
GOVERNMENT MUST STEP IN TO EXPAND PUBLIC OWNERSHIP OF THE ENERGY TRANSITION OR RISK MORE CONFLICT WITH MULTINATIONAL FOSSIL CAPITAL
The South African Federation of Trade Unions (SAFTU) has noted with concern Shell’s plan to depart from the South African downstream market of liquid fuels, having already in 2022 closed its half-owned SAPREF refinery in South Durban after massive flooding in April that year caused by climate change – at a time Shell is partnering with Johnny Copelyn’s Impact Oil & Gas in the Supreme Court next Friday, against community activists who defeated them in the High Court in 2022, over offshore Wild Coast methane gas exploration.
Shell’s departure threatens working-class jobs in more than 600 Shell service stations.
While it is possible that these jobs will be saved by a company that may acquire the assets of Shell, such ownership turnover often results in retrenchments. Any threat to South African jobs is a cause for concern in the context of such high unemployment and a declining economy that continues to shed more jobs.
Shell’s Energy Transition and Future Profits
Contrary to reports in the City Press and Sunday Times, both Shell SA and Thebe Investments argue that Shell’s departure is not caused by the scuffle over the valuation of Thebe’s assets. Thebe is quoted saying, “Shell’s relationship with Thebe is not the reason for Shell exiting South Africa.” Recall that through Thebe, the African National Congress has been rewarded with tens of millions of rands in dividends, and Shell has consistently received permission to drill for offshore gas and oil despite the climate crisis.
Indeed, in response to queries from the Daily Maverick, Shell said it is departing as part of a review of the “Downstream and Renewables businesses across all regions and markets in line with Shell’s focus on performance, discipline, and simplification.” In their Energy Transition Strategy, Shell stipulates that it is divesting from fossil fuels to reduce their contribution to climate-destructive emissions. In a message from the chairman, Andrew Mackenzie, Shell planned to “sell more low carbon products and solutions, and less oil products including petrol and diesel.” Seemingly, their divestment from the downstream South African market is linked to this strategy. Whether this is mere rhetoric is a good question, given Shell’s long-standing role as a climate denialist, suppressing scientific information about an existential crisis that threatens all humanity, and particularly the world’s working classes.
What we suspect is that, in reality, such a shift in Shell’s investments is best interpreted not as love for the environment. It is a long-term strategy that recognises the push towards energy transition so that Shell can position itself to dominate the impending charging network market for new electric vehicles. They aim, according to Shell’s Chairman, “to create more value with less emissions.”
Shell’s plan to exit the South African downstream petrol market should be located in this context, particularly with South Africa not making inroads in scaling up electric vehicle production and distribution. The government’s 15-year old rhetoric about using the country’s vast solar and wind capacity to establish charging stations along our main roads, and to encourage all our automakers to produce Electric Vehicles, is simply a tortoise-paced. It cannot determine the pace EV sector because it is beholden to the whims of private corporations and their profit motives.
Public Pathway to a Just Transition
Certainly, Shell’s exit, based on the energy transition, is not a Just Transition. It will leave workers unsure of their future, as the new company which may acquire the assets of Shell will not guarantee workers are looked after. If this exit is part of a transition plan that is Just, it would be guided by the government and representative of workers’ interests through trade unions. But this exit is guided by long-term accumulation goals and profiteering motives of Shell’s shareholders.
Shell’s planned exit, citing these reasons, is a wake-up call to the South African government to finally begin requiring the production and distribution of electric vehicles. However, because the state is not involved in car production, it depends on the private sector to do so. Its role is currently relegated to creating an enabling environment for capitalism (regardless of workers or environmental concerns), i.e. to incentivise multinational-corporate automotive businesses.
The whole world recongises that this should shift from petrol and diesel vehicles to government-backed electric cars. But as experience has shown, especially at a time China has taken over electric vehicle production and now its firms far outstrip Tesla and Western companies, this is why the energy transition will lag in South Africa: government must create a profitable environment for the private sector in each sphere of the energy transition. And yet with the enormous edge by foreign competitors and massive Chinese export capacity, we can safely predict that the degree of success of government production of electric cars will be zero.
In the Just Energy Transition Investment Plan (JET IP), government promises it will expand the electric vehicle sector and acknowledges the backward and forward linkages that electric vehicles will provide the renewable energy sector and the economy. Government claims that “EV charging-related investments in the grid could enable greater energy access and security”. But since the reality is that there are only slow-paced efforts to produce EVs in the existing corporate plants, any investments in EV charging networks will simply be slow. EV charging networks cannot precede the adoption of increased electric vehicles and production afterall.
To avoid relying on the private sector for the transition in the automotive and transport sector, our government should ambitiously start an electric car manufacturing company that will produce affordable electric vehicles. Our scarce electricity should be directed to such a company, in contrast to the multinational corporates guzzling our electricity to make petrol- and diesel-powered cars.
Based on this vision, the government should consider acquiring Shell assets, to use as fossil service stations in the intermediate period, which it should repurpose in the future to meet the needs of a flourishing NEV sector. It should also deny Shell offshore gas and oil drilling permits, as Energy Minister Gwede Mantashe suggested might happen if Shell pulls out (thus denying Thebe R3.8 billion in cash plus further dividends). Minister Mantashe is merely revealing the state capture in which he gives permits in exchange for election campaign contributions.
In addition, the government should invest in renewable energy plants dedicated to powering the passenger and freight rail. The resuscitation of the Passenger Railway of South Africa (PRASA) should be integrated with that of Transnet as part of the plan to transition. Operating PRASA from dedicated renewable plants will not only assist in furthering the energy transition but will also help in reducing vehicles on the roads, whose congestion causes untimely deaths of working-class people as well as local pollution and globally-damaging greenhouse gas emissions, which again mainly kill working-class people