Case Study Program on Public Policy Development Analysis

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FORMATIVE ASSESSMENT 1                                                                                                 [100MARKS]

Read the article below and answer ALL the questions.

DIRTY TRUTH BEHIND SA’s COAL DEPENDENCE

Associate professor of Economics and Econometrics Sam Ashman usefully shapes a broad understanding of how collaboration between the state and mining companies historically entrenched mining, especially coal.

To inform practical policies today, we need a more detailed understanding of the costs, risks and benefits of the minerals- energy complex for different socioeconomic groups. Even more, we need to analyse the public and private sector systems that secure its reproduction. Policy also originates from different sources. And often the sources may be from different role- players. Only then can we develop effective interventions to change direction. Consider also, the possibility of unintended consequences that the complex policy mix may have on the socio-economic architecture of the country.

Cost versus benefit

This is the thorniest kind of economic policy, where the benefits of change – in this case, a shift to cleaner energy and development of more equitable, labour-intensive industries – are huge but widely spread and often intangible, while the costs are visible and concentrated.

Already, for most South Africans, the costs of coal outweigh the benefits. Those costs take the form of increasingly intense droughts and floods, the risk of tariffs on South African exports, and the escalating cost and unreliability of coal-fuelled electricity.

Households and businesses that can afford it are fleeing to renewable generation, which promises lower costs and fewer interruptions than Eskom’s coal-based supply.

Improving the competitiveness of the national electricity supply can go a long way towards supporting small businesses, creating more employment and more dynamic industrialization.

But the transition away from coal will also come with costs. Most obviously, the new energy systems require large upfront investments in transmission and grid management, as well as generation.

Like any shift to a more productive technology, the transition also entails a loss of capital and livelihoods in now obsolete processes.

The costs of the transition have so far been higher than needed because government systems have long been skewed to favor coal use. This is a problem of both the structures of the state and its specific decision-making systems.

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Disjointed perspectives

Government oversight over the coal value chain is fragmented between a dozen departments, the provinces of Mpumalanga and Limpopo, Mpumalanga’s coal towns and several state-owned enterprises. Of these, only the environmental affairs department has an explicit mandate to promote clean energy, and it has no direct authority over the pricing and use of coal.

This disjointed system inevitably leads to rifts between state agencies. Most notably, the mineral resources and energy department insists that South Africa cannot afford to write off its coal reserves and that they are irreplaceable as a baseload for the national grid.

Other government institutions generally see the phasing out of coal as unavoidable, given its loss of competitiveness and growing unreliability, as well as the escalating cost of emissions for the whole economy.

A few examples illustrate the problem: When the energy department makes decisions on the national electricity supply, it does not have to show how they align with national emissions targets. Nor does the department have to publish evidence on the costs and benefits of different options for businesses and households.

Ignoring national imperatives

An effective policy to diversify away from coal must start with clarity around its governance. The first step would be to translate national targets for reducing emissions and improving economic equality into consistent mandates and performance indicators for all the relevant state agencies.

In the longer term, restructuring should ensure that the responsibilities for transformation are aligned with authority and resources. More fundamentally, South Africans need to understand both the benefits and costs of depending on mining, particularly that of coal.

Too often, decision-making systems in both the in the private sector and government encourage officials to avoid the risks of innovation and ignore the costs of promoting capital-intensive minerals and energy activities rather than more labour- intensive and innovative industries. Some argue that this is a glowing example of government failure since the ultimate price is that the soaring costs of emissions are criminally undervalued as the climate crisis intensifies immeasurably.

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QUESTION 1                                                                                                                                      (25 Marks)

Policies often prove to have unintended consequences; a policy may be effective in one arena (e.g. the continued reliance on coal-powered energy generation) but it yields undesirable consequences in another arenas. Often, unintended consequences of policy are regarded as a measure of “government failure”.

Elaborate on the above narrative and conduct a concise analysis of the possible effects and impacts that a policy, which entrenches some measure of dependence on coal as primary energy source has for electrical power generation in South Africa. Indicate if you regard the unintended consequences as a measure of government failure. Your answer should present appropriate context-focused examples to support your arguments.

QUESTION 2                                                                                                                                  (25 Marks)

It is often stated that government policy originates from party political policy (as typically presented in a political party’s manifesto), which is translated into government policy once a party becomes the government. Of course, moving from politicking to developing such a policy into an implementable and effective governance policy may be challenging. However, in addition hereto, policy may also originate from other sources. Elaborate on the above statement and discuss ten (10) possible origins of policy. Support your answer with appropriate examples and refer to the above article for contextual examples.

QUESTION 3                                                                                                                                  (25 Marks)

In understanding implementation as a complex political process, rather than a mechanically administrative one, the study of implementation becomes an attempt to unravel the complexity of following policy as it travels through a complex and dynamic maze of implementation; to understand how it changes its surroundings and how it has changed itself in the process; most importantly, also to see how it can be influenced to better accomplish the goals it set out to achieve. Consequently, five such variables (the 5C protocol) emerge which are important causal factors. Each of the five variables is linked to, and influenced by, the others – though, to varying extents depending on the specific implementation situation. Critically apply the 5C protocol on policy implementation on the Government and Eskom’s policy of retaining coal-powered power generation.

 

QUESTION 4                                                                                                                                  (25 Marks)

Contemporary society, living in a global context and with access to information about every conceivable phenomenon requires government to approach policy formulation in a multi-disciplinary manner. Elaborate on the following five (5) aspects that policy makers should pay attention to when a policy on coal-powered energy generation is considered.

1. Sociological implications;
2. Technological requirements;
3. Psychological factors that may result from the policy;
4. Physical demands and implications (e.g. environmental impacts etc.); and
5. Economic effects of the policy.