Adam Tooze's Blog, page 4

Ones & Tooze: What Saudi Arabia’s Reconciliation With Iran Means for the Region

Iran and Saudi Arabia are exchanging ambassadors a month after announcing their resumptions of diplomatic ties. What will this detente mean for economics in the region?

And a quick note to our listeners in Berlin… Adam and Cameron will be taping a live episode of Ones and Tooze on May 25 at Prachtwerk Berlin. Click on the link below for tickets. Their last show in New York City sold out quickly, so don’t wait!

https://www.podfestberlin.com/event-details/ones-and-tooze-live

Find more episodes and subscribe at Foreign Policy.

Chartbook #209 The Sudan crisis and the Sahel gold rush

Sudan is a pivotal link in the increasingly fragile and violent geopolitics of both the Sahel and the Red Sea/Horn of Africa regions. The bloody fighting across the country that began on April 15 is the result of a clash between the two most powerful military forces in the country – General Abdel Fattah al-Burhan, president since October 2021, and General Mohamed Hamdan Dagalo, better known as Hemeti (Hemetti, Himedti), Sudan’s vice-president and commander of the powerful paramilitary Rapid Support Forces. The fighting is driven by rivalry between the generals, heading different factions within the security forces in the wake of the ouster of long-time President al-Bashir in April 2019. They represent different power groupings in Sudan and enjoy sponsorship from rival outside forces. Al-Burhan is connected to Sisi in Egypt. Hemeti is thought to be closer to the Emiratis. Both have links to Russia. But the condition of possibility for this clash are the political economy of Sudan to which one of the keys is gold. As the work of a brilliant group of French scholars reveals, the emergence of General Hemeti as a challenger for power in Khartoum, is a reflection of the power-shift brought about within Sudan and the wider region, by a spectacular gold rush.

***

As the International Crisis Group reported in 2019:

In central Sahel (Mali, Burkina Faso and Niger), gold mining has intensified since 2012 due to the discovery of a particularly rich vein that crosses the Sahara from east to west. The first finds were made in Sudan (Jebel Amir) in 2012, followed by others between 2013 and 2016 in Chad (Batha in the centre and Tibesti in the north of the country), in 2014 in Niger (Djado in the north east of the country, Tchibarakaten to the north east of Arlit, and the Aïr region in the centre north), then finally in 2016 in Mali (the northern part of the Kidal region) and Mauritania (Tasiast, in the west). The cross-border movement of experienced miners from the sub-region, notably from Sudan, Mali and Burkina Faso, has fuelled the exploitation of these sites. These recent discoveries come in addition to the gold already mined in Tillabéri (western Niger), Kayes, Sikasso and Koulikoro (southern Mali), and various regions of Burkina Faso, making artisanal gold a hugely important issue in the Sahel.

Source: Raphaëlle Chevrillon-Guibert, Laurent Gagnol, Géraud Magrin Hérodote 2019

As it has swept from East to West, the gold rush has been rearranging populations, economic, social, political and military relations across the Sahel. It is a moving frontier of artisanal production similar in some ways to the astonishing helter-skelter development of cocoa planting that I analysed in Ghana and Cote D’Ivoire in Chartbook 196.

The activities of Africa’s artisanal miners have attracted media coverage around the world. This tends to concentrate on the primitive conditions in which they work. Dramatic pictures of artisanal mining conjure up comparisons to the “19th century” or some other imagined past. Frequently comments are made about the stark contrast between the smartphones that the rare earths end up in and the primitivism of the conditions in which gold, coltan etc are mined.

The contrast between affluence and poverty is only too real. But the idea that they reflect different eras of history, or different stages of development is an illusion.

The activity of artisanal mining is quite new in most of the places in Africa that have been caught up in the current resource boom. It has certainly never been practice on this scale before. Giant artisanal mine sites in Mali or Darfur are no more more natural or native to Africa than the deforested cocoa regions of CdI. Furthermore, all this activity involving millions of people organized across huge distance, would not be possible without the extensive use of modern technologies at the African sites of production. In 2018 Mali registered 150 cellphone subscriptions per 100 inhabitants and rising. But there is one gizmo of which the Sahel’s gold miners can claim to be the most important users worldwide – the cheap portable metal detectors, which became widely available in the region around 2008-2009.

By 2009 the Sahelian demand for metal-detectors was so intense that it produced a global shortage of the equipment, with order books backed up for 6-9 months, and Chinese imitators scrambling to steal technology from Western market leaders. At one point the British army in Afghanistan blamed its lack of mine detectors on the African mining boom.

The communities that have been created by the gold rush are anything but “traditional” or “archaic”, like mining camps of the 19th-century California, they are wildly cosmopolitan places, peopled by migrants from across Africa, mixing communities – Muslim and non-Muslim – and opening up novel routes of trade and communication. This piece about communal mixing and life in gold regions of Niger gives a graphic description of the makeshift sociability that functions in the mining camps and the hardship these communities are forged under.

A fascinating snapshot of the level of activity in the region and its material needs was provided in December 2020 by a coordinated interpol operation in which regional police forces conducted raids on smuggling hotspots in Burkina Faso, Côte d’Ivoire, Mali and Niger. In the course of a week the police confiscated the modest total of 50 firearms, 6,162 rounds of ammunition, 1,473 kilos of drugs (cannabis and khat), 2,263 boxes of contraband drugs, 60,000 litres of contraband fuel … and 40,593 sticks of dynamite!

Unsurprisingly, mining on this scale draws in more or less organized groups of men with guns who seek to establish control, control commerce, tax and in some cases even organize production. Across the Western Sahel, gold figures in the background of the jihadist revolts.

Control over gold is also a key stake for the juntas who have recently seized control in Guinea, Burkina Faso and Mali. The gold has also attracted interested from the Russian mercenary forces that have been operating on an increasingly large scale, especially in Central African Republic.

***

Though the Jihadi threat tends to draw most outside coverage of the Sahel to the Western end, it is Sudan that anchors the Sahel gold belt in the East. And it is Sudan from where the gold rush began. According to the official statistics Sudan emerged quite suddenly in the 2010s as by far the largest of the Sahel producers, third only to South Africa and Ghana in Africa as a whole. Unlike the Western Sahel as presentation by the Sudanese Mining authorities spelled out, mining in Sudan goes back to antiquity.

Having said that, until the 2010s the vast majority of Sudan’s 45 million people support themselves with agriculture. Tensions between pastoralist and farmers are a key fissure in Sudanese society as in much of the Sahel and East Africa. But agriculture doesn’t generate hard currency to pay for imports, or much tax to operate a state. So commodities for export have long been key to the functioning of the Sudanese state and its politics.

Source: Ali, Murshed and Papyrakis et al Mineral Economics 2023

The Islamist regime that ruled the country from 1989 based itself from the late 1990s onwards not on gold but oil. Oil revenues were abundant enough to pay for infrastructure work such as the tarmacking of thousands of km of road and the construction of dams. They also had the attractive attribute of being generated from enclave industrial facilities that did not disturb the structures of Sudanese society or power. The oil fields were overwhelmingly in the South where Khartoum ruled at a distance over a mainly Christian population. In 2011 South Sudan broke away to form an independent state. The impact on the rest of the Sudanese economy was devastating. Whereas Sudan in 2010 benefited from oil exports of $ 9.69 billion, by 2015 its oil earnings were reduced to a paltry $627 million. This terrible blow triggered Khartoum into adopting a brutal austerity regime. But as Raphaëlle Chevrillon-Guibert shows in a fascinating report, the loss of the Southern oil fields did not come as a surprise. From 2005 onwards, anticipating eventual secession, Khartoum was looking to diversify its exports, prioritizing agricultural and mining development in the Northern part of the country.

Sudan has promising deposits of chromium, manganese and even uranium. But the obvious prize was gold. The original vision of the al-Bashir regime was to turn Sudan into an industrial gold producer like Ghana or South Africa. The regime would license production by a handful of large companies on the enclave model familiar from the oil industry. This was both “modern” and it would leave the existing structure of politics and society in place. As research by the US NGO Enough explains:

Until 2012, 74 percent of the country’s proven gold reserves were being managed through just two companies: the Canadian-Egyptian-Sudanese joint venture Ariab and the Moroccan-Sudanese venture Managem. Those companies’ concessions are in Red Sea and Nile states respectively, far from the country’s war zones. Although these large-scale mines attracted criticism for their poor labor conditions and negative environmental impact, the country’s gold trade was never directly touched by its wars.

Under the company concession regime, gold production remained contained. Between 2005 and 2011 production did increase significantly, but from a very low base. And then came the explosion of 2012.

As Jérôme Tubiana described it in Foreign Affairs:

In April 2012, a small team of wandering miners discovered gold in the Jebel Amir hills of North Darfur, Sudan. One of the mines was so rich — it reportedly brought millions of dollars to its owners — that it was nicknamed “Switzerland.” Diggers rushed in from all over Sudan, as well as from the Central African Republic, Chad, Niger, and Nigeria. After a much-publicized visit by Sudan’s mining minister and the governor of North Darfur state, their number may have reached 100,000. …

Between 2011 and 2014, rather than Sudan becoming the home of a tightly managed enclave gold mining industry, Northern Sudan, and especially Darfur, became the theatre for a full-scale gold rush. Sudan’s gold production surged to 70 million tons. Gold sales rose from ten percent of Sudan’s exports to 70 percent. In 2015, 1 million workers and 4 million dependents were supported by the mining industry, most but by no means all were Sudanese. The techniques used were primitive and dirty. Mercury was used to extract the gold and sodium cyanide to process the tailings, resulting in huge health risks for the workforce and extensive environmental damage. NGOs and local authorities have protested these conditions but the priority has been production.

