Socially Owned Renewable Energy

“We are fighting for a socially owned [renewable energy] sector, a sector under public, community or collective ownership and designed to put people before profit,” former NUMSA deputy general secretary Karl Cloete wrote in 2018. Its mission, he added, would be to “meet universal needs, decommodify energy and provide an equitable dividend to communities and workers” while decarbonizing the economy.

South Africa’s electricity workers have struggled to realize this vision. But their efforts have much to teach the US labor and climate movements. As calls grow for an energy transition led by rank-and-file organizing in the electricity sector, the South African case highlights the importance of defining “just transition” not merely in terms of worker inclusion but of worker ownership. In its ideal form, a socially owned electricity sector looks like working people guiding the transition from fossil fuels to meet their immediate interest in material security (good jobs, strong unions, affordable electricity) and long-term interest in a livable planet. At the same time, electricity workers’ setbacks and false starts — owing to a brutal recession, a fragmented labor movement, and the temptation to defend coal jobs as unemployment hovers around 50 percent — clarify how hard it can be fight for a truly just transition when austerity and privatization reign.

South Africa is a case study in how capital is using the climate emergency to privatize public goods. At the COP26 climate conference in 2021, the United States and several European nations struck a deal to provide South Africa with $8.5 billion to hasten its pivot from coal. In exchange for these funds, Eskom will proceed with a series of reforms to “unbundle” its energy provision. Originally pitched by the World Bank, unbundling means dividing Eskom’s generation, transmission, and distribution arms into three separate entities. Already partially underway, and strongly opposed by NUMSA and the National Union of Mineworkers (NUM), the point of unbundling is to make it easier for for-profit firms to sell solar and wind power on Eskom’s wires, effectively subsidizing the utility’s competitors in the name of quitting dirty energy.

There’s no question that South Africa needs to end its dependency on fossil fuels. Africa’s third-largest economy relies on coal for domestic power and is the world’s fifth largest coal exporter, making the country the fourteenth-worst carbon polluter globally. Its eastern “coal belt” is one of the most polluted places on earth. Elected leaders, environmental groups, and some currents on the South African left see unbundling as the only way to decarbonize the grid. Greenpeace has charged unbundling’s opponents in the labor movement with holding South Africa hostage to fossil fuels as climate change worsens droughts and floods — like those that killed more than four hundred people in KwaZulu-Natal in April. The conflict highlights what has become a commonsense view of the energy transition in South Africa and elsewhere — that decarbonization can only come at the expense of public power, and that anyone who opposes a privatized path to renewable energy is willfully letting the world burn.

This is an oversimplification that serves the interests of the section of capital seeking to profit from energy privatization. Public power utilities can drive the shift from fossil fuels, in South Africa and globally. And labor unions have the leverage to transform these utilities into engines of economy-wide decarbonization, refusing the false choice between saving the planet and defending public goods.

To electricity workers, unbundling is privatization by another name. And privatization means job losses, wage cuts, and a reduction in labor’s bargaining power. “They [the current government] have made it crystal clear that the best way to save Eskom from its current state is to privatize,” Jabulani Sokhela, a works coordinator at Eskom and NUMSA member, told me while I was reporting on South Africa’s energy transition for In These Times. “Private hands in any form of business, all they want to do is maximize their profit.”

Profit maximization has, predictably, come at workers’ expense. Preferring to import engineers and equipment, for-profit renewables firms have hired South Africans as low-wage construction workers, laying them off after cutting the ribbon. These firms have also challenged workers’ right to strike. Though unbundling is pitched as a way to increase energy access, private producers have no mandate to connect poor people to the grid. One of the country’s major solar farms, celebrated by some, powers an Amazon data center.

Furthermore, privatization is hardly guaranteed to decarbonize South Africa’s grid. Independent power producers account for 11 percent of the grid’s capacity; much of this power comes from solar and wind. But South Africa plans to get the bulk of new capacity from natural gas. More, the utility may soon stop offering twenty-year “power purchase agreements” to independent producers — subsidies that often require Eskom to buy power at above-market rates.

If the government winds down these sovereign guarantees to support private investors,  renewable energy companies will have fewer reasons to enter the market. Globally, meanwhile, the capital-led energy transition has failed to deliver serious carbon cuts. Wind and solar account for about 3 percent of global energy production, and the Intergovernmental Panel on Climate Change’s most recent report noted that “financial flows are a factor of three to six times lower than levels needed by 2030 to limit warming to below 2°C (3.6°F).” There’s little reason to think that entrusting electricity generation to private capital, in South Africa or elsewhere, is a quick or even likely path to decarbonization.

Unbundling or Privatization?

