The political economy of power (Part 2)
The generation and distribution of power (electricity) is political and economically driven. It is also surrounded by deception and falsehoods. Tristen Taylor explains why and how.
To illustrate that the energy cycle is centralised in a manner which reinforces the political domination of the few over the many, primarily through economic instruments, we now turn to South Africa and the generation and distribution of electricity.
95 per cent of electricity in South Africa is generated (and distributed) by one organisation, Eskom. The South African government owns 100 per cent of Eskom, with the Minister of Public Enterprises being the representative shareholder. In effect, this means that the South African government has total control over the conversion of energy into electricity and its subsequent distribution. Eskom generates this electricity overwhelmingly through the use of ten coal-fired power stations, producing 90 per cent of all electricity. The additional 5 per cent comes from nuclear (Koeberg) and hydro resources. This represents centralisation of energy conversion almost unheard of in human history. If we accept that the government is just one actor within our society, then it appears strange that it holds full control over one of society’s basic goods.
The South African government decides howEskom’s 208,314GWh of electricity is distributed. These are the proportions by sector: agriculture three per cent, commerce ten per cent, the transport sector two per cent. Industry is allocated a whopping 68 per cent. Residential users represent 17 per cent.
To recap - Agriculture and the business sector combined get a whopping 83 per cent of all electricity, while the citizenry must scavenge for the remaining 17 per cent. Approximately, 30 per cent of households are without electricity. And the pro-business, anti-poor bias is further illustrated in Eskom’s pricing policy. As Bryan Ashe notes:
'Soweto residents are charged 28 cents per kilowatt/hour while Sandton … residents pay 16 cents and big business pays seven cents. In rural areas, consumers are charged 48 cents per kilowatt/hour.'
How is such a distribution model justified? Mostly according to the dominant economic policy of our time, GEAR and its offspring. All of which are minor variations on the policies of the IMF and the World Bank, often termed neo-liberal economics or the Washington Consensus. The South African government gives more electricity to the business sector because, rightly or wrongly, it believes that business interests are greater than those of individual citizens, especially in a situation where demand has outstripped capacity. Given a choice between providing cheap electricity to industry and cheap electricity to the people, the Government has routinely chosen the former, as witnessed by the Alcan-Coega deal.
One may ask, if this is in the common good, this current distribution of electricity, why have so many conflicts occurred between government authorities and communities seeking access to electricity? Why do some South Africans have to make do with candles and paraffin while big business gets all the power it wants, at the price it wants?
Primarily because of the macro-economic policies adopted by our government. Incidentally, these macro-economic policies create what is currently considered a favourable investment climate for foreign capital, which is free to move anywhere it wishes (unlike people). If the government refused to create this climate, capital would not be invested and growth would not be possible, or so the argument goes. If the economic and social data are anything to go by, this macro-economic policy of the last ten years has produced an unrelenting assault upon the poor whilst facilitating fantastic levels of growth within the financial services sector. Of course, the poor and the working classes do not own shares or unit trusts. As Dale McKinley states:
'Research conducted by the Development Bank of South Africa in 2005 revealed that the number of South Africans in poverty (with the national poverty line for 2002 being benchmarked at a miserable R354 per adult per month) in all population groups increased dramatically, from 17,000,000 in 1996 to 21,000,000 in 2003…indeed, the state’s own figures for 2002 show that the poorest half of all South Africans earn just 9,7% of national income (down from 11,4% in 1995), while the richest 20% take 65% of all income.'
According to the Report of the Committee of Inquiry into a Comprehensive System of Social Security for South Africa in 2002, 55 per cent of South Africans live in poverty and 60 per cent of the poor receive no social security transfers and/or grants. Making matters even worse, the Report of the South African Cities Network (2004) revealed there was a 180 per cent increase between 1996-2001 in the number of urban households with no measurable income at all.
Further, in determining its energy position, the Government did it without seeking meaningful citizen-participation. Why should it? Why does any centralised authority have to consult with what are, after all, the end consumers of an energy chain? What can citizens do? Boycott electricity?
Access to electricity is a determining factor in one’s position within society, and the withholding of access to electricity, either through refusing to provide access or through tariffs, is an act of controlling individual access. In the power relationship between the citizenry and Eskom/the South African government, those who control the generation and distribution of electricity hold all the cards. There is very little citizens can do if the price of electricity is increased (for the poor with access, a rise in price means that their access becomes further restricted) or if supply is diverted to industry.
