How a just transition can speed up the race to net-zero

Published on November 17, 2020

If there is one thing that the brutality of the COVID-19 pandemic has taught us, it’s the importance of shared endeavour in the face of a disruptive shock. The same is true for the existential threat of climate change, whose physical impacts are already disrupting lives and livelihoods across the world, spurring countries, companies and communities to step up the race to net-zero

Long championed by the trade union movement, the just transition is now also becoming a shared endeavour. Five years ago, the Paris Agreement recognised the imperative of placing the interests of workers and communities centre-stage so that decarbonisation brings decent work and quality jobs. All the evidence suggests that the creation of the net-zero economy offers huge potential to create both more and better jobs, thereby contributing to ending the poverty and inequality that hold back the global economy.

Looking at energy, for example, the sector employed almost 58 million people worldwide in 2017. According to IRENA, this could rise to 100 million under its Transforming Energy Scenario, which would set the energy system on the path needed to keep the rise in global temperatures to well below 2°C and closer to 1.5°C during this century. This generates 15% more jobs than IRENA’s conventional Planned Energy scenario, led by renewables, energy efficiency as well as power grids and energy flexibility. This shift is already underway with renewable energy jobs growing by 500,000 to 11.5 million in 2019.

This expansion in employment, achieved in ways that provide fair incomes for workers and better prospects for communities, will not happen automatically, however. Too often, the climate agenda has been socially blind, introducing policy interventions with little regard for the impacts on employment, or indeed on consumers. As one of the gilets jaunes protesters in France memorably remarked, “You care about the end of the world; we care about the end of the month”.

That is why the just transition is rising to the top of the agenda as the connective tissue that binds together climate goals with social outcomes.

First of all, it is simply the right thing to do, making sure that longstanding human rights are realised in the transition, not least the right to participate in decision-making in the workplace. Second, a just transition is essential to build the political support for the changes that are needed, overcoming the understandable anxiety of those who fear that they could lose out. Workers in high-carbon sectors tend to support green policies when they believe that credible alternatives exist. This was confirmed this year in a survey of oil and gas workers in the UK, where over 80% said they would consider moving to a job outside the sector. Given the option of retraining to work elsewhere in the energy sector, more than half said they would be interested in renewables. As one worker put it: “moving into renewables is something to feel good about.”

COVID-19 is intensifying the importance of translating the just transition into a practical reality for the global energy system. Global coal production peaked two years before the Paris Agreement and 2019 looks set to be the peak for oil production. This year, oil corporations have made historic writedowns as they realise the looming risk of ‘stranded assets’ on the road to net-zero. Sharan Burrow, General Secretary of the International Trade Union Confederation (ITUC), has said that it is essential that this economic restructuring does not result in ‘stranded workers’ and ‘stranded communities’.

The key ingredients of what makes for a just transition are well established: social dialogue in the workplace, along with respect for labour standards and human rights, economy-wide skills development and retraining, buttressed by social protection and safety nets. As many of the core high-carbon sectors are clustered in specific places, community renewal and regional development are crucial, along with macroeconomic strategy to connect the just transition with key climate policy levers (such as carbon pricing). In addition, a special focus needs to be placed on small and medium-sized enterprises, both along supply chains and in regional economies.

Turning the just transition into everyday reality is clearly a tough challenge. Even before COVID-19, the global economy was marked by a set of ‘decent work deficits’ that confront the 3.7 billion people who are either employed or could be in a job. But there are growing examples of leaders across government, business and society demonstrating how this challenge can be met.

In the European Union, Commission President Ursula von der Leyen has placed the just transition at the heart of its Green Deal, introducing a dedicated funding mechanism, stating that “the transformation ahead of us is unprecedented. And it will only work if it is just – and if it works for all”.

In South Africa, President Cyril Ramaphosa has committed to draw up a just transition plan backed with a just transition fund so that measures are in place for “workforce reskilling and job absorption, social protection and livelihood creation, incentivising new green sectors, [and] diversifying coal dependent regional economies”.

And in the USA, President-Elect Joe Biden has made seizing the opportunity of net-zero emissions central to his Build Back Better plan, with the intention to create “millions of good-paying jobs that provide workers with the choice to join a union and bargain collectively”.

In business, energy utilities across Europe are signing up to a just transition pledge and a new guide has been released in the US showing how companies can incorporate the just transition into their renewable energy procurement. Investors too are starting to integrate the just transition into their climate activities. Bringing together more than 500 global investors with over US$47 trillion in assets, Climate Action 100+ has included the just transition as one of the eight areas in its Net Zero Carbon Benchmark. Development finance institutions such as the European Bank for Reconstruction and Development and CDC are also coming forward with new initiatives.

These efforts of course are only the beginning and will eventually need to cover all parts of the global economy. This includes the agricultural sector – which makes up a quarter of global employment – so that the promise of nature-based solutions also generates inclusive outcomes. As the world heads towards COP26, the just transition will need to be part of every government’s COVID recovery plan as well as their nationally-determined contributions and long-term climate strategies. It needs to be part of every business plan and every finance strategy from banks and investors. If net-zero is the ‘what’, then the just transition is the ‘how’.

This commentary is based on a piece published by Race to Zero on 27 October 2020.