Transitions in the Global South share many aspects with similar processes in developed countries. However, there are a number of important asymmetries which disproportionally affect the Global South, and will alter the timescales and the nature of sustainability transitions in these countries.
One aspect, which has received a great deal of attention in the literature, is the more limited ability of developing countries to develop or absorb new technologies. The absorptive capacity depends to a large extent on the level of a country’s human resources, its scientific infrastructure and the level of innovation within its firms. Renewable energy technologies are no exception, and, although there have been some international efforts on improving technology transfer, there remain wide disparities in the adoption of new technologies.
A second aspect, which is the subject of this blog, is the question of resources for the financing of transitions, and particularly the goal of deep transition (DT). It is widely projected that meeting the commitments of the Paris Agreement and the goals of the United Nations Agenda 2030 will require a global annual investment of many trillions of dollars. Both private and public investment will be required to support the redirection of ‘development’ from linear, carbon-based and resource intensive expenditure to circular, renewable and sustainable programmes.
Almost by definition, investment financing to support DT is less available in the Global South and these countries have a greater need for transition, due to a historically higher dependence on fossil fuels. Financial markets in these countries were already highly constrained prior to COVID-19 and now face even higher levels of demand. Moreover, financing DT will require more than investment capital. It will also be essential to secure the re-allocation of operational budgets within government departments and agencies. There is already a need for new policies, training programmes, initiatives to support Just Transition, policy experiments, technological innovation and environmental projects. This new demand will grow as the challenges of transition are better understood and actioned.
Redirecting Public Sector Operational Expenditure
In this context of rising public debt and declining revenue, securing government expenditure in support of Deep Transition will be highly contested. In a recent article on the budget process in South Africa, it is argued that reallocation will require more than niche experimentation and destabilisation of the present socio-technical regime. Based on an exploratory study of budget processes and participants, it concludes that change will occur only when four separate pre-conditions converge, namely a rapidly growing societal or environmental problem capable of leading to widespread civil unrest, a supportive and recently developed policy framework, decreasing techno-economic costs for the solution of the problem, and strong political support from an effective ministry or minister.
Turning points for transition, although infrequent, can be reached through strategic attention to these pre-conditions. The article proposes the use of a modified Kingdon multiple streams approach, which introduces the additional dimension of techno-economic feasibility, as a useful framework for anticipating when and how to act in order to mobilise sufficient public resources for decarbonisation and transitions.
The use of techno-economics is controversial within the general field of energy studies. The technique is considered to be a calculative discourse that is self-fulfilling or performative. It can be used to justify a reluctance to change socio-technical systems (such as ‘circular economies will be too expensive’), to ignore environmental externalities and generally to override important societal or environmental consequences of planned investments. More broadly, economic modelling is a tool in the hands of neo-classical economists which is ignorant of ethics, values, evolutionary principles and politics.
However, in this article, it is shown that in South Africa at least, it is important to address a value-for-money question in the overall lobbying process for new public money, or the re-allocation of existing funds. The government faces multiple demands for expenditure on public programmes, and must actors such as National Treasury, whose support is highly important, emphasise the need to prioritise budget allocations using a value-for-money framework. These results strengthen the existing approaches to understanding and managing sustainability transitions, such as the multi-level perspective and the insights of historical intuitionalism. Their novel contribution lies in how these theoretical frameworks can be applied to support DT within the public sector, and particularly its operational rather than investment activities.
In summary, cost of transition will be an important consideration for all countries. In the Global South, and particularly South Africa, this issue will be more acute, given its smaller financial markets and heavy dependence on fossil fuels. Moving forward with DT with the use of public sector operational expenditure will require competing against many other interests, some of which are solidly entrenched within the present landscape and will be fiercely resistant to change. Overcoming these barriers will need the judicious pursuit of the mobilization of civil society (to place pressure on the Executive), engaging in politics within all three arms of government and a solid policy framework, all of which must be supported by strong techno-economic arguments.
Reference: Walwyn, D. R. (2020). Turning points for sustainability transitions: Institutional destabilization, public finance and the techno-economic dynamics of decarbonization in South Africa. Energy Research & Social Science, 70, 101