Put another way, the individual citizen is dependent entirely upon the government to provide him/her with a basic condition of modern life. This gives the government undue power over the circumstances of the fortunes of citizens, communities, organisations, and businesses, resulting in an insidious form of patronage. Furthermore, the total centralisation of energy conversion has enabled the government to use electricity as part of its macro-economic policy; witness the pre-paid meter wars in Soweto, the staggering numbers of disconnections (10,000,000 by 2002), preferential pricing for domestic and foreign corporations, an attempt at privatising Eskom, and a continued reliance on coal. Using only coal to generate electricity provides an effective market-subsidy to the coal mining and export companies (such as Anglo Coal and TOTAL).
For example, Anglo Coal produced 56.900,000 tons of coal in 2005 in South Africa, of which Eskom bought 34.300,000 tons. Furthermore, Anglo Coal is currently seeking new deals with Eskom for additional long-term purchasing arrangements to the tune of an additional 25,000,000 tons of coal per annum.
From global profits in excess of US$1 billion for Anglo Coal, US$439,000,000 came from South Africa. With such a huge amount of money at stake, it is in Anglo Coal’s own interest that Eskom continues its love affair with coal and, by necessity, that South Africa’s electricity generation remains centralised. TOTAL is the ninth largest oil and gas company in the world and the fourth largest coal exporter in South Africa, representing a major consolidation of local and global energy resources in private hands.
Perhaps one of the greatest and most tragic ironies of the current Eskom policy of pro-business generation and distribution of electricity is that the technology used was paid for by the citizenry as a whole, mostly through foreign and odious debt incurred during apartheid. Eskom was one of the prime beneficiaries of foreign loans during the apartheid era. For example, in 1974 Barclays participated in a US$15,000,000 Eskom Eurobond issue; in 1976 (after the Soweto uprising) Citibank, along with three other US banks and Barclays, provided credit of US$200,000,000 for Eskom. In 1980 Credit Suisse was the managing bank in loans worth CHF,000,000 million to Eskom. And so on. 16 per cent of all foreign debt in 1990 was the result of loans to Eskom. These loans became the obligation, post-1994, of the victims of apartheid to pay back via taxes. It is these same victims that are being discriminated against in Eskom’s current energy policy.
The feudal lords with their watermills were thinking small
But what does this social and economic problem have to do with the environment? In one sense, all social and economic issues are environmental. Human beings and all their artefacts are part of the global ecology. True that may be, but it sidesteps the real concern. Addressing the situation described above – that the centralised energy conversion system of South Africa is anti-poor – does not mean having to revert to traditional environmental issues such as dirty coal, global warming, renewable energy, cute and fuzzy bunnies. The answer would be to change the distribution policy of Eskom and the government, reduce cut-offs, lower residential tariffs, increase 'lifeboat' allowances, and build more transmission lines and bigger power stations.
This approach is fundamentally flawed in that it ignores two key factors. First, it ignores the fact that electricity generation (like all energy conversion systems) underscores a political power relationship. Within a centralised and tightly controlled system as South Africa’s, the citizenry already gets as much electricity as it needs, according to the system. Because the South African energy cycle is controlled entirely by an elite class, electricity is granted to non-elites in accordance with their ability to serve the elite class. By way of example, middle class individuals receive a fair amount of electricity because: 1) They provide a means of subsidisation for industry through the payment of tariffs, and a form of revenue for Eskom; 2) They need a fair amount of electricity to fulfil their roles as the technicians of the modern economy. One cannot be an effective engineer or doctor if one does not have electricity. The poor receive a more limited amount (or none at all) precisely because the system does not require them to be electricity-rich. In fact, the value of the poor for the system, besides the role of consumers, is to depress wages.
The current lack of capacity within Eskom to generate additional electricity is being addressed only because the dominant interest group (business) is demanding more and cheaper electricity. This demand is virtually unlimited, and additional increases in generating capacity (more power stations) will be absorbed and used by industry. To radically alter this equation to truly favour the poor would require a complete change of the economic and social paradigm of the economy itself. This would require a transition to a democratic socialist regime and a degree of central planning to the economy. Only after this has happened, after the power of capital has been broken, can the policy of Eskom be changed.
Any move towards a democratic socialist South Africa will not happen overnight, for such a move will be strongly (if not violently) resisted by current elite groups and capital in general, and could take generations to achieve. There is no time to wait for such a transition, both in terms of human suffering and external factors. Nor is it evident that the populace as a whole wants a socialist South Africa.