Given this helter-skelter expansion the question of control was paramount. Nominally from 2012 it was the Central Bank that had the exclusive right to purchase artisan-mined gold and to sell it abroad. But the Central Bank has struggled to match international prices. Its efforts to do so by printing local currency en masse have sparked bouts of severe inflation. And efforts by the authorities to corral the private minters have been anything but consistent. The result is that perhaps as much as 90 percent of all gold produced in Sudan is exported through dark channels particularly to Dubai, which has become the major entrepot for gold exports from the Sahel artisanal mining boom. If 90 percent is the correct figure, as CNN sources estimate, then in 2022 $13.4 billion worth of gold production was smuggled out of Sudan. It could be even more.

The question is who organizes, sanctions and ultimately permits smuggling on this scale. The giant gold rush in Sudan exploded into the Darfur region, which since 2003 had been one of the chief battlefields of the Sudanese civil wars. In January 2013, the gold mining area of Jebel Amir in North Darfur witnessed a mass ethnic cleansing and forced clearance of much of the local population, overseen by Musa Hilal, an Arab tribal leader and infamous Janjaweed commander. In the course of the war, the Janjaweed, were accused of killing perhaps 300,000 civilians on behalf of al-Bashir’s regime. All the while, the gold flowed from Jebel Amir to Sudan’s central bank and from there to Dubai and the markets of the UAE. Sudan was forced to accept heavy discounts on its gold, but given American financial sanctions it was an invaluable source of foreign currency.

Musa Hilal resorted to any means of force necessary to control the Jebel Amir region. But his local standing and growing influence also made him a target. Following a rebellion by the local population, the man who moved to supplant and ultimately to subordinatet Hiala by 2017 was Mohamed Hamdan Dagalo, a Brigadier General in the Janjaweed. He is from the same ethnic group as Hilal but lacking his clan standing. At the end of fighting it was General Dagalo also known as Hemeti, a man without proper education who struggles to express himself in either proper Arabic or Sudanese colloquial Arabic and who many suspect of being Chadian, that emerged as the ruler of Jebel Amir. Dagalo and his brother, through their family vehicle the Al Gunade company, have thus become kingpins in Sudan’s gold economy. On that basis Hemeti emerged not just as a national powerhouse, but as an independent international actor. As many as 16,000 of his heavily armed RSF militia were deployed alongside regular Sudanese army as part of the Saud-coalition in Yemen. The RSF control trade and migration on the border region to Libya and have intervened militarily. And to further consolidate his grip Dagalo has struck up an unlikely relationship of patronage with Russia.

This may seem far-fetched. But the regime of sanctions imposed on Sudan by the US and the punishments meted out to French bank BNP in 2014, had the effect of freezing out much Western investment. Russia filled the vacuum. Moscow started engaging with Sudan at the latest in 2017 when then President al-Bashir was hosted by Putin in Sochi. As the New York Times reports:

Within weeks (of the meeting of al-Bashir with Putin), Russian geologists and mineralogists employed by Meroe Gold, a new Sudanese company, began to arrive in Sudan, according to commercial flight records obtained by the Dossier Center, a London-based investigative body, and verified by researchers at the Center for Advanced Defense Studies. The Treasury Department says that Meroe Gold is controlled by Mr. Prigozhin, and it imposed sanctions on the company in 2020 as part of a raft of a measures targeting Wagner in Sudan. Meroe’s director in Sudan, Mikhail Potepkin, was previously employed by the Internet Research Agency, the Prigozhin-financed troll factory accused of meddling in the 2016 United States election, the Treasury Department said. Meroe Gold’s geologists were followed by Russian defense officials, who opened negotiations over a potential Russian naval base on the Red Sea — a strategic prize for the Kremlin, suddenly within reach.

By 2019 al-Bashir faced opposition from within the army and from the pro-democracy movement. What was keeping him in power were above all the RSF under Hemeti’s command. But from 2017 onwards Hemeti became increasingly suspicious of businesses close to al-Bashir that were muscling into his territory. It was Hemeti’s decision to switch sides that opened the road to the coup that removed al-Bashir from power in April 2019.

Following the removal of al-Bashir Moscow backed both major military factions. Moscow cultivated Sudan’s regular military leadership in Khartoum with a view to establishing a permanent naval base on the Red Sea. At the same time, it worked with Hemeti and his militia in the gold fields. His Darfur base welcomed Russia’s own gold refining operations in Sudan and served as a convenient connecting point for their mercenary activities in both Central African Republic and Libya.

After a two-year experiment with a transitional civilian government, both the major military factions in Sudan and their Russian backers had had enough. In a transaction I wish I knew more about, in the spring of 2020 Hemeti’s group announced the official return to government control of the Jebel Amir mines. But who was the government? In October 2021 with Russian backing the military factions put an end to the civilian transitional administration. It has been rumored that the coup may have been motivated by the desire to end civilian administrative obstruction of collaboration between the Sudanese military and the Russians. In the months prior to the coup Russian operatives had become increasingly nervous about US oversight of their activities and had been looking to create Sudanese shadow companies to hide their tracks. This had been resisted by civilian Sudanese corruption watchdogs who bitterly resent the idea of a sellout of their country to Russia.

After the coup in October 2021 that civilian interference ceased. Russian warships docked in Sudanese ports and on February 24 2022, the day of Russia’s invasion of Ukraine, ex-Janjaweed militia leader and gold tycoon Hemeti was in Moscow hobnobbing with Lavrov and Russian top brass.

If you are curious about Gen Mohamed Hamdan aka Hemeti’s diplomatic forays you can follow the warlord’s account on twitter where he gives a running account of his diplomacy, including conversations with Secretary of State Blinken.

***

How the power struggle in Sudan will play out is an open question. Most recently a US diplomatic convoy was caught in the crossfire in Khartoum and Cairo is under pressure to send more troops into the country to rescue those already taken prisoner by RSF. Hemeti is spoiling for a fight, he relishes the prospect of positioning himself. as the successor to al-Bashir as Sudan’s defender against the over-mighty Egyptians. As Chevrillon-Guibert, Ille and Salah summarize it, what we are witnessing is a truly remarkable catapulting of a provincial warlord of humble origins: “who belongs neither to the Darfurian elite nor to the Nile riparian elite historically dominant in the country” to the status of a global player. “Himeidti represents the intrusion of new, formerly peripheral, forces into the higher levels of power, by capturing natural resources and by pure and simple brutality”. He is a fitting product of the gold rush.

***

Thank you for reading Chartbook Newsletter. It is rewarding to write. I love sending it out for free to readers around the world. But it takes a lot of work. What sustains the effort are voluntary subscriptions from paying supporters. If you are enjoying the newsletter and would like to join the group of supporters click below. As a token of appreciation you wil receive the full Top Links emails several times per week.

Carbon Notes 4 From Feast to Famine: Apartheid’s power bonanza and the genesis of South Africa’s electricity crisis.

Envisioning the global energy transition there is a credibility gap. Expert modeling says that trillions of dollars in investment are needed every year. $ 4 trillion per annum globally and $ 1 trillion for the Emerging Market and Low-income world ex-China is a substantial but feasible share of global GDP. But why, given the track record to date, would low-income and developing countries believe that funding and support will be forthcoming?

To date, levels of support from the rich world are an order of magnitude off. And though the IRA and Green Deal have kicked green industrial policy debate in the global North into a new and higher gear, this debate seems entirely preoccupied with the China-USA-EU triad. Furthermore, the subsidy race between the rich countries may, in fact, imperil the energy transition in the Global South.

It was this jaundiced backdrop which gave strategic significance to the announcement at COP26 in Glasgow in November 2021 of the Just Energy Transition Partnership between the United States, European partners and South Africa. With proposed funding of $8.5 billion it seemed finally to offer an answer to the question of how the rich world and the developing world might cooperate in the energy transition.

As Sierd Hadley comments at ODI.

For South Africans, the JETP potentially offers financial support for the challenging energy transition, a precondition for revitalising the economy and creating much-needed jobs. There is currently no other mechanism which would unlock the scale of international public finance needed to retire South Africa’s multiple coal-fired power plants, re-skill fossil fuel workers and support local economic development in coal mining regions. For South Africa’s development partners, the JETP offers a relatively low-cost way to rapidly cut emissions and stimulate private investment in clean energy, electrification and other green technologies

Faced with the scale of the challenge and the limited progress so far, it is not too much to say that “the eyes of the world are on the JETP”. It fills a large hole in the narrative by which the global elite convinces itself and its audience that the energy transition is manageable and realistic. The model’s appeal has been confirmed by the fact that agreements labeled as JETPs have since been extended to Indonesia, Vietnam, Egypt and India.

The selection of partners is telling. Thanks to global growth it has become more and more clear in recent years that climate politics must extend beyond the familiar boundaries of the G7 – USA, EU, Japan – and China. The largest part of global emissions and the most rapidly growing part is in the statistical box once labeled ROW or “Rest of the World”. India’s annual emissions now exceed those of the EU. Indonesia’s emissions are the fifth largest in the world. South Africa, Africa’s only member in the G20, has the 14th largest emissions in the world. Vietnam is one of the most rapidly growing economies and has hitherto been very heavily dependent on coal.

Nor is it a coincidence that South Africa was the first to partner with the EU and US in a JETP. Thanks to its coal-based electricity and heavily energy-dependent mining sector it has per capita emissions almost on a par with Germany. It is unusual amongst middle-income countries in having been heavily involved in climate politics for a generation. It has a rapidly expanding renewable sector, which accounts for 10 percent of electricity generation and since 2020 it boasts a Presidential-level commitment to crafting national climate policy.

It was in 2011 at COP 17 hosted by South Africa in Durban that the concept of just transition was first introduced, by COSATU the South African trade union movement. It is a coinage that befits a country with South Africa’s profile. It has been said that South Africa has the emissions profile of Australia and the inequality of Mozambique, a combination which starkly reveals its history – an amalgam of the overlapping trajectory of colonial and inter-ethnic struggles across the Southern cone of the African continent and the model of extractive capitalism common to many settler colonial regions, be they Australia, Canada or the United States.