South Africa is just one example of how capital is using the urgency of the climate crisis to license privatization. India, Indonesia, and Kazakhstan are potential candidates for a climate-finance deal like the one South Africa inked at COP26. In the United States, after Hurricane Maria pitched Puerto Rico into darkness in 2017, the island’s governor, Ricardo Rosselló, jumped to sell off the public power utility. Rosselló defended the move by suggesting that privatization might allow Puerto Rico to build renewable “microgrids,” and, on Twitter, toyed with the idea of bringing in Elon Musk to set them up.

Then there is Eskom’s debt. After the defeat of apartheid in 1994, Eskom began a campaign of national electrification, dramatically increasing the share of South Africans linked to the grid. The problem, however, was that Eskom was now also required to break even — part of neoliberal reforms requiring “full cost recovery” for public services. Many of Eskom’s customers could not pay. Now buckling under $26 billion in debt, mostly owed to foreign creditors like the World Bank, Eskom is at the root of a national credit crisis — to which the government has responded with punishing austerity measures, including a nearly 400 percent electricity rate hike. High energy prices and rolling blackouts have worsened an already brutal economic contraction amid the pandemic, fueling massive protests last summer.

Public power supporters say unbundling will only worsen Eskom’s “death spiral.” Some in the labor movement have called for Eskom simply to renounce “odious debts” owed to the World Bank, and to use South Africa’s public-employee pension fund, which consistently runs a surplus, to bankroll the utility’s transition to renewables. For now, though, the economic crisis puts pressure on unions to back coal. While NUMSA stresses its commitment to “socially owned” renewables, union leaders have publicly defended coal in recent years, suggesting how tempting it can be to revert to a mystifying “jobs vs. climate” framework when unemployment is high. But as Matthew T. Huber writes, fossil capital can sometimes “find allies among their unions and their leadership, but this need not be the case. With the right conditions, unions can always become sites of working-class struggle.”

Workers in South Africa’s “minerals and energy complex” have a long history of organizing for broad social goods. The class solidarity forged by unions and community groups during the struggle for national liberation made “South Africa’s labour movement one of the most powerful labour movements in the world,” Michelle Williams writes. While NUM and NUMSA have not used their leverage to push explicitly for renewable energy, electricity workers have occasionally shut down power production, including during a 2018 strike that won significant raises. Convincing workers to flex their strike muscle for decarbonization will take work. But with concerted organizing, worker anger over fossil capitalism’s boom-and-bust cycles can and should be converted into organizing for a socialized, de-commodified, renewable electricity sector — in South Africa and everywhere else.

Overcoming the Coal vs. Jobs Debate

For all their flaws and failures, NUMSA’s just transition proposals have made South Africa’s energy debate about ownership, putting front and center the questions of who controls electricity production and who production serves, people or capital. This is what the energy transition should be about everywhere. Before NUMSA’s proposals, “The shift to renewables was seen as a panacea to the problem of a carbon-intensive economy,” Dinga Sikwebu, a former NUMSA official who led the union’s early climate education efforts, told me. Now, he said, “it’s also a question of what the purpose of transition is, who owns the renewable energy.”

Public ownership is the key to a just transition. Investor-owned utilities, however much they hype clean energy, seek to maximize returns on capital. A decade of piecemeal privatization in South Africa shows that appeasing these interests not only results in service cuts and rate hikes; such measures do nothing to guarantee a timely, much less just, transition to renewable energy. South Africa’s beleaguered Medupi coal plant, financed with loans the World Bank suggested would support “carbon mitigation,” provides an especially stark example of what can happen when capital-led energy development puts profits over social needs: cost overruns, blackouts, carbon emissions, towns blanketed in smoke.

Public ownership, on the other hand, makes electricity production the site of political struggle. A public utility’s responsibility to the people, however imperfectly executed, represents an alternative to the logic of capital accumulation that lies at the root of the climate crisis. Even when a public utility fails to serve the public good, the fact that it is publicly owned gives working people a means and motive to fight for a utility that meets their needs.

Workers need and deserve higher pay, better working conditions, and de-commodified goods, including electricity. They also need and deserve a livable planet. Public power can deliver both. Protests against pollution from South Africa’s coal-fired plants clarify that working people’s interests are entirely aligned with decarbonization when it’s focused on securing the well-being of ordinary people, at work and at home.

What this means is that a truly “socially owned” electricity sector — especially one operated by workers who are conscious of their ecological interests and sufficiently organized to use militant tactics — is better positioned to decarbonize than an electricity sector disciplined by capital. South African workers’ opposition to privatization, even when it veers into defending coal jobs, is about more than protecting livelihoods in a moment of precarity. It is about championing public power as the best way to decarbonize, de-comodify, and democratize power production. We should not forget that it is only because the electricity sector remains mostly publicly owned and heavily unionized that workers are able to make such ambitious demands in the first place.