Why Is Coal Still King in South Africa?

A coal miner is pictured working in northeastern South Africa. Photo by Jan Trutter.

Coal dominates South African electricity sources. On the precipice of horrible electricity blackouts since 2022 and coal deposits reaching their end-of-life, it seems like the perfect time to switch towards alternative sources of energy. However, despite international aid and funds through the Just Energy Transition Partnership, businesses, especially South Africa’s largest electricity company Eskom, are reluctant to phase out coal. Coal’s racial history, inconsistent government policies, and persistent funding for fossil fuels are pushing the coal lobby forward in South Africa.

Is the coal industry in South Africa fighting a losing battle? Coal deposits have declined since 2022 and been subject to the worst outages on record. Supposedly far more threatening to the industry is the Just Energy Transition Partnership (JETP), a program pioneered by South Africa following the 2021 COP-26 to phase out coal reliance. However, two years later, coal still dominates the country’s power grid. South Africa’s coal usage reflects a deep-rooted political and social relationship between the majority Black-owned coal industry and federal authorities. Without acknowledging the struggle between energy reliance, environmentalism, and social justice, international monetary aid cannot overcome coal.

South Africa is one of the most coal-reliant countries in the world. According to the International Energy Agency, the country depends on coal for 70% of its power generation capacity and 85% of its electricity. A majority of the coal reserves are located in the northeast, but 75% is sourced from just two mines, both of which are set to exhaust resources by the end of the century. As such, South Africa’s coal deposits will not be sufficient to sustain its electricity capacity in the long run. Furthermore, coal employs less than 1% of the country’s population, mainly near the coal mines. These communities are not only exposed to increased health risks from coal pollution, but they often lack training and education that can be applied to other industries. From this background, it would seem as if a shift away from coal is not only possible but necessary for long-term sustainable development. However, as is often the case, the story is much more complicated than it might initially seem.

Coal has been a fiercely contested source of power and control in South Africa since the 1860s, when colonial elites first started exploiting the resource. White mine owners continued relying on predominantly Black workers well through apartheid. Following the end of apartheid in 1991, the government instituted numerous programs to rectify long-standing racial injustice, including a revamp of the country’s mining charter to require 26% Black mine ownership. Today, the coal mining industry is a majority-Black-owned industry. This shift was a means for Black South Africans to reclaim a previously white-dominated industry.

Paradoxically, while the international community rightfully calls to decrease coal in South Africa over environmental concerns, it simultaneously threatens to undermine a meaningful source of racial justice in South Africa: the coal industry. One of the government’s greatest challenges is balancing demands for sustainability with social equity after a long history of white-on-Black exploitation. This is especially true when the countries calling for South Africa to stop relying on coal are the same ones that originally took advantage of the country’s resources.

When it comes to the South African coal industry, all roads lead to one dubious company—Eskom. Eskom is a state-owned electricity entity that supplies 90% of the country’s electricity, around 80% of which is powered by coal. Regionally, Eskom produces 45% of Africa’s total electricity usage. However, the company is ridden with corruption and mismanagement. The company loses an estimated $50 million a month due to corruption. This has amounted to over $22 billion of debt, two-thirds of which the government pledged to forgive earlier this year. Despite owning significant portions of its production line, it struggles to provide reliable electricity throughout the country, in part because of a limited electricity grid that deliberately neglected Black-majority regions through the 20th century through many racist apartheid policies. Power outages have been widespread. Earlier in 2023, buildings in South Africa were left up to 10 hours a day without any electricity, prompting President Cyril Ramaphosa to declare a state of emergency. Recently, these outages have limited water supply from electric-powered pumps and decreased foreign investments in the country. 