Further, even a socialist South Africa will not remove the underlying power dynamic between the citizenry and centralised energy conversion. As long as the generation and distribution of electricity remains in the hands of a single entity or the few, the entire citizenry will remain at the mercy of the few. Electricity and other forms of energy, petrol, for example, are not luxury items. An individual requires constant access to them in order simply to survive in the modern world.
The second factor, which renders much of the previous factor mute, is that external factors will force a change in the current energy cycle. Coal is not an unlimited resource, and South Africa’s coal reserves will run out. Current reserves are at about 34 billion metric tons, and by 2040 South Africa could have only 7 billion metric tons. 8 Yet these statistics are not the whole story. The demand for coal is growing on a global scale and will continue to do so, despite diminishing reserves. Simple economics means that the price of coal will keep on increasing, making coal-generated electricity increasingly expensive. There are already signs of this happening. For example, China is concerned that it does not have enough coal to fuel its industrial expansion:
'This year, China's domestic demand for coal is expected to reach 1.78 billion tons. Taken together, the four major industrial sectors of power generation, metallurgy, building materials manufacture and fertilizers will consume 1.58 billion tons, up 12.9 percent on the previous year. Meanwhile exports will exceed the 80 million ton mark. Energy expert, Han Xiaoping, says, ‘The fundamental reason for China to slash its coke export quota lies in China's deepening energy crisis. China's current coal reserves and rates of exploitation are just not sufficient to continue to sustain the rapid development of the Chinese economy.'
Shortages in coal supply will be further exacerbated by declining petroleum reserves and rising petroleum prices. As the price of oil per barrel increases, the viability of transforming coal into oil increases. This is what SASOL does, and it is a technology in which China has heavily invested in. This makes coal an even more useful resource thereby increasing demand, price and rate of extraction. This will mean greater pressure on the poor and working classes for, as energy prices increase, more and more people will be unable to afford access to energy, leading to negative social implications such as the further entrenchment of poverty, poor/minimal education, disease, and social conflict.
Recent moves in the biofuels sector (ethanol and biodiesel are now economically viable alternatives and additives to petrol and diesel) are showing a similar trajectory. The production and distribution of biofuels is rapidly becoming consolidated in a nexus of agribusiness and traditional oil companies, often with generous state subsidies. Once again, the only role for the individual in this system is as the consumer. Further, as ethanol and biodiesel become the cash crops of the 21st century, good land will be used for them, contributing to the increasing driving out of small-scale farmers to ever more marginal soil.
Simply speaking, the odds are that the coal and petroleum global economy will be abandoned or it will collapse before it can be shifted to a pro-poor approach. There is an ecological limit on our current growth trajectory and method, and this is applied to capitalist, communist, and socialist economies alike.
The other external factor that will force a change in the global energy conversion cycle is climate change. The overwhelming body of scientific evidence states that the current use of petroleum and coal is the primary reason why the climate is warming. As the climate warms, weather and oceanic patterns will change, causing massive disruption to ecologies. We can expect longer droughts, rising sea levels, increasing extinctions, reduced food supplies (especially marine food sources), and unhealthy weather. Most likely, you will be cursed to live long enough to see this happen.
Climate change is not only an environmental issue. It is a social issue, and will have profound social implications. Those with access to resources (capital) will be better equipped to deal with the negative effects of climate change; those without access to capital will suffer the most. Hurricane Katrina has been an abject lesson on how social, economic and political relationships will be played out as climate changes increase.
Just before Hurricane Katrina hit New Orleans in August 2005, the rich and middle classes deserted the city - they simply drove or flew away. They had the access to capital required to move themselves out of harm’s way. The poor (and black) were left behind to face the storm. The white guys left town and watched the show on CNN, the black folks drowned. Welcome to the future.
In the coming decades the world will either make the transition away from a fossil fuel economy or it will suffer the negative consequences of climate change. And, because this change is imminent (assuming we don’t 'choose' to drown instead), there is a great danger that the transition towards an alternative energy system will ignore the social and economic relationships that exist in energy conversion, especially within the minerals-energy complex.
If the negative affects of global warming and air pollution are temporarily excluded from the equation, it makes no difference in terms of societal power relationships if the system for producing electricity comes from a centralised coal-based system or a centralised renewable energy (or nuclear) system. Both systems will produce the same kind of socio-economic relationships that currently exist. And the environmental movement seems to have forgotten, ignored, or is unaware of this fact. Replacing one system that bolsters domination with another that also bolsters domination does not advance the cause of human justice one bit.
