fossil fuel divestment movement is gaining momentum in South Africa. This May, shareholders in Standard Bank voted by a 55 per cent majority that the financial institution must adopt a policy that obliges it to make public all its lending to coal-burning power stations and coal mines.
The second significant resolution tabled at the bank’s annual general meeting in May didn’t pass, but the fact that it was tabled is still significant. This would have required the bank to report on all carbon emissions ‘resulting from its financing portfolio and its exposure to climate change risk in its lending, investing and financing activities’, according to civil society group Just Share. Even though it didn’t pass, 38 per cent of shareholders voted in favour of it, showing a significant upswing in the potential of shareholders to use their investor influence to drive the country towards a cleaner economy.
According to Daily Maverick journalist Sasha Planting, this is the first time a South African company has ‘tabled a resolution on any climate-related issue… proposed by shareholders’.
In the same month, activists marched on a shopping complex outside Durban on the East Coast to demand divestment from Sasol, because of its massive emissions profile and for ‘failing to set any emissions reduction targets’, according to the report by Kevin Bloom.
Counting the cost of carbon pollution
Since these significant developments, the country’s carbon tax policy also kicked into gear on the first of June. Based on the principle of the ‘polluter pays’, this tax is the first meaningful attempt by the state to factor into our country’s economy the actual cost of carbon pollution. The tax is described as ‘modest’, with plenty of exemptions for the bigger polluters – mostly mining, manufacturing, and the likes – in the first phase between now and December 2022, but the cost to pollute the atmosphere carries a price tag of between $0.42 to $3.39 per tonne of carbon dioxide equivalent.
South Africa’s state utility Eskom – which supplies 95 per cent of the state’s electricity, is the country’s biggest source of carbon emissions – escapes the tax for now, with the Treasury arguing that the utility already ‘pays an electricity levy on its generation of nonrenewable electricity’, as reported by the Mail & Guardian.
While these taxes are a way of internalising the damaging costs of carbon pollution at the top of the value chain, paying these taxes nevertheless still gets passed on to the consumer in various ways. Filling up with petrol or diesel now costs about $0,35 more per tank of fuel, which no doubt will ripple out across the cost of consumables like food.
Take it to the courts?
Using the courts to get the biggest carbon polluters to start paying for the damage they’re causing to communities and the environment after decades of free access to the atmospheric space, is getting traction globally. The Status of Climate Change Litigation report, put out by the United Nations in 2017, documents the mushrooming number of court cases being brought against governments and big corporates, as a way of getting them to be accountable for their contribution towards slipping the climate into a new and unstable state.
One South Africa court case gets a mention in the UN report: a 2017 ruling which found that the environmental impact assessment for the development of a 1200 megawatt, coal-fired power station, about four hours’ drive north of Johannesburg, needed to include the climate change impacts of the plant. The court ruling overturned the ministerial approval on the project, because the EIA didn’t take into account the climate implications.
This could open the door to using the courts more aggressively to put a chokehold on similar pro-coal development decisions in South Africa.
A similar court process in 2016 and 2017 managed to thwart the government’s attempts to push through a nuclear power deal with the Russians. The judge agreed with the activists who brought the case to the courts, that the state had bundled the red-tape and not followed due process in its negotiation process on the deal, and ruled that the state had to start the negotiations from scratch. This allowed enough time for those in government who were pushing the pro-nuclear position to be replaced by leaders who acknowledged how economically crippling the deal would be for the country.
No one in South Africa has yet considered using a class action suit to hold big emitters accountable for their carbon pollution, but lawyer and climate change activist Brandon Abdinor considers the possibilities, based on a key pillar of the South African Constitution: that everyone has the right to a healthy environment. It’s complicated, but the foundation is there in the jurisprudence, he argues.