And more than the numbers are at stake in this JET partnership. South Africa today still carries the nimbus of the anti-apartheid struggle. The Mandela generation is gone. But the senior leadership in South Africa today, were young activists in the 1980s and 1990s. Today that same elite and their collaborators preside over a society and polity confronting huge social problems, of dramatic inequality, mass unemployment, social discontent and a precariously balanced political economy, which under Jacob Zuma between May 2009 and February 2018 lurched alarmingly towards kleptocratic state capture.

In addition South Africa faces something very unusual, the progressive collapse, extending over a period of more than 15 years, of a once sophisticated and reliable electricity network. South Africa’s electricity utility Eskom has become a byword for dysfunction with rolling blackouts and a near permanent state of emergency in the power sector. Meanwhile, growth in South Africa is measured not in double digits but in fractions of one percent. The current forecasts for 2023 range between 0.5% (World Bank) and 0.1% (IMF). This is well below the rate of population growth even in a society experiencing rapid demographic transition.

For some of the broader backdrop check out the podcast.

In South Africa, the polycrisis is real in the most dramatic and urgent form.

In March 2023 global reinsurers let it be known that the triple impact of the pandemic, the extensive looting during the 2021 “Zuma riots” and heavy flooding in 2022 had caused them to triple rates for catastrophe insurance for South African clients. Even before this current rash of disasters, South Africa ranked fifth in the world in terms of total insurance premiums as a percentage of gross domestic product and accounted for a staggering 70 percent of all insurance premiums in the African continent. Now some insurers, “either on their own initiative or at the urging of reinsurers”, are notifying South African clients that their policies will not cover the event of a total power grid failure, a contingency which is a matter of daily conversation the length and breadth of the country.

So the JETP is not just a complicated scheme for international financing of renewable energy development. It is an intervention in a country that is widely seen, both inside and outside, as standing at a fork in the road. To put it rather dramatically the question is: Can a just energy transition unlock growth? Or will the energy sector, organized in Moloch known as Eskom, drag South Africa into a doom loop of economic stagnation, interest group in-fighting, social dislocation and violence.

Given this dramatic backdrop,, a lot of reporting about South Africa of late has been dominated by lurid stories of poisoning attacks on the Eskom boss, sabotage, organized crime and illegal mines operated by migrant labour from Zimbabwe. It is telling that De Ruyter the now-ousted boss of Eskom, told one reporter that he viewed his embattled years at the company “‘as my second diensplig,’ …. referring to the mandatory military conscription of young (White) South African men during the apartheid era”. Kyle Cowan continues in his book Sabotage published in January 2022 by Penguin Press: “It is easy to see why (De Ruyter) feels this way: he and his team are at war. And the battle lines are not traditional; the other side are using guerrilla tactics and are apparently well versed in the dark art of destabilisation.”

Rather than espouse this disturbing view of power system management as counter-insurgency, I want in this newsletter to try to tell the South African energy story in terms of political economy. This political economy, of course, bears the imprint of South Africa’s trajectory from the apartheid to the post-apartheid era, but its chronology and logic also reflects more general trends in the governance of capitalism around the world and familiar dilemmas in how to organize and plan for investment in energy systems shaped around the economic imperatives of the mid to late 20th century. The way this is shaping up, this is going to be a multi-part story. Part 2 will deal with the Ramaphosa government and the 2021 Jet P. In this first part I want to try to sketch a narrative of the multiples forces that define South Africa’s current situation as a highly electrified, deeply modern society deeply engaged in global climate politics but also one on the edge of total power failure.

In making this sketch of the South African power crisis, I draw selectively on a dauntingly vast and sophisticated literature on South African political economy. One of the fascinations of South Africa to an outsider is the sheer sophistication and contentious multiplicity of narratives it produces about itself. Eskom is no exception. This newsletter is a first effort to wrap my head around this hugely complex field. In doing so, I owe a debt to everyone I had the privilege of talking to on a recent trip to South Africa. In particular I owe thanks to the wonderful Keith Breckenridge, whose recent essay “What happened to the theory of African capitalism?” I recommend to your attention. I want to thank WISER at Wits University and the Wiser-Standard Bank chair in African Trust Infrastructures for their support of my trip. I had. ahugely stimulating time in the company of Murray Leibbrandt and the brilliant audience at ACEIR at the University of Capetown.

Whatever I did manage to learn, I owe to these interlocutors. The errors are all mine. If you know a lot about this, please feel free to let me know where I am going wrong.

***

Part of the tragedy of the current moment is that as recently as twenty years ago electricity in South Africa was a success story with global resonance. Eskom was hailed as one of the best utilities in the world. This was in part the halo effect of the post-apartheid era. But it also reflected a dramatic story of change, for the better.

Electrification in South Africa began as early as 1882, impelled by the power needs of the mining industry and cheap coal. From the outset, electrification bore the imprint of a hotly contentious polity. Escom (the forerunner of Eskom) was set up in 1923 to provide the railway system with a power supply that was not under the control of syndicalist White working-class local governments. Escom would go on to position electrification at the heart of what Ben Fine and Zavareh Rustomjee dubbed South Africa’s “minerals-energy complex”.

According to McDonald in his edited collection Electric Capitalism, in the 1990s mining and minerals accounted for 40 percent of electricity consumption in South Africa. Conversely, electricity, even at heavily discounted tariffs, accounted for 32 percent of the intermediary costs of gold production. It takes 600 kwh to yield one fine ounce of gold. As a result, South Africa’s economy was estimated to be three times more electricity intensive per unit of gdp than the USA.

For its first sixty years, Escom in Apartheid South Africa was first and foremost an industrial power supplier, which also provided electricity for white domestic consumers largely by way of private distribution companies.

Capacity grew dramatically through the mid-century, but by the 1960s Escom was struggling to keep up with the demands of the booming South African economy. A break point was reached in 1970s as the South African apartheid regime faced the oil crisis, the escalation of the Cold War on the African continent in Angola and Mozambique and the Soweto uprising of 1976. The strategists of Apartheid began to fear what they called a “total onslaught” that would require the South Africa state to defend a last redoubt of white rule. For the power sector, as Andrew Lawrence argues, the implication was that Escom needed to dramatically increase capacity – to a gigantic total of 70 GW by the year 2000. A key element of this expansion drive was the nuclear power plant and weapons program at Koeberg. South Africa thus offers and extreme and ideologically-overdetermined example of electricity expansion planning at the time. Such dramatic expansion programs, often with a nuclear component, were not unusual in the 1970s and 1980s.

In South Africa the investments of the 1970s and 1980s continued to shape the available generating capacity decades later. The last of the big 1980s projects was Majuba Power Station on which work began in 1983. Its last unit came into operation in 2001. At that point, Eskom had effectively doubled the available generation capacity to just under 40 000 MW. It was also the halting point for any further expansion.

By the mid 1980s the horizon of expectation had shifted again. With the South African economy beginning to slow under the impact of sanctions, forecasts for future demand began to seem excessive. Power tariffs, imposed above all on household consumers and small businesses, who took their power from regional and municipal distributors, were rising fast. Meanwhile, industrial consumers continued to be supplied with power at favored rates. The White voter base were disgruntled. In 1983 a commission of inquiry under Dr W.J. de Villiers recommended sweeping financial and operational reforms including the merger of the entire electricity supply industry into a single system, renamed Eskom rather than Escom. New plant construction was halted – a ban that would effectively remain in place until 2004.

The management of the newly formed Eskom began looking for new sources of demand to absorb the capacity they were constructing. They did so against a spectacularly uncertain horizon. The one thing that seemed obvious was that the Apartheid status quo could not last. As Pieter du Toit outlines in his remarkable book, The ANC Billionaires. Big Capital’s Gamble, faced with a mass popular uprising and facing exclusion from the world economy, South Africa’s big business interest began to look for an escape from the impasse of apartheid. At Eskom, Dr Ian McRae, who was appointed CEO in 1985 entered into clandestine contact with the ANC to explore options for expanding power supply to townships. Contrary to the racist legends of the regime, which denied the very idea that Black South Africans might use electricity, McRae found a huge repressed demand for electrical services.

Across the political break of 1994, the drive to expand mass consumption of power would shape Eskom’s history. Mass electrification of South Africa’s townships, it turned out, was the logical complement to the capacity expansion triggered in the 1970s by fear of a black “onslaught”.

Between 1991 and 2014, in the forefront of the National Electrification Program, Eskom would provide new electrical connections to 4.3 million households. That is almost a quarter of South Africa’s 15 million households. As a result of combined action by the ANC-led government, Eskom and local authorities, the share of households with power rose from 58 percent in 1996 to 87 percent of those in formal housing by 2013. At that point three quarters of informal shanty settlements had power connections too. From 2003 universal connection was encouraged by the introduction a basic ration of 50 kwh per month in free electricity for every household with a meter.

It is this expansion of electricity supply, which defines the crisis of power supply as it is felt across South African society today. The impact is all the greater for the fact. that the vast majority of homes are actually connected.

But the politics of electrification were always more complex than this celebratory story of expansion suggest.

The most obvious question is who actually gobbled up most of South Africa’s power. Even allowing for mass electrification, low-income households accounted for no more than 5 percent of demand (McDonald Electric Capitalism, 16). Consumption per household remained extremely modest, in most cases barely rising above the 50kwh that were provided free per month from 2003. Penetration of consumer goods was defined by the extreme inequality of South African society and sharply demarcated along racial lines.

To substantially tilt the balance towards consumers would require South Africa to achieve true mass affluence, a dream which remained far out of reach. The biggest beneficiaries of the power bonanza bequeathed by the apartheid-era expansion were industrial producers. In the 1990s and 2000s with the global resource boom in swing, South Africa’s abundant and cheap electricity made it a major investment location for aluminium production, stainless steel and ferro alloys. The coega aluminium plant owned by Alcan of Canada and then snapped up by RioTinto was to be one fo the biggest smelters in the world attracting huge South African subsidies as well as GW of power.

The rates for this group were negotiated between Eskom and the so-called Energy-Intensive Users Group. The amounts paid were rarely made public in the 1990s and early 2000s but there is reason to believe that they were extremely favorable to the business users. This is not by itself unusual. Favored rates for major customers are commonplace. But the contrast is particularly egregious in the South African case because of the degree of inequality and the way in which that was openly articulated in contractual relations between Eskom and its customers.