The only long-term solution that will address both the environmental and human justice concerns is one that addresses the political economy of power. Moreover, addressing the political economy of power is a necessary step towards a better, brighter world for all of us.
I’ll keep my remarks on how to address the political economy of power to the generation of electricity; no alternatives for petroleum, unfortunately. To begin, we must remember that there is no shortage of energy. The only limit that exists is our ability to tap into that energy, and this is a technological problem.
Fortunately, there do exist alternative technologies - such as solar, wind, biogas - and there are also methods of using energy with greater efficiency, that have the potential to change the political economy of power. Some of these technologies will require state subsidy, others need further research and development, but neither of these two factors are prohibitive. Technologically speaking, we are close to the point of having a carbon-based paint that can be applied to a wall and generate electricity using solar radiation.
What needs to be done is to decentralise the generation of electricity to the level of municipalities, towns, villages, and, most importantly, individual households. The goal is that each household should be able to generate enough electricity for its own use, as well as generate excess electricity that can be fed back into the national grid. This goal is not impossible to achieve. The laws of physics do not prevent it, and it is not beyond current engineering capacity. This can be achieved. It is not science fiction. The technology will have to be renewable and use materials available at a local level. Wind and solar provide two potential sources for such a system, and, because they are free to all, cannot be controlled by the few.
The basis of the electricity conversion system needs to be at the grassroots level. Individual citizens and communities must have the ability not only to set their own electricity requirements but also to meet their own needs. If this can be achieved, it will provide adequate electricity and will also alter the political economy of power. No longer would communities have to beg from the State for an extra couple of kilowatts a month; the State would not be able to use electricity as a means of control and oppression, and as a vehicle for implanting its own desires. To use a slightly different terminology, the means of the production of electricity would be in the hands of the users themselves.
The social and economic implications of such a system are clear – in at least one important sector of modern life, the people would have direct and clear ownership of the electricity sector. The corrosive and dominating relationship with regard to electricity would be dissolved and replaced with a situation of community and individual level self-sufficiency, providing a basis for advances in other areas such as economics, liberty, human rights, and real education.
Quite often in the struggle for human and environmental justice, we see ourselves fighting a rearguard action while hoping to survive until some future date when things will, miraculously, be better. Salvation is at a distant point, for the conditions for change are not yet right. Current struggles often seek to enable the foundations for change, not the change itself.
Breaking the political economy of power and decentralising electricity generation needs not wait for some far off event. The time for change is now. The current system has systemically failed both the poor and the environment, and has just about reached its ecological limits. Coal and oil are running out. The continued use of fossil fuels is producing an ecological response (climate change) that is already having widespread and negative effects. A change must happen, the historical moment of change has arrived. Just as Europe and China shifted to coal as wood supplies dwindled, so Africa will shift from fossil fuels to alternative sources of energy.
For the past 250 years we have had the feudal lords and their watermills. Time for some windmills and freedom.
* Part 1 was published in Pambazuka News 293
* Tristen Taylor is the energy policy officer at Earthlife Africa Jhb. The views expressed in this work are not necessarily those of Earthlife Africa Jhb.
* Please send comments to [email protected] or comment online at http://www.pambazuka.org
1 David A. McDonald, “The Bell Tolls For Thee: Cost Recovery, Cutoffs, and the Affordability of Municipal Services in South Africa”, Municipal Services Project, March 2002, pg. 5
2 Bryan Ashe, “South Africa's Mammoth Electric Company Leads the Way in Utility Privatisation while Touting Sustainable Development”, 16 August 2002, http://www.corpwatch.org/article.php?id=3528 Bold added
3 Dale T. McKinley, “The Making of a Myth: South Africa’s Neo-Liberal Journey”, 22 March 2006
4 David A. McDonald, “The Bell Tolls For Thee: Cost Recovery, Cutoffs, and the Affordability of Municipal Services in South Africa”, Municipal Services Project, March 2002, pg. 3
5 Currently on hold, but which would result in a centralising of energy conversion in the hands of business, a far smaller and less accountable group than Government.
6 Brendan Ryan, “Anglo Coal pitches for Eskom”, MiningMX, 21 December 2005, http://www.miningmx.com/energy/531028.htm
7 For more on the role played by multinational banks in propping up Apartheid, see Tristen Taylor, “Funding Repression”, 2005.
8 Note estimates vary widely. Source used: http://www.mbendi.co.za/indy/ming/coal/af/sa/p0005.htm
9 Tang Fuchun, “Call for Coal Reserve in Energy Security Strategy”, China.org.cn, 17 June 2004.