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Egypt and COP27: Soaring fossil fuel profits plus climate neglect equal catastrophe

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Graphic: Wade Geduldt/African News Agency (ANA) – There has never been a time in history during which so much money is being made from a planetary-scale crisis: firms emitting carbon dioxide and methane, the writers say.

By Patrick Bond and Desmond D’Sa

There has never been a time in history – even the darkest days of World War II – during which so much money is being made from a planetary-scale crisis: firms emitting carbon dioxide and methane. The half-hearted delegates to the annual United Nations climate summits are to blame, including those from Pretoria – but mostly the West and their allies in other high-emitting middle-income economies.

Even US weapon manufacturers during World War II did not achieve the current fossil fuel corporations’ extraordinary takings. In 2021, Saudi Aramco declared $105 billion profit (on revenues of $400 billion), which was 114 percent higher than in 2020. Next was Russia’s Gazprom with $28 billion. And this was well before Vladimir Putin’s invasion of Ukraine in February.

This year, with the Brent Crude oil price moving from a pre-invasion level below $80/barrel to a peak of $126 in May, and with the Oil Producing Exporting Countries (Opec) meeting last week to raise the price from the current $93 to above $100 by cutting output, the rewards are even more obscene.

Several Western oil firms led by ExxonMobil are anticipating profits in the $50-$70 billion range.

We are fortunate that in South Africa, Shell/BP (Sapref), Engen and Glencore have fallen foul of legislation raising clean air standards and have shut their oil refineries in South Durban and Cape Town.

But coal companies are still digging away in KwaZulu-Natal, Mpumalanga and Limpopo, as the price of the dirtiest fuel has risen by a factor of ten from its low point of $40/tonne in April 2020.

And on the gas front, PetroSA is essentially bankrupt, having closed its offshore-gas refinery in Mossel Bay due to a lack of feedstock.

But the next largest local oil firm – Johnny Copelyn’s HCI subsidiary Impact Africa, allied with Shell and Total – made a gas discovery that doubled its Johannesburg Stock Exchange price this year, despite losing a major court battle for its offshore methane gas exploration last month.

Yet all these profits come at the expense of 500 dead in KwaZulu-Natal’s April 11 rain bomb, ongoing droughts, heat waves and forest fires raging across the US, Europe and China in June to August, a third of Pakistan flooded last month, not to mention Florida’s hurricane damages in excess of $70 billion last week – all of which is attributable to the climate crisis.

Next month, the United Nations Climate Summit – the Conference of the Parties 27 – will do nothing to reverse this process, or to comply with a half-dozen demands made by activists from the climate justice tradition over the past two decades:

These demands won’t be met mainly because of an unholy alliance between Western polluters and China, India, Brazil and South Africa, starting in 2009 when at the 15 th UNFCCC summit, Barack Obama famously barged into a room where the ‘BASIC’ countries’ leaders were meeting: Lula da Silva (soon to win Brazil’s presidency again), Jacob Zuma, Manmohan Singh and Wen Jiabao.

Obama tabled the brief ‘Copenhagen Accord’ and it was then imposed on the rest of the United Nations, setting the tone for future ‘bottom-up’ UN deals. As activist Bill McKibben explained, it was a league of super-polluters and would-be super polluters who ‘blew up the UN’ and ‘gutted progressive values’.

One crucial weakness in the Copenhagen Accord, the 2011 Durban Platform and the 2015 Paris treaty, is unaccountability.

Donald Trump walked out of the UNFCCC in June 2017, with no punishment of the US (e.g. trade sanctions) in spite of calls to do so from voices as diverse as climate justice strategist Naomi Klein and former French president Nicolas Sarkozy.

The hypocritical European Union is, however, imposing climate sanctions in coming years via a Carbon Border Adjustment Mechanism, which will hit South Africa especially hard. But perhaps this is the medicine required since that threat worries the local Minerals Energy Complex more than any other.

There is, however, a decarbonisation cash carrot, instead: the much-celebrated finance deal that Eskom arranged with the US, UK, Germany and France at the 2021 Glasgow UN summit.

Western agencies would lend South Africa $8.5 billion in additional funds, i.e. as debt imposed on future generations, to shutter coal-fired power plants early.

But while the new financing will go in part to convert some power plants from coal-to-renewable energy, an anticipated 44 percent would also fund coal-to-methane if Eskom CEO Andre de Ruyter has his way, thus increasing reliance upon imports from the war-riddled Mozambique “Blood Methane” gas fields next door.

And what the lenders require most is repayment of what many labels Eskom’s “Odious Debt”: the 2010s loans of $24 billion weighing down the power utility, which was mainly contracted to pay for the two largest coal-fired power plants under construction in the world (Medupi and Kusile). Even setting aside the climate implications, the plants’ main contractor, Hitachi, had blatantly corrupted the African National Congress via Chancellor House, a fact well known to a variety of Western and BRICS lenders, led by the World Bank with its largest-ever project loan, of $3.75 billion.

Activists and their allies will keep making the case – in the streets, on the beaches and in courtrooms – that a serious strategy is needed. That means not repaying the World Bank for Medupi, not taking on new fossil liabilities (Eskom’s methane gas plans) via “Just Energy Transition” financing, and if necessary, advocating for climate sanctions against local polluters.

Patrick Bond teaches sociology at the University of Johannesburg, and Des D’Sa is the co-ordinator of the South Durban Community Environmental Alliance.

This article is original to the The African. To republish, see terms and conditions.