Eskom’s mass electrification drive was based on the innovation of prepayment. Crucially, this ended the system under which retail customers paid for monthly delivery in arrears – effectively owing the utility for a month of supply. That required customers to be creditworthy, a level of confidence that might be extended to the members of the EIUG or a privileged white household under Apartheid, but clearly did not extend to black households in the townships. What unlocked the supply was flipping the risk so that customers made prepayment to their accounts for the electricity they were going to use. In effect hard-pressed consumers extended an advance to Eskom not the other way around. Unsurprisingly this made supplying them more attractive. As critics pointed out, Eskom retained the power to end supply as soon as the cash ran out. What ought by rights to be a social entitlement was turned into a commercial relationship governed by household budgeting.

It was, in short, an individualized, market-based, low-trust relationship typical of contemporary, neoliberal thinking about service provision. However, the meaning of that relationship depended not only on how it was formally structured. It depended also the terms of trade on which consumers and producers interact in the market, on the price. And in that regard at least the 1990s and early 2000s were kind to both Eskom and its customers. Taking advantage of the apartheid-era capacity surge, electricity was cheap. Tariffs were progressively reduced to some of the lowest rates in the world. And under those circumstances, whatever the form of the supply relationship, it was hard to see electrification as anything other than a blessing.

***

Given the ANC’s founding commitment to socialism, and its close ties to the Communist Party and the Soviet bloc during the years of struggle, South Africa’s post-apartheid conversion to a neoliberal model of economic governance was spectacular. In fiscal and monetary policy this was encapsulated in the adoption of the so-called GEAR agenda. In the electricity system, thinking ran along similar lines.

In 1998 the White Paper on electricity proposed extending neoliberal visions to power supply. The White Paper proposed that Eskom be separated into two parts: the transmission system that would remain a monopoly and the generating side which would be thrown open to competition. This was the model of unbundling pioneered in Chile and the Uk in the 1980s and 1990s and that went on to be adopted by over 100 countries worldwide. The idea being that it disaggregated decision-making on price-setting and investment thus minimizing the risk of big mistakes and lowering costs to minimum.

On paper the unbundling vision prepared for South Africa by PwC looked good. It seemed like an obvious way to maximize competition in what might otherwise be seen as a natural monopoly sector. But like any other structural change it was a gamble. Crucially, it was not clear whether such a system could really provide incentives for long-term investment. Experience with unbundling in Uganda and Kenya gave little grounds for optimism. In South Africa the powerful trade union COSATU and Eskom management opposed the unbundling plan. In 2003, under substantial political pressure, Mbeki’s government abandoned the idea. Private investors who had been gearing up to enter the market were left jilted at the altar and more importantly, Eskom and South Africa were left without an investment plan and time was running out.

Throughout the 1990s ESKOM reserve capacity was well above the 20 percent threshold considered comfortable. It was on this basis that corporate interests at Eskom and national electrification neatly aligned. But already in 1998 forecasts were warning of trouble ahead. By 2008 at the latest Eskom would need more capacity if the happy balance of corporate and societal interests was to align. But, distracted by the brawl over the abortive “unbundling” plan and hoping to be able to rely on foreign capital, the Mbkei government stalled any new investment. ESKOM improvised by bringing back online plants that had been mothballed years earlier. This maintained the momentum of electrification, but only postponed the eventual reckoning.

Not until September 2004, after the battle over privatization and decentralization was fought out, did Eskom and the South African state face the need to begin making serious plans for major new investment. With diversified private source of supply off the table, Eskom reverted to a gargantuan version of 1970s and 1980s-style power planning. The basic idea was to add two giant coal plants, rated at almost 5 GW each, plus new nuclear reactors. Longer-term, the required investment was put at close to one trillion rand.

Work on the giant Medupi power station began in May 2007. But the soonest it would be operational was six to seven years in the future, a very optimistic forecast it turned out. To expand capacity quickly, Eskom added two smaller, more flexible open cycle gas turbine stations, at Gourikwa and Ankerlig. Completed in short time frames between 2006 and 2008, they brought online just over 2 000 MW with which to meet peak demand. The downside was that they ran on expensive diesel fuel.

As in the 1970s capacity expansion brought with it the question of financing and that raised the issue of electricity pricing. In the early 2000s though it was neither unbundled nor privatized, ESKOM was corporatized meaning that it was converted into a free-standing, publicly owned corporation which paid dividends to the South African state. The quid pro quo in 2006 was a change to ESKOM’s pricing formula, which was notionally designed to align prices more closely with generating costs. With the approval of regulator NERSA, ESKOM would confront its vastly expanded customer base with a series of price escalators, structured as Multi-Year Price Determination (MYPD).

The good years in which cheap power would fuel social and economic development were coming to an end. But it was far from obvious that the window of opportunity in the 1990s and 2000s had been long enough for South African society at large to grow to the point at which it could easily bear substantial increases in the cost of electric power. Average incomes were up but the vast majority remained so poor that even minimal electricity prices were likely to be felt as punitive.

***

And, then, before ESKOM could put in place the new regime of greater investment and price increases, disaster struck. Starting with a failure at the Koeberg nuclear power station at the end of 2005, South Africa’s over-stretched electricity system began to fall apart. From November 2005 rolling blackouts and load-shedding became a daily reality.

The blackouts were caused not by an absolute shortfall of capacity below demand, but by a lack of safe reserve capacity to deal with inevitable outages. From a high of 27% in 1999 the margin of reserve capacity had fallen by late 2007 to a dangerous 5 percent. At that point any outage in the system required load shedding. Outages occurred with increasing frequency not only because the power stations built in the 1970s and 1980s were getting old and worn out, but because maintenance had been underfunded and Eskom had underinvested in training and motivating its workforce. Furthermore, reliability problems were compounded by a shift from established relationships with large-scale coal mining companies which were often excessively favorable to the mining companies, but at least secured regularity of good quality supply, to a new network of smaller black-owned mines, whose supplies were haphazard and of lower quality. Eskom compounded the complexity of its situation by shifting a share of its coal contracts to a spot market basis.

In November 2007 a new series of power cuts began and by early 2008 Eskom and the government were forced to declare a national emergency. Mining output plunged as did business confidence. Electricity had tipped from being one of the success stories of South Africa to being a driver of panic. Nor was there any real question about the basic source of the problem. On 11 December 2007, during a fundraising dinner in Bloemfontein, Mbeki admitted: ‘When Eskom said to the government: “We think we must invest more in terms of electricity generation”, we said no, but all you will be doing is just to build excess capacity,’ ‘We said not now, later. We were wrong. Eskom was right. We were wrong.’

Mbeki had been struggling for years to maintain the grip on power of the relatively conservative centrist wing of the ANC. Six days after his Bloemfontein speech, his time ran out. Jacob Zuma, former head of the ANC’s counter intelligence wing, who had been ousted by Mbeki in 2005 as his vice president on corruption charges rode to victory at the ANC’s national elective conference in Polokwane. In 2009, after a brief interim period, he was carried to power on the back of an upsurge of left populist indignation at the failure of the post-Apartheid era to fulfill the promises of 1994.

***

Given Zuma’s subsequent career and the extent to which he serves as a symbol for all that is “wrong” or might “go wrong” in South Africa, it is important, at this point not to flatten the narrative. We know what happened next. State capture and kleptocracy would come to the fore and Eskom would be at the heart of it. But that turn for the worse was not immediately obvious in 2008.

On the most existential question facing South Africa at the time, HIV/AIDS, Mbeki’s ouster finally brought a turn to a more rational policy. Mbeki had taken a lethally misguided line on HIV, blaming the disease on poverty. His successors promised to do more to address poverty, but they also ended AIDS denialism and introduced the mass provision of retrovirals, saving hundreds of thousands of lives.

The ESKOM crises of 2006-2008 and Mbeki’s ouster also marked the opening of a new era in the politics of climate and renewable energy in South Africa.

South Africa’s first renewable energy plan had been drafted in 2003. But it was not until 2009 that the government hosted a nationwide conference on renewable energy in Pretoria. At the COP conference in Copenhagen in November 2009, South Africa’s government committed itself to reducing emissions by 34 percent by 2020 and 43 percent by 2025 – ambitious targets. South Africa’s intensified engagement with climate, set the stage for the Zuma government to host COP17 in Durban, where South African diplomacy played an important role in restoring momentum following the disaster of Copenhagen and where the South African trade union movement would launch idea of “just transition”.

Meanwhile, South Africa’s energy regulators and the Department of Energy came to see renewables as a potential solution to the power supply problem. The coal investments that Eskom was pushing for since 2004 were hugely expensive. Funding was uncertain and the 2008 financial crisis increased the pressure on South Africa for economy. In Europe, Germany, Spain and Italy were demonstrating the possibility for affordable rapid deployment of solar. In 2009 the NESRA, South Africa’s regulatory agency, took the lead in introducing a feed-in tariff – known as the renewable energy feed-in tariff (Refit) – along the lines that Germany had pioneered. Feed in tariffs are a model under which independent generators or households with solar panels on their rooftops are allowed to sell surplus power to the grid at an advantageous rate, encouraging decentralized investment in renewables.

The 2010 Integrated Resource Plan envisioned that by 2030 20 percent of South Africa’s power would come from wind and solar. 40 percent would be from low-carbon sources. This kind of planning was also significant in that it reflected the sense that with the victory of the left-wing of the ANC over Mbeki, there might be a return to more concerted economic government.

When NERSA’s Refit initiative fell foul of administrative institutional conflicts, the renewables push did not end. Instead, Department of Energy replaced it with a new program under the amended Electricity Regulation Act (ERA) that allowed private sector renewable developers to bid for supply contracts. After intensive informal consultation with the business sectors including investors, lawyers and the financial sector, the Department of Energy in August 2011 launched the program know as Renewable Energy Independent Power Producers Procurement Programme (RE I4P). This was to provide for contracts to cover 17.8GW of new renewable energy generating capacity by 2025, which would go a long way to towards bolstering ESKOM’s reserve capacity.

