Understanding the policy principles for a 'just transition'
Corporates are switching from dirty power to renewables. Shoppers are ditching cow milk for almond, oat and soy alternatives. Drivers are flocking to electric cars in droves.
All these developments are good news for the planet, but they come with potentially bad news for many workers. Bad news for those in the energy industry who only know how to extract and burn coal, not how to fix a wind turbine. Bad news for food processors majoring on dairy and meat products, or farmers yet to switch to planet-friendly crops. Bad news for factory workers who are laboring to make the latest petrol and diesel cars, but remain untrained and unprepared for the switch to electric vehicle production.
For every step the global economy makes towards lower emissions and a safer future, workers in high carbon industries become more at risk of underemployment and redundancy. Ensuring that worker training moves in lockstep with the economy's low-carbon transition is therefore essential, not only for the livelihoods of those workers, but for keeping the social fabric of nations intact and ensuring political support for rapid decarbonization is maintained.
This challenge formed a central narrative at COP24 in December in Katowice. Pushed by the Polish presidency — concerned, rightly, about the fate of the nation's influential coal industry — and eerily echoed by a backdrop of riots in Paris initially sparked by opposition to new carbon taxes, nations at the U.N. climate summit promised (PDF) to do everything possible to "ensure a decent future for workers impacted by the transition while working to ensure sustainable development and community renewal." The Silesia Declaration stressed the "just transition of the workforce and the creation of decent work and quality jobs are crucial to ensure an effective and inclusive transition to low greenhouse gas emission and climate resilient development."
But what do these high level declarations actually mean in practice? What will it take for countries to really deliver on the ground, to transform the foundations of their economy without causing mass unemployment and civil unrest?
Scotland recently launched a Just Transition Commission to explore the question and the promise of multi-billion Euro investments in coal-dependent regions as part of Germany's coal phaseout suggests some governments are starting to flesh out "just transition" policies. But for many policymakers and business leaders, the concept remains surprisingly remarkably vague given its critical importance.
However, a new policy briefing paper released by Climate Strategies, based on a COP24 event hosted by the nonprofit alongside the Polish presidency and the International Labor Organization (ILO), seeks to provide some clarity on how a credible just transition plan might look.
While the United Nations is an effective forum to trade information and strategies, it is not the best point in the global governance chain to drive the just transition, the paper stresses. Instead, national governments should take the lead, placing the just transition front and center in their Nationally Determined Contributions (NDCs), the climate action plans nations submitted to the U.N. as part of the Paris Agreement.
As such, each NDC should include "an upfront assessment of both positive and negative employment impacts, and a pledge of measures that will be taken to protect workers," the paper recommends. It points to Ghana as an exemplar; the country has an NDC that focuses on climate resilience and job creation in the country's agricultural sector. "Just transition can be positioned as an enabling element of socially sound NDC implementation and an important mechanism for securing support," the paper reads.
Meanwhile, in perhaps a nod to the concerns of the Polish government, the paper also warns countries must be prepared to provide financial support to not just carbon intensive regions, but also neighboring nations. For example, countries in Central and Eastern Europe (CEE) are "comparatively poor" in comparison to their European neighbors, and may well need "both greater focus, and greater support throughout the transitions process," the paper warns.
Governments also must have a clear timeframe over which they expect transitions to take place. Taking coal as one example, the phaseout date for the fuel from electricity systems varies considerably across European countries. In the United Kingdom, coal is set to be off the grid by 2025, whereas under its new plans Germany doesn't intend to completely ditch the fuel until 2038. This has a knock-on impact on how to manage the just transition — will governments seek to protect the current generation of workers, or those still in school or training? Policymakers — and business leaders — also must be clear who certain policies are targeting: just the workers at a particular plant? Those in the wider supply chain? Those indirectly affected, such as the people who teach workers' children?
These factors will have a massive impact on the kind of support governments and businesses are able to provide to those affected by a transition, including the generosity and accessibility of financial support tools such as pensions, income support and retraining opportunities. A broad transition over a longer time frame might require a restructuring of national curriculums, for example, while a rapid industry shift might require generous pension arrangements for affected workers. Policymakers are also urged to bear in mind that even if a country experiences net job gains, this is unlikely to be the lived experience of every worker. The potential for a backlash against climate policies and clean technologies is obvious, and as such schemes must be in place to support those who lose out in the low-carbon shift.
Finally, pre-emptive planning is flagged as "essential" in the paper. Governments which prepare well in advance for a coming transition stand to reap the co-benefits that come from workers flocking to low-carbon industries, as well as cost savings associated with designing the most efficient policy mechanisms. This applies to business leaders as well — preparation will help to catalyze positive investment environments, mitigate legal risk and minimize workforce restructuring, the paper notes.
More research is needed to assess how the low-carbon shift is set to impact industries beyond the coal power sector. But it is clear from today's briefing that even as challenges vary from sector to sector, some common sense principles hold true. To deliver a successful just transition policymakers and businesses must plan ahead, know who they are trying to help, and be prepared to invest in new infrastructure, skills and welfare support to enable a smooth and just transition. As low-carbon industries move from strength to strength, it's time for countries to start turning their warm words on the importance of a just transition into tangible and effective policies.