Unions challenge climate alliance

• Numsa says that if partner countries are driven by a desire to help SA, the funding on offer would have included more grants and fewer loans

The two largest unions representing workers at Eskom and in the coal value chain are not happy with the partnership agreements the SA government has concluded with developed countries to finance just transition projects.

The two largest unions representing workers at Eskom and in the coal value chain are not happy with the partnership agreements the SA government has concluded with developed countries to finance just transition projects.

On Monday and Tuesday, the National Union of Mineworkers (NUM) and National Union of Metalworkers of SA (Numsa) separately expressed their reservations about the $8.5bn Just Energy Transition Partnership (JETP) between SA, Germany, France, the UK, US and the EU, which will see investment flow from these countries to finance clean energy and other just transition initiatives in SA.

During a dialogue session hosted by the presidential climate commission on Tuesday, Mbulaheni Mboni, Numsa secretary of the national shop stewards council of Eskom, said SA must not “overcommit and be pushed into a corner by the Global North”. Developed countries, he said, were not extending support to SA for the just transition “because they had a very strong desire to help us”, but rather because they saw the financial upside of doing so.

If the partner countries were driven by a desire to support SA, the funding on offer would have included more grants and fewer loans, Mboni said.

As details trickled in about the composition of the $8.5bn package announced by SA and the international partners group at COP26 in Scotland in 2021, it emerged that less than 4% of the money on offer was likely to be in the form of grants, and the rest in the form of loans and concessional loans from development and commercial finance institutions. The funding that has so far been received via the JETP is mostly from two €300m loans provided by public development banks in Germany and France.

The Treasury previously said the loans from the French development bank (AFD) and Germany’s KFW were “highly concessional” and offered “more generous” terms than in those the government would have been able to raise in capital markets.

Each of the loans has a maturity of 20 years, including a fiveyear grace period. The AFD loan will have to be paid back at an interest rate of 3.6% (equal to the six-month euro interbank offered rate [Euribor] plus 129 basis points) and the KFW loan has an interest rate of 3% (sixmonth Euribor plus 69 basis points).

In his opening address at the PCC dialogue minister of public enterprises Pravin Gordhan said global climate change dynamics were being influenced by geopolitics. This included the “north-south political divide that came sharply profiled in the run-up to the Brics summit” hosted in SA in August. There now seems to be a “geopolitical battle for the heart and soul of the Global South”, Gordhan said.

“Each of the major powers is attempting to woo various countries in the south to a point where they can receive the political backing of the south in exchange for economic incentives. We will see more of that [in coming years]. How this will translate to the climate trajectory and discourse is something we should discuss,” he said.

The NUM called for “a lengthy delay in the implementation of the just transition”.

The union criticised what it perceived to be a lack of consultation with organised labour on the drafting of SA’s just energy transition investment plan, which provides direction on how the $8.5bn JETP money, and other funding for the just transition, should be spent.

“In all of these processes a total of 90% of the funds come in forms of loans rather than investments. It is not free money. It has to be repaid in foreign currencies back by the SA government,” the NUM said.

The NUM also said the current energy transition seemed to be pushing for equitable distribution in reducing carbon emissions, “thus allowing the developed countries not to be held accountable for the significant and historic contribution of carbon emissions”. This would create, it said, an “environmental injustice and inequity”.

“The rapid pace of the energy transition and accelerated decommissioning of power stations will exacerbate SA developmental challenges such as unemployment, poverty and inequality.”

The union said it wanted all activities related to the just energy transition to be put on hold until “all stakeholders are convinced that such transition will be fair and just to workers and communities”.

THE AFD LOAN WILL HAVE TO BE PAID BACK AT AN INTEREST RATE OF 3.6% AND THE KFW LOAN HAS AN INTEREST RATE OF 3%