Kathryn Hochstetler’s new book offers an interesting comparison of the struggle around transition to cleaner energy in two large emerging markets. The book correctly notes that the main focus of the existing literature around energy transition is focused on Western countries. The reason is straightforward, those are the economies, primarily in the European Union (EU), where transition has been promoted. There are a wide variety of possible reasons behind why uneven transition in the EU has taken place, from fossil fuel import dependency, writ large through the current Russian gas crisis, to proportional representation voting systems, to more widespread and vociferous green (“postmaterialist”) values.
Hochstetler claims in her introduction (p. 2) that transition challenges are more challenging in the Global South because of the greater importance of economic growth. She suggests that there is a possible pathway that allows for growth and reducing emissions in “middle-income and developing” countries. She touches here on the idea of “green growth,” that transition can bring new manufacturing jobs and reduce energy costs, among other benefits. So far, that has not proven the case. In fact, one can argue that the window for entering such technologically sophisticated industries may be narrowing for new entrants. China has been aggressive in its green industrial policy, including rising market shares of global wind, solar, and battery manufacture. More fundamentally, as the author acknowledges, renewable energy is still more costly than fossil fuels, and “carbon lock in” including sunk and paid off capital and infrastructure exacerbates the gap.
Hochstetler’s main question gets to the heart of political economy, namely “who will pay the costs and receive the benefits of the transition?” (p. 4). She proceeds to answer this question by documenting government commitments, examining industrial policy, looking at the potential for renewable energy to meet electricity needs, and siting decisions. The logic behind selecting these particular variables is unclear. The proposed overall framework is familiar to political economists, including as it does policy coordination; interest group coalitions; path dependency from institutional and socioeconomic legacies; and costs and benefits upon different actors. However, these factors are stated as context, rather than integrated into a more rigorous application to the cases. Thus, the book fails to provide an overall framework that could be applied to developing countries more generally.
An equal challenge is to understand how the case selection fits the research design. Beyond their obvious importance as stand-alone cases, Hochstetler notes their similarities, such as recent authoritarian transitions and ethnically mixed-race societies combined with severe economic inequality. As middle-income countries, she states, they have “characteristics of both developed and developing countries” (p. 21). While there is evident merit behind the cases, more development of the logic and framework of analysis would have improved the research design and potentially the ability to apply it more broadly across time and space.
Hochstetler’s painstaking analysis of the cases proceeds along classic comparative political economy lines. In examining state capacity, she concentrates on each state’s ability to meet their climate commitments. In both cases, the electricity monopoly played a crucial role in the rate of progress. Her claim that action on climate in South Africa is reflected by an increase in government white papers is unconvincing, however nongovernmental organizations and emerging parts of the private sector clearly became more active over time. She concludes that Eskom, the electricity monopoly, successfully resisted change. Brazil’s case is a juxtaposition in the sense that its electricity sector is dominated by hydropower. Thus, the comparison seems counterintuitive, and Hochstetler acknowledges Brazil’s growing emissions problems in terms of its development as an offshore oil powerhouse that further strains the comparison.
The overall challenge that emerges is between renewable energy and incumbent systems, whether based on fossil fuels or hydro. Hochstetler’s most illuminating comparative lesson comes from examining Green Industrial Policy. In Brazil, the national development bank (BNDES) offered a consistent source of financing that has allowed wind and solar manufacturing to gain a toehold, though installation is much larger. This was balanced by competitive electricity markets with limited feed-in-tariffs (higher prices for renewable electricity producers). South Africa followed a private sector-led path, with independent power producers supposed to lead the way. The end results were far under potential in terms of local job creation and installations, according to the author. Essentially Eskom resisted implementation of a more vigorous industrial policy for renewables in favour of nuclear, leading to half-hearted efforts based more on rent-seeking than building out new sectors.
In the last two substantive chapters, Hochstetler examines attempts to achieve universal distribution and levels of community support for wind and solar. The two are tied closely in the sense that failure to achieve universal access has led to widespread solar adoption throughout the Global South. Her decision to focus on utility scale solar and wind misses this important unfolding story. Brazil has achieved almost universal access while South Africans have an estimated 86% basic access (p. 140).
In the question of expanding distribution, not only financing additional infrastructure but also charging differential prices to different types of customers comes into question. South Africa, similar to many countries in the Global South, suffers from a proliferation of mini off-grids and backup power for the wealthy and theft by lower-income consumers, thus creating financial instability for Eskom. The instability reflects a lack of clear objective data, an inability of Eskom to collect arrears, and a general situation of contestation over policy, all of which prevent Eskom from creating rational financial plans (p. 157). In Brazil, the PT (Workers’ Party) government that took over in 2003 naturally made electricity access a priority. Using subsidies, the “Light for All” program achieved success. Hochstetler here alludes again to the technocratic capabilities of the Brazilian bureaucracy, which appear to have much more insulation than their South African counterparts. Using feed-in-tariffs (FITs) and other subsidies, the state has been able to expand wind and solar capacity as generation prices have declined. The ability to manage these subsidies without them falling apart due to rent-seeking à la South Africa, and to link them to some real cost basis, is a remarkable contrast brought out by the volume.
Both countries have blocked the development of community-owned installations that might be a pathway for off-grid communities (p. 178). Here Hochstetler cites the lack of distribution of revenues from FITs and auctions to local communities for solar or wind in contrast to hydropower (p. 189). In addition, licensing for wind and solar is done at the state level in Brazil, with the expected inconsistencies in regulations. The challenge is even greater in South Africa, where long-ranging EIAs are required. Community resistance to wind-power sites is significant in both countries but minimal for solar (p. 218).
The author notes but does not explore the energy revolution that is beginning to happen in much of the South around solar energy, which is modular and thus, even with the cost gap, can fill in where the grid does not reach and/or is unreliable. Nonetheless, Hochstetler’s work provides important and rich case studies of two major developing countries’ struggles with the green transition. While lacking a rigorous analytical framework, the lessons around state capacity, sectoral power and organization, consistent financing, and community participation resonate with other studies in the political economy of development.