It appeared, in short, as though the combination of a global developments in climate policy, technological change, the local energy crisis and the lurch to the left of the South African government would open the door to an acceleration of the energy transition and a green solution to the Eskom crisis. Over the following years that hope would prove to be premature. Renewables, climate and the energy transition were now on the South African agenda as never before. But progress was painfully slow and at times seemed to be going into reverse. Meanwhile, South Africa suffered a lost decade symbolized by Eskom’s spiraling into near total failure.

***

This sense of dithering on the threshold to a new energy system, had local determinants of course. But it is a chronology familiar from Europe and the US in the same period, where after an initial burst of optimism around 2008, which for instances saw the Obama team advocate for the first Green New Deal, progress stalled. The money for subsidies in the US ran out. Against the backdrop of the Eurozone crisis, European renewable investment plunged.

In South Africa the fossil fuel interests around Eskom – as opposed to the Department of Energy and NERSA – fought back hard. And they gained support from the outside. In 2010 in a controversial decision the World Bank gave its approval, worth $3.75 billion in loans, to Eskom’s giant Medupi coal-fired power plant, one of the two projected since 2004 and one of the largest coal-fired stations ever built outside Asia.

Quite apart from environmental and climate impact, this cemented ESKOM’s ruinous commitment to implementing a giant investment program which its staff had no experience of managing. For a notional budget of R150 billion it planned to build not just the 4 764 MW Medupi plant, but the 4 800 MW Kusile coal-fired stations, plus the Ingula pumped storage scheme in the Drakensberg, which would deliver 1 332 MW of hydroelectricity during peak demand periods. Medupi and Kusile would end up costing three times as much. To this day, they have not reached full capacity. Funding needs far exceeded the World Bank loan, leaving Eskom hugely in debt. To keep up its payments it was forced to raise electricity tariffs at an extraordinary rate. In real terms between 2006/7 and 2017/8 Eskom’s customers would see electricity prices increase sevenfold.

This was all the more egregious because privileged industrial consumers like BHP were paying substantially less than the cost of generation. In addition South Africa’s long-suffering consumers had to deal with ever more frequent and serious outages.

Starting in 2013 electricity supply became chronically unreliable. As the new coal-fired power stations failed to come online and costs soared, ESKOM ran its existing generator stock to the point of collapse, whilst skimping systematically on maintenance. The overall impact was to stop dead in its tracks the growth in demand for power, which had been at the heart of the upbeat story of electrification up to 2006. South Africa shifted from being a society in which energy use was broadening and deepening to one in which economic growth depended on economizing on overpriced and unreliable electric power. Richer consumers resorted to buying their own generators. But industry was prevented from expanding so-called “embedded” power production by rules that barred connections for anyone generating their own power. It was a hobbling, unproductive, inefficient disaster, which helped to constrain South Africa’s lack-luster economic growth. GDP per capita stagnated in line with power consumption for most of the 2010s. Perversely, low growth helped to cap power demand on Eskom, cementing the low-level equlibrium.

***

So far in this account I have not given prominence to the drama of Zuma’s Presidency, corruption on an epic scale, kleptocracy and state capture. This is not to deny their significance but to make the analytical point that the combination of capacity constraints, badly managed construction projects, deteriorating infrastructure, low-level inefficiency and a fierce upward ratchet in prices is, by itself enough to explain a severe deterioration in South Africa’s power situation. And it was those factors which presumably most directly impinged on South African power consumers. But behind the scenes we now know that Zuma and his cronies were indeed engaged in a remarkable series of schemes which amounted not just to theft but to a complete subversion of the integrity of the state. This directly impinged on ESKOM because personal and family connections cynically cloaked in the rhetoric of Black Empowerment enabled the transfer of billions of dollars in assets. Padded coal contracts were one of the means through these deals were financed and vast sums of money were siphoned into corrupt channels that in turned helped to cement the grip of smaller-scale local mafias over coal supplies.

Though Zuma’s and the Gupta’s actions were shocking, rather than thinking of them in isolation as corruption or kleptocracy, it is perhaps more illuminating to think of them as being situated on a spectrum of mechanisms – limited neither to the market and formal contracts nor to formal politics and legislation and public administration – through which resources were distributed within the South African power system.

Zuma and the Guptas were clearly engaged in criminal self-dealing. That happened both at the national and large-scale and locally in smaller networks notably in the coal regions. Meanwhile, large power consumers benefited from extraordinarily advantageous deals that were never made public. As Lawrence reports:

In 2013, when the average generation cost to Eskom was about 40c/kWh and industry customers paid close to this amount, BHP Billiton, which buys 9% of Eskom’s electricity, paid only 22.65c/kWh, while 4.5 million residential customers paid on average R1.40/kWh—more than six times more.

One is put in mind of Bertolt Brecht’s famous quip: “What is the robbing of a bank compared to the founding of a bank.” Meanwhile, management and trade unions helped themselves too. They regarded Eskom as their bailwick which it was essential to defend against the intrusion of competition, alternative technologies and the reforming impulses of regulators or the Department of Energy.

Whilst Zuma’s large-scale corruption and local mafias centred their attention on coal, as far as the renewable energy transition is concerned it was bureaucratic politics that was more consequential in blocking the progress of renewables in South Africa after the promising starts of 2009-2011.

The shift in South Africa from the original idea of a generous feed in tariff for renewable energy towards a system of competitive auctions for contracts to deliver renewable power, was very much in line with international trends in the 2010s. Auctions were all the rage. But it was consequential not only because it prioritized large power producers but also because it shifted the balance of power within the energy supply system. The somewhat free-standing bureaucratic and expert unit within the Department of Energy (IPP unit) that was responsible for the auctions drove the process with real energy. Up to 2015, the DOE notionally procured almost 5GW from 77 renewable energy generation projects. Furthermore, across the four rounds of bidding, the price, especially for solar PV, came down so fast that it was able to match the costs of generation at the coal-fired mega-generators in Medupi and Kusile. But the entire process was stopped dead in its tracks in 2015 when Eskom’s management dug in their heels and refused to sign or finalize any further IPP agreements. Acting group CEO Matshela Koko gloated openly over his obstructionist stand. Eskom refused to free up budgetary space to purchase the power. In addition Eskom resorted to making prohibitive charges for grid connections. Rather than proactively expanding and strengthening the grid it used the fact that the existing transmission system was centered on the coalfields in the North East of the country to limit the expansion of solar and wind which are more naturally located in the North-Western side the Cape. Nor was this opposition confined to renewables. Eskom adopted a similarly obstructive stance towards power imports from both Namibia and Botswana too.

As one expert remarked: “Eskom frustrates the entry of IPPs and private investment through the disingenuous use of facts, the political brinkmanship and what lawyers term malicious compliance, through the quiet subversion of government policy by actions such as delayed access or inflated grid-connection costs for IPPs.” Beyond bureaucratic resistance Eskom also deliberately incited opposition from major trade unions – the National Union of Metalworkers of SA (NUMSA) and the National Union of Mineworkers (NUM) – by threatening that taking up the renewable energy capacity would force it to hasten the decommissioning of five older coal stations. In reaction the NUM reacted by calling rolling mass strikes to block the adoption of private power supplies.

ESKOM’s own preferred solution to the capacity problem was to add a third major coal-fired power complex to the two that it was struggling to complete. Meanwhile in Zuma’s inner circle the favorite boondoggle was a plan to hurl $1 trillion rand at a 9 GW nuclear upgrade. Frustrated developers who thought they had won successful REI4P tenders took to the courts to force ESKOM and the DOE to proceed with the contracts as agreed. But it would take court actions at a higher level to really break the deadlock. It was the collapse of the Zuma Presidency over the winter of 2017/8, amidst a welter of legal claims, that would break the deadlock and allow the combination of external engagement and internal rebalancing that had first announced itself in 2009-2011 to begin again to shift South Africa’s power system. That is a story to be continued in a future newsletter.

***

Thank you for reading Chartbook Newsletter. It is rewarding to write. I love sending it out for free to readers around the world. But it takes a lot of work. What sustains the effort are voluntary subscriptions from paying supporters. If you are enjoying the newsletter and would like to join the group of supporters click below. As a token of appreciation you will receive the full Top Links emails several times per week.

Ones & Tooze: The Economics of Sneakers

On this episode, Cameron and Adam discuss the Nike Air juggernaut: how Michael Jordan’s basketball shoes became a multi-billion dollar enterprise. Also on the show, how austerity measures in Greece contributed a deadly train crash there earlier this year.

And a quick note to our listeners in Berlin… Adam and Cameron will be taping a live episode of Ones and Tooze on May 25 at Prachtwerk Berlin. Click on the link below for tickets. Their last show in New York City sold out quickly, so don’t wait!

https://www.podfestberlin.com/event-d...

Find more episodes and subscribe at Foreign Policy.

Chartbook 208: “as a historian …” – the courage of Vladimir Kara-Murza

“What is history for?” … “It makes us brave!”

I’ll never forget this response by my distinguished colleague Professor Jonathan Riley-Smith to one of the “theory and practice” questions with which we used to torture Cambridge undergraduates back in the 1990s and early 2000s. Riley-Smith’s answer resonated with me, precisely for its profound, almost archaic quality:

History as consolation and spur, as inspiring legend. History as conducive to a life lived in the spirit of of bold action. History as one of the places where we preserve tales of valor and the memory of heroes. History as a form of resistance against the oblivion to which power may wish to consign those who oppose it.

Riley-Smith’s exclamation came to my mind this morning in light of the conspicuous show of courage by Russian opposition politician Vladimir Kara-Murza in the face of the Moscow City Court. Since the early 2000s Kara-Murza has been a thorn in the side of Putin’s regime. Having survived two poison attacks in 2015 and 2017, in 2022 he spoke out against the war, was arrested, charged and has been put on trial in the Moscow City Court. On trumped-up charges the prosecutors are demanding a 25-year sentence in a brutal, “strict regime” prison colony.