With this backdrop of power outages and decreasing faith in the long-term sustainability of coal as the country’s key electricity supply, South Africa became the JETP’s pioneer partnership. The JETP is a financing mechanism wherein high-income countries invest in the country to phase out coal through a series of grants and loans. These loans have been criticized for creating a cycle of debt that stunts development. In South Africa’s case, the United States, the United Kingdom, and the European Union (especially France and Germany) agreed to invest $8.5 billion over three to five years through direct investments and the Climate Investment Funds Accelerating Coal Transition Investment Plan. The money was aimed at increasing renewable energy sources and providing financial incentives for companies to speed up the process of closing down coal plants. South Africa was JETP’s pilot program, and it has since spread to agreements with Indonesia and Vietnam. As it quickly spreads to other countries with completely different histories and relationships with coal, it becomes even more important to understand the struggles of JETP and direct investment in South Africa. 

The JETP is more than a funding network between states. It includes non-state actors, like Eskom, and promotes private-public partnerships in its governance structure. Through JETP’s efforts to directly support private-sector development, the World Bank promised half a billion dollars in direct investments to Eskom. To increase foreign investments both from JETP and from external sources, Eskom promised to shut down most of its coal-powered plants by 2050 and convert to alternative sources of energy for its electric power grid. On paper, the JETP’s success was rooted in its ability to supplement environment policy in the private sector with international funds. 

Yet monetary aid has not addressed commitments on the governmental level. Although the government initially made similar promises about shifting towards renewable energy sources, efforts were halted by the persistent tension between energy security and energy sustainability. In 2022, President Ramaphosa announced a five-year energy transition plan that pledged for $95 billion in funding from the JETP, additional foreign investment, and the country’s own budget. However, Ramaphosa’s plans for energy security prioritized improvements to existing energy infrastructure. Since South Africa’s current energy infrastructure is reliant on coal, this policy meant strengthening coal’s centrality in the energy market (and thereby strengthening Eskom). Despite the energy transition plan’s efforts to promote renewable energy sources, persistent power outages and energy instability has led to emergency legislation to speed up energy sector expansions, including coal. 

The government, in short, needs more unity on energy policy. The JETP, as we have seen, consistently fails to provide the necessary policy support to decrease coal use because of limited domestic support. For instance, not all government leaders were included in JETP discussions. Administrators like Energy Minister Gwede Mantashe have continually supported legislation to slow the phase-out of coal, minimizing the possibility for cohesive, green policies. Even two years after the announcement of JETP funding, there are no concrete plans from the government to fulfill JETP’s central aim of sustainable coal removal. 

The government also supports coal interests through sustained institutional investments. Private South African fossil fuel companies received $3 trillion in institutional investments in 2023 alone. The Government Employees Pension Fund, the country’s largest pension fund, has its assets managed by the Public Investment Corporation. Together, they contributed to a $10.8 billion investment in fossil fuels. Eight billion USD were specifically allocated for Eskom annually. On the other hand, although JETP had hoped its initial investment would spark further foreign aid to South Africa’s private sector to support green transition, Eskom’s rampant corruption and unreliability have decreased trust. When companies like Eskom annually receive almost as much money as renewable energy programs receive from the international community in three to five years, their continued dominance can come as no surprise. 

Taken together, these factors demonstrate that coal in South Africa is more than an environmental and economic issue—it is political. But there appears to be little political will to completely overhaul an industry not only harmful to the environment but running out of its own raw materials. Even when companies like Eskom violate government health and pollution regulations, the federal judiciary has failed to take legal action. And with frequent power outages, the government is prioritizing electricity security over renewable energy sources. This trend is especially prominent in the near future as President Ramaphosa seeks re-election in the 2024 general elections amid continued public outcry at the power shocks. Without consideration for historical and cultural dynamics and for fundamental concerns over electricity access and sustainability, international monetary aid packages will have wasted potential. 

The JETP is set to continue on its current trajectory and expand into India, the most populous country in the world and one of the largest coal producers. South Africa, however, can serve as a cautionary tale. When resources like coal are as deeply rooted in a country’s racial history and its leading companies have political support, international funding alone will not achieve ambitious climate goals. Hard as the JETP is fighting to dethrone coal in South Africa, coal has yet to lose the battle.

Ada Baser (GS ’24) is a staff writer for CPR studying political science. Her main interests include U.S.-Middle Eastern relations, water governance, and transitional justice.