In the procedures of the Russian judiciary, before judgement and sentencing the accused are afforded the chance to make a final statement. I reproduce below Kara-Murza’s speech from the Washington Post, for which he has been a regular writer. The speech is a monument to the articulation of courage and the historical imagination:

MOSCOW CITY COURT — Members of the court: I was sure, after two decades spent in Russian politics, after all that I have seen and experienced, that nothing can surprise me anymore. I must admit that I was wrong. I’ve been surprised by the extent to which my trial, in its secrecy and its contempt for legal norms, has surpassed even the “trials” of Soviet dissidents in the 1960s and ’70s. And that’s not even to mention the harshness of the sentence requested by the prosecution or the talk of “enemies of the state.” In this respect, we’ve gone beyond the 1970s — all the way back to the 1930s. For me, as a historian, this is an occasion for reflection.

At one point during my testimony, the presiding judge reminded me that one of the extenuating circumstances was “remorse for what [the accused] has done.” And although there is little that’s amusing about my present situation, I could not help smiling: The criminal, of course, must repent of his deeds. I’m in jail for my political views. For speaking out against the war in Ukraine. For many years of struggle against Vladimir Putin’s dictatorship. For facilitating the adoption of personal international sanctions under the Magnitsky Act against human rights violators.

Not only do I not repent of any of this, I am proud of it. I am proud that Boris Nemtsov brought me into politics. And I hope that he is not ashamed of me. I subscribe to every word that I have spoken and every word of which I have been accused by this court. I blame myself for only one thing: that over the years of my political activity I have not managed to convince enough of my compatriots and enough politicians in the democratic countries of the danger that the current regime in the Kremlin poses for Russia and for the world. Today this is obvious to everyone, but at a terrible price — the price of war.

In their last statements to the court, defendants usually ask for an acquittal. For a person who has not committed any crimes, acquittal would be the only fair verdict. But I do not ask this court for anything. I know the verdict. I knew it a year ago when I saw people in black uniforms and black masks running after my car in the rearview mirror. Such is the price for speaking up in Russia today.

But I also know that the day will come when the darkness over our country will dissipate. When black will be called black and white will be called white; when at the official level it will be recognized that two times two is still four; when a war will be called a war, and a usurper a usurper; and when those who kindled and unleashed this war, rather than those who tried to stop it, will be recognized as criminals.

This day will come as inevitably as spring follows even the coldest winter. And then our society will open its eyes and be horrified by what terrible crimes were committed on its behalf. From this realization, from this reflection, the long, difficult but vital path toward the recovery and restoration of Russia, its return to the community of civilized countries, will begin.

Even today, even in the darkness surrounding us, even sitting in this cage, I love my country and believe in our people. I believe that we can walk this path.

Given the terrible ordeal that Kara-Murza faces, the resources of courage, conviction and determination that he must have summoned to make this statement, defy comprehension. He knows that Putin’s regime will bury him alive and yet he refuses to flinch.

But what stopped me dead in my tracks was that phrase in the final line of the opening paragraph.

“For me, as a historian, this is an occasion for reflection.”

Drawing himself up to face his terrible fate, he draws strength from his self-description “as a historian”, strength to withstand the immediate pressure of the situation and to carry on thinking. Rather than sinking into an abyss, it is as if, assuming the historian’s mantle, he can soar out of the cage in which he is being held. He can look back through time and weigh the scale of the abuse to which he is being subjected and the shame it brings on Russia, but also to look to the future, to a moment of day-break, towards a spring that will inevitably come. Historical consciousness is a source of courage.

As a historian myself, who often asks the question – why? and what for? – Kara-Murza’s speech moved me deeply. All the more so, because I was one of the people – one of a team at Cambridge – who helped to give him the identity that at this terrible moment he chose to adopt, that of a historian.

At Cambridge, early on in his undergraduate career, perhaps in 1998 or 1999, I was Kara-Murza’s teacher. In the Cambridge system this means that over a period of two months we met for many hours, one-on-one, to discuss history, including, if memory serves, Russian history. I do not follow Russian oppositional politics, so it is striking to me that amongst the hundreds of students I taught in that period I remember him so vividly, his energy, the force of his personality, the depth of his historical knowledge that in 2011 would lead to the publication of his historical study of the Cadet party and their failed effort to build constitutional government in Russia in 1906. Alongside his journalism and activism. Kara-Murza truly is a historian.

All of this came rushing back to me when I first heard news of his arrest in early 2022. A series of vivid images of the two of us sitting, quite close together, debating one of his essays. It was a memory, I should say, accompanied by a feeling of guilt. The sense that perhaps in the years afterwards I had neglected this remarkable person. I fear there were emails, many years ago, perhaps to do with his book, unanswered by me. But that is for me and my conscience. I mention it only to ward off even the suggestion of reflected glory. I deserve none. When we started talking, when he was a student in his late teens, he already carried within him a sense of historical motivation which, I now realize, was more intense, more demanding, more self-sacrificing than I will ever bear.

Today I want simply to bring Kara-Murza’s case to your attention, to express the humility I feel in the face of his magnificent sense of historical purpose and to ask you to join me in paying our respects to his extraordinary courage.

Chartbook Carbon Notes #3 Four trillion dollars per annum – The shock of reality from sustainable development thinking.

If you ask the question – what would it take to put the world on a track of sustainable development? – the best guesses of the experts who have spent most time trying to figure this out tend to congregate around $4 trillion in investment, per annum over the next decade. This was the conclusion of a panel of experts working for the COP27 meeting in November 2022 headed up by Vera Songwe, Nicholas Stern and Amar Bhattacharya.

Within this $ 4 trillion, if you ask what is needed in additional spending for low-income developing countries and emerging markets not including China, the answers tends to congregate around $1 trillion per annum by 2025. By 2030 closer to $ 2 trillion in additional spending will be needed. For Africa alone, by 2030 the figure is an additional $500 billion per annum.

Another set of estimates have been prepared for the energy transition narrowly conceived, rather than broader sustainable development goals.

One could write an interesting story about the calculation of these numbers and the remarkable resurgence of world-level development thinking they imply. To be talking about a “big push” harkens back to the early days of development economics. Is the message from Vera Songwe, Nicholas Stern and Amar Bhattacharya that we need go “back to the future”?

You might say that as in earlier generations of development thinking there is something disembodied, utopian, anti-political about asking this question – what will it take? – and answering with a round number – $ 4 trillion per annum. After all, there is no “we”, no global government that will answer this call. Nation states pursue geopolitics. As ever, national politicians want to retain power. They have short time-horizons. Capitalism is driven by profit, pure and simple. What kind of political process do we envision that would mobilize and direct this immense amount of money? What kind of revolution would it take?

But the question of “what will it take”, and the answers given by the expert panels are not figments of some liberal progressive dream. The bodies that ask these questions “what will it take?” are real enough. They are authorized by the COP process, which is itself based on UN treaty. The sustainable development goals were ratified by a process no more and no less legitimate than the Paris climate conference. Indeed, the two were ratified within months of each other in the momentous last few months of 2015, when Jean-Claude Juncker was first musing about “polycrisis”.

What is the UN you might ask? Well, the very least we can say is that it is there and it goes on. That is far more than nothing. It is, in fact, a huge collective enterprise. It is our best answer to the question of who the “we” is. Beyond that one can imagine coalitions of the willing, carbon clubs, various corporatist combinations involving a variety of interests. There is no simple answer to the “we” question, but that is what politics is for.

The planetary scale of this “big push”-thinking is noteworthy in its own right. One of the striking things about the Sustainable Development Goals promulgated in 2015 is that they extend to everyone. The $ 4 trillion figure is not for low-income countries only. It includes the US, Europe, Japan and China. Indeed, one might be tempted to say that the twin challenges of China and the climate has made everyone, including even faded “advanced economies” like the US and Europe, into developmentalists.

The experts and their networks form a world that is real enough. This circularly self-recruiting epistemic community is closely connected not only to academia and think tanks but institutions like the World Bank and private business. One could write an interesting study of how such expert groups are constituted and constitute themselves.

I’ve had the privilege of meeting and, indeed working with, several of the folks on this list and they are all smart, profoundly committed, broadminded. But something beyond their distinguished character is driving bodies like the Independent High-Level Expert Group on Climate Finance into existence.

It is reasonable to be skeptical about the nature of such exercises, to regard them as expressions of a certain kind of ideology, a demand on the part of the global elite for recognition as intelligent, thoughtful, long-range leaders and the desire to present themselves as such. But what is also undeniable is that this impulse to rationality exists and its products, ones like the “Big Push” report, are produced in ever greater profusion, inclusivity and sophistication. Skepticism loses its value when it negates the existence of this system of discursive and political problematization in favor of bluntly asserting the primacy of power and profit.

It is clear that we don’t live in a world that is going to scramble to adopt Songwe and Stern’s report and to appropriate $ 4 trillion annually for global sustainable development. But we do live in a world that will produce more and more such reports, which as far as we can tell are not entirely without purchase on reality. And those interventions will produce mediate but real effects on policy and business decisions. So the upshot is that we must navigate our way in a reality that IS structurally hypocritical. On the one hand it sizes up issues it identifies as common questions, makes enquiries, devotes intellectual effort to the problem, makes promises, but then, more often than not, reduces those reports and analyses to the status of internet relics as the result of the more or less complete failure to deliver on account of self-interested resistance and obstacles small and large. And then does it again and again.

So what to do? There are many possible responses. One is to challenge the entire structure, to call out the hypocrisy from the outside. Another, as J.W. Mason recently urged in the context of US industrial policy, is to keep on drilling the hard boards of politics, working the COP process and others like it at every level to squeeze out one win after another. Another is to leverage the knowledge produced from within this structurally hypocritical system to establish accountability and increase the tension, spell out the gap between recognized need, potential and actual delivery.

***

So, let us focus on the figure: $ 4 trillion per annum. The number cannot be repeated too often: At least $ 4 trillion per annum for the foreseeable future. In new investment. Every year. We should learn to live with that number and use it as a benchmark. If IRA, for instance, promises on the most optimistic estimates to deliver $ 4 trillion over ten years in the US, “the richest country in the world”, is that a lot or a little … ?

Rather than shrinking away from the $ 4 trillion in shock the really striking thing about it, is that it is far from utopian. If we take the Songwe, Stern, Bhattacharya figures at face value then the explosive conclusion is that sustainable development for the entire planet is within reach. All the more egregious and inexcusable will be our failure, if we do not. It is one thing to fail grandly in the face of an impossible challenge, it is quite another not to do something of immense important that is, in fact, manageable.

Calculated on the same rough and ready basis, global GDP is $85 trillion and rising. So, as a percentage of global GDP, the $4 trillion per annum starts out just shy of 6 percent and falls to something closer to 4 percent.

Is that a lot or a little? It is no doubt a formidable task. But we have made rearrangements of GDP of this scale, over a multi-decade time horizon before. During the Cold War, spending on defense in many countries was sustained at this level for thirty years. It did not require a revolution. The risks of the metastasizing military-industrial establishment that alarmed Eisenhower in the 1950s became manageable once the West opted for the terrifying, but comparatively cheap option of nuclear deterrence with hydrogen bombs.

What we are havering over is the possibility of setting in motion a sustainable-development-complex on a scale similar to that of the Cold War military establishments of the late 1950s and early 1960s – NOT the Korean war burst that consumed 10 percent of GDP or more. As in the Cold War this needs to happen at the global level and will involve forms of burden-sharing.

Obviously, this would induce a significant reallocation of resources and the displacement of other activities. We may, of course, hope that many of the resources for sustainable development will come out of dirty, polluting and exploitative investments – we have in the past invested in the order of $1 trillion in polluting fossil-fuel per annum. But, should we run up against supply constraints, we know from experience that supply is elastic, again this is a point made forcefully by J.W. Mason. The rate of productivity growth tends to increase with the level of demand and the pace of GDP growth.

In any case, even if there are “costs”, we should not think of this as money “blown out of the window”. Sustainable development investment builds schools, railways, power lines, renewable energy facilities. It is not like spending money on nuclear weapons – expensive, highly-sophisticated deadly artifacts we store in secret silos and hope never to use. In economic calculation it is easy to make too much of opportunity costs. They are, after all, hypothetical. Even if it were to displace other hypothetical usages, the $ 4 trillion per annum on Sustainable Development would not be conspicuously useless. On the contrary one would hope that it would legitimize itself by producing large and positive changes in our world.

If politics dictates, much of the investment, could be made profitable and be commercialized and privatized. It is not essential to stimulate economic activity through the profit motive, but if political economy requires, it can be done. That is certainly what is attracting so much serious money to the energy transition right now, suitably “derisked”, of course. At current carbon pricing levels, according to McKinsey’s most recent report, the vast majority of spending required for Europe’s energy transition has a solid business case.

As Daniela Gabor has led the charge in arguing, the politics of derisking are at the heart of our current political economy. As Daniela Gabor demonstrates in her collaboration with Ndongo Samba Sylla on green hydrogen projects in Namibia, critical engagement with the process, kicking the tires, looking under the bonnet, inspecting the terms of every deal and constantly holding open the possibility of alternatives is a key function for critical intelligence in this current moment.

The strategic role of such visions of public-private partnership is neatly brought out in reports by the COP experts.

Taken at face value, a chart like this, which calls for the mobilization of hundreds of billions of dollars in tax revenue to fund investment and service trillions in new debt, is calling for something akin to a revolutionary process of state-building – a “bourgeois” revolution at warp speed. It is radical and yet it is also familiar. This is the apotheosis of development finance thinking of the last generation. And what has it delivered? In the heyday of the 2000s and 2010s these were the flows of capital into Africa (thanks as ever to Brad Setser).

The problem here is the scale. Measured against the estimates for what is necessary for sustainable development, in the best years, following the development finance formula we were approximately an order of magnitude off, not $500 billion per annum but $50 billion. Currently, funding flows are drying up and more and more African states are facing debt crises.

So we are led to a clash of realities: The reality of what seems financially sustainable given existing commercial and fiscal arrangements. The reality of what has actually happened over the last ten years and has been preached for the last twenty. And the reality of what our best estimates tell us is necessary for the future. And there is one further uncomfortable reality: Measured against the $ 4 trillion per annum benchmark, the only country that over the last decade has come anywhere close to spending, lending and investing on the required scale is CCP-led China. These spending figures from Bloomberg for the energy transition in 2022 bear repeating over and over again.

Not just in 2022 but over the last decade, China’s domestic and One Belt One Road investments are at least in the ball park of what is needed going forward. Europe and the US, both in their domestic and international programs, have fallen short of what is needed judged by the $4 trillion-per-annum-standard.

***

This, to be clear, is anything but a revolutionary vision. The “Big Push” the COP team have in mind is limited and conventional. A vision of sustainability delivered through over $120 trillion in investment over a generation, is no more and no less than a “greener” version of our current trajectory. It does not promise a balance achieved through reductions in demand, or minimizing our footprint on the planet. This is a growth-orientated, resource-intensive vision. It will entail new forms of extraction. It says nothing about exploitation or unequal trade.

Yet this vision should still command our attention because it is the most coherent overall estimation produced from within the global power elite, of what would be necessary to produce some semblance of sustainability within the existing status quo. And, as such, it is a hostage given to fortune. Unlike other, more radical visions this, perhaps, is a callable promise. Its authors certainly recognize its urgency.

We are, Songwe, Stern et al acknowledge at:

“A decisive moment in world history. Humanity is at a crossroads – a moment of great risk and great opportunity. One path leads to attractive growth and development; the other to great difficulties and indeed destruction.” “Our world is in peril: the climate crisis is accelerating. Current action is too weak and too slow; to delay is dangerous. … As shown by each successive report from the Intergovernmental Panel on Climate Change, climate change is occurring at a faster pace than previously anticipated, the impacts and damage are greater than foreseen, and the time for remedial action is rapidly narrowing. Emissions are still rising and tipping points getting closer. What happens in this decade is decisive for the world.”

The least we can say is that we stand open-eyed before this reality.

***

Thank you for reading Chartbook Newsletter. It is rewarding to write. I love sending it out for free to readers around the world. But it takes a lot of work. What sustains the effort are voluntary subscriptions from paying supporters. If you are enjoying the newsletter and would like to join the group of supporters click below. As a token of appreciation you will receive the full Top Links emails several times per week.

Carbon Note 2: The “Western” energy transitions – narcissism of small differences.

Did Putin’s war on Ukraine and the ensuing energy crisis lead to a retreat from the energy transition in Europe? Did Russian aggression expose the vanity of green ideology? Was a war what we needed to relearn the “basic math” that modern societies cannot do without some combination of fossil fuels and nuclear? This was the contention of pieces in Foreign Policy over the last 12 months notably by Brenda Shaffer and Ted Nordhaus. Since I share the pages with these authors I decided to write a rebuttal.

As the evidence clearly shows, the idea that Europe was falling back in love with fossil fuels is, in fact, very wide of the mark.

Though some coal-fired power stations were reopened and Europe imported more coal, these were precautionary measures. Though coal consumption blipped up for a few months it did not break the downward trend of recent years.

Source: Lauri Myllyvirta

Renewable investment surged to record levels. In solar Europe is now installing twice its previous record set a decade ago.

Rather than offering a dose of clear-thinking and realism what the critics of European energy policy in the pages of Foreign Policy reveal are their own political preferences, which revolve around a critique of a certain kind of environmentalism and a commitment both to fossil fuels and atomic power. That is fair enough. In commentary all of us blend opinion, judgement and fact. But one has to ask what purpose and whose interests are served by this kind of critique. To me it smacks of the fossil-fuel scare-mongering and rear-guardism that we saw around the “greenflation”-scare of 2021 – what I then dubbed a “climate kalecki” moment.

Independently of the position they advocate, it is worth noting whether a commentator is able to make their political worldview engage with substantial trends in reality, rather than “will of the wisps”, like the supposed return to coal. And regardless of its empirical grip a line of commentary really demands our attention if it has influence in the domain of policy in the broadest sense, whether in the public or private sector.

In this regard a more interesting take on Europe from the American sides comes from the axis that runs from the folks in the White House who drafted the March 10 communique of the von der Leyen – Biden meeting, by way of Todd Tucker, impresario of industrial policy at the Roosevelt Institute, to Yakov Feygin of Berggruen Institute and the Building a Ruin newsletter. These observers also operate in the register of realism, but theirs is a more sophisticated take on European-American relations, both with regard to energy policy and history.

Feygin has been writing in a very interesting vein about the American developmental state. Most recently he penned a blistering account of his generation’s disillusionment with the “good Europe”. Writing about a recent trans-Atlantic meeting, Feygin observes:

Quite bluntly, between the IRA bashing that is really an avatar for internal squabbles, never once did (his European interlocutors register, AT) … that the EU has a serious image problem in the United States. And that image problem is not with the traditional Republican opponents of the EU but with a newly energized left-liberal arm of the Democratic Party that sees the EU as a neoliberal obstacle to radical action and a dinosaur that still believes history is over.

Like it or not, I recommend it as reading to anyone on the European side wanting to get a sense of the range of American opinion right now.

Moving to the very heart of the industrial policy crowd in Washington right now, Todd Tucker’s twitter feed offers a rich running commentary both on the technical aspects, the politics and atmosphere of trans-Atlantic climate and industrial diplomacy. Tucker writes from an engaged and unapologetically national point of view, but with a view to communicating clearly with Europe about differences and finding ways to square the circle. He is interested in constructive influence in Europe, with an important recent essay on trade policy being translated into French and Spanish by way of Grand Continent the highly influential Paris-based geopolitical think tank (in English here).

Tucker in turn is close to the folks in the White House who have been working for months to make the best of the global kerfuffle unleashed by America’s chip wars and the Inflation Reduction Act. Though (or perhaps because) the Inflation Reduction Act was not crafted by the administration, but was made in Congress, it has stirred up relations with Korea, Japan and Europe. The Biden team have been working overtime to turn that to the advantage of American grand strategy. The fruits of those diplomatic labors include in the last moth, the deal with Japan on strategic materials and the joint statement issued from the von der Leyen-Biden meeting of March 10th. Its key points include

•EU-US to begin negotiations on a targeted critical minerals agreement, also possibly a work around on IRA.

•Clean Energy Incentives Dialogue to coordinate respective incentive programs so that they are mutually reinforcing i.e. “do our best to avoid further nastiness over IRA and CBAM”. 

•The Clean Energy Incentives Dialogue will become a part of the EU-U.S. Trade and Technology Council where it will also facilitate information-sharing on non-market policies and practices of third parties i.e. China.

•Global Arrangement on Sustainable Steel and Aluminum first touted at COP26 in Glasgow in 2021 to be concluded by October 2023, before the current trade truce expires, also targeted at China.

•G7 Partnership for Global Infrastructure and Investment (PGII), an idea first launched back in 2021 that is now to be given some juice – counter to China’s BRI.

•Agenda to evolve the multilateral development banks, starting with the World Bank with the change of leadership pending and climate and debt relief high on the agenda – ditto with regard to BRI.

Signed off on by the European Commission, this memo figures Europe and the US as loyal partners in a cooperative move towards energy transition with the clear purpose of confronting, competing and containing Chinese influence. The document offers an admirably clear and comprehensive sketch of how Europe fits into the Biden administration’s strategy with regard to industrial policy (foreign policy for the middle class i.e. jobs for working class Americans), climate and China.

Questions of realism arise here with regard to America’s own commitment to such a vision. Can the world’s largest fossil fuel producer really be a credible partner in the energy transition? And also with the willingness of either Europe or the USA to go to the necessary scale on global development. Over five years the PGII aims to mobilize $600 billion, of which $200 billion is America. This, as everyone involved must realize, is a tiny fraction of what emerging markets and low-income countries need in terms of investment. Estimates presented to COP27 suggested the need for an additional $1 trillion per annum for low income and emerging market investment. In light of this huge gap, one has to ask whether the US-EU vision is a serious answer either to China or the the urgencies of the moment, or just another pleasant-sounding but ultimately ineffectual squib, of which the new era of “development finance” has already produced so many.

Finally there is the question of where Europe actually stands. The question posed in more or less subtle and telling ways by all the American commentators. Von der Leyen’s diplomacy in Washington in March, met with far from universal applause in Europe. In Paris recently I heard notably skeptical tones. Pascal Lamy a close confidant of Macron is arguing for a more aggressive stance against the United States. As Lamy puts it:

The second option is to rebuild with several countries a North–South coalition promoting open trade while respecting various collective preferences, the most common of which is now environmental protection. Such a coalition would start from what already exists, but without the Americans, hoping to create a disadvantage for them that would make them change their position. This is the strategy that I would prefer.

Certainly Macron’s visit to China suggests that Paris does not want to be corralled. Chancellor Scholz made the same thing clear on his visit to Beijing. And the commission’s target for self-sufficiency in the recently launched Net Zero Industry Act is 40 percent, a long way short of the made in America line laid out by the IRA.

Meanwhile, for all huffing and puffing about the Inflation Reduction Act, there is on the European side a deep sense of political paralysis, which I address in an FT op-ed today. Getting to the Inflation Reduction Act may have been a nightmarish process for all involved in Washington, but at least it was a political bargain within the Democratic Party majority. Europe right now is shrinking from any major political debate. France and Germany both have domestic “issues” and their bilateral relations are fraught, notably on the energy issues, particularly around nuclear. Neither Paris nor Berlin seem to have the stomach for the kind of grand bargain that in 2020 turned the COVID crisis into the great leap forward of NexGenEu. And yet Europe needs to summon the political energy, because though it is silly to suggest that it is retreating to coal and abandoning the energy transition it is also clear, that, like the United States, it is still not moving fast or comprehensively enough.

***

To see what I mean check out the handy benchmarking exercise being run by Deutsche Welle and European Data Journalism Network.

In the wake of the COVID-rebound, Europe is on track to continue cutting its emissions, but it is currently falling far short of its 2030 targets.

On power generation it is now ahead of the curve on solar, but still lagging behind the projected targets for wind power-generation. But even more serious is the deficit when it comes to domestic heating. On heat pumps it is currently on track to fall 50 percent short by 2030.

EV now make up 18 percent of new cars registered in the EU. A German effort to derail the phasing out of new internal combustion engined cars has been contained. But the share of EV needs to leap in coming years, which will require a huge investment in charging and green power supply.

On agriculture, the fifth key element of the energy transition – along with power, industry, transport and buildings – Europe has made next to no progress.

****

The acceleration in 2022 was real and significant, but it is not enough. What would a truly large-scale investment push look like? Look no further than the more or less hidden referent of the entire European-American discussion, China.

To put the following in perspective let us start with the generally agreed fact that China’s GDP in current dollar terms is roughly the same size as that of the EU and considerably smaller than that of the US. In per capita terms it is much lower than either of its Western competitors. And yet, according to data compiled by BloombergNEF, China’s investment in the energy transition in 2022 was 70 percent greater than that of the US and the EU combined.

China’s dominance in upstream investment – in the facilities that produce batteries, PV and EV – was even more dramatic. In 2022, China accounted for 90 percent of investment in the factories that will make the equipment and components necessary for the energy transition worldwide. In the last five years, China’s share in this upstream investment has only once dipped below 75 percent.

Now there may be quibbles with both the Bloomberg data and the GDP numbers. And the full effects of Europe’s programs and the IRA are yet to make themselves felt. But even the largest estimates of the IRA’s cumulative impact over ten years – $1.2 trillion in public support plus $3 trillion private – on top of what the United States is already spending, will do no more than match China’s current effort, on a much smaller gdp per capita. And, all analysts agree, that if China is to meet its decarbonization objectives – the current trend in its emissions is a matter of some dispute – it spending will have to ramp up considerably.

In short, we are all having a problem of realism.

***

The energy transition is gathering momentum in the US and Europe. It is driven at this point by hard technological facts, security concerns and commercial calculation, as much as vision or ideology (which btw are normal parts of any investment decision). Putin’s war is, if anything, accelerating the shift. Carping from both sides should not distract us from these realities.

But neither \should the narcissism of small differences in the West blind us to the bigger picture. There is a huge gap between China, Europe and the US in terms of the current pace of investment. The difference in upstream investment means that for all the announcements triggered by the IRA, 2022 was a year in which that gap between China and the West widened, rather than closing. The idea of a Western green alliance remains on paper and untested under serious strain. Its impact on the overall pace of the energy transition is uncertain and will depend amongst other things on China’s reaction. If they end the export of PV manufacturing equipment, for example, it could have a disastrous impact on the pace of investment in the West. And, on all sides, there is a gulf between rhetoric and the emissions reductions, which as far as climate stabilization is concerned, are the only things that count.

***

Thank you for reading Chartbook Newsletter. It is rewarding to write. I love sending it out for free to readers around the world. But it takes a lot of work. What sustains the effort are voluntary subscriptions from paying supporters. If you are enjoying the newsletter and would like to join the group of supporters click below. As a token of appreciation you wil receive the full Top Links emails several times per week.

EU green policy must bring the population with it

The commission’s industrial policy debate has been singularly lacking in bottom-up public participation

Read the full article at The Financial Times.

Ones & Tooze: The Economics of South Africa Since Apartheid

This week on the show, Adam and Cameron discuss the economy of South Africa, which has come a long way since the end of apartheid in 1990. South Africa is now number 36 on the list of countries ranked according to GDP. But deep economic inequalities persist, as a legacy of the apartheid era.

Find more episodes and subscribe at Foreign Policy.

Europe’s Energy Crisis That Isn’t

American critics chastise Europeans’ rejection of fossil fuels. But Europe is winning the bet.

Russian President Vladimir Putin’s war on Ukraine has led to a reassertion of national security concerns in every facet of Western countries’ policy. The most obvious aspect is military security, with the United States and the Europeans ramping up ammunition production and wrangling over tank deliveries. But as far as Europe is concerned, the even more urgent priority is energy security. As Russia’s natural gas supplies were cut off and prices surged to record levels, European governments have spent more on subsidizing the energy bills of their populations, stockpiling gas, and bailing out bankrupt energy companies than they have either on their militaries or on supporting Ukraine.

The emergency energy programs were short-term expedients. The urgent question now is which direction long-term energy security is to be found.

The crisis struck Europe in the midst of an accelerated energy transition away from fossil fuels, one driven by climate concerns and a program of green industrial policy. Since 2020, Europe has been doubling down on green energy policy, with the Next Generation EU investment program, the Fit for 55 energy transition framework, rising carbon emissions pricing, and a flood of national programs. Britain recently celebrated a day without any use of coal. Spain celebrated a day entirely on solar and wind. European utilities are driving sectors such as offshore wind. Costs for clean energy were falling, in part due to the parallel efforts being made by China in the cheap mass manufacture of solar panels. The European car industry was setting a course for electrification by the mid-2030s. European car producers and engineering companies saw not risk but huge opportunities in China, which is the dominant global force in electric vehicles.

Moscow’s aggression, on top of deteriorating relations between Washington and Beijing, has troubled this outlook. Indeed, some hawkish voices in the United States have gone so far as to suggest that the new geopolitical configuration puts the entire European vision of energy transition in question. They argue that the basic math in favor of fossil fuels is now triumphing over green ideology. History has pronounced its judgment against Europe’s naive and unrealistic ambitions for the renewable energy transition and in favor of fossil fuels as a key element of Western grand strategy and nuclear power as a carbon-neutral power source.

Read the full article at Foreign Policy.