ISSUE 56: What’s Standing in the Way of a Just Transition?

Acorn International believes that social equity, backed by sound social science and meaningful engagement, is a fundamental ingredient of ensuring the energy transition succeeds in helping to address our climate crisis. In early 2023, we posted “Why the Energy Transition Will Fail Without Good Social Science”[1].  As a team of professional social scientists, of course, our perspective on this may be biased – but our view is supported by the many tremendous opportunities we have to help global industries and investors tackle otherwise vexing challenges in ensuring that their energy transition investments are sustainable.

Delegates and energy industries at COP28 made headlines by committing to the need for progress on new energy initiatives in a just manner, and this message continued – albeit as an undercurrent – in Davos (see references below).

This bravado is all well and good, but there are substantial challenges in the way of solving inequitable impacts of climate change on the communities of our world. As we enter 2024, we’re tracking four such challenges to ensuring the policy, technological, and finance solutions needed for the energy transition are deployed equitably and with assurances for just outcomes.

1. Insisting on accountability for commitments

World leaders who made bold speeches and commitments at CO28 and the World Economic Forum these recent weeks need to walk the talk from UAE to Davos back home and be accountable to their rights holders – both the haves and the have-nots, not just where most convenient but where most needed.

Earlier this month in Davos, we heard the UN Secretary-General Guterres challenge world leaders to keep social justice commitments at the forefront of their energy transition initiatives. Targeting the runaway development of Artificial Intelligence without guard rails and its impact on energy and the climate, he cautioned that “some powerful tech companies are already pursuing profits with a clear disregard for human rights, personal privacy, and social impact”.[2] Clearly, it’s not just the tech industry that needs to be held accountable – energy, mining, and finance companies need to take the lead in:

• promoting innovative solutions for climate justice,
• working in collaboration with their host communities and regions most in need and least resourced, and
• sharing results and learnings to both raise awareness and accelerate adoption of solutions that are shown to have just outcomes.

As consumers, shareholders, employees, and neighbors, we all need to demand tangible, responsive, and just outcomes from the tremendously talented scientists, engineers, and business leaders working within these companies.

2. Ensuring the rush to renewables doesn’t sacrifice host community engagement and benefits

Opponents of fossil fuels rightly demand more progress on a shift to renewables. But the rush to renewables has so far come with too little attention to ensuring the necessary infrastructure is developed with controlled social impact and optimal community benefits. This is especially true for disadvantaged communities, now targeted for priority attention under the Justice 40 initiative[3] being applied to DOE’s decarbonization and carbon sequestration grants that are helping transform oil and gas companies into carbon solutions companies. To be clear, carbon sequestration, hydrogen development, and decarbonization of assets aren’t the solutions to the climate crisis, but the crisis is so massive that these developments will need to accompany a more aggressive shift to renewables if we are to make progress in meeting the Paris goals.

To date, renewables developers have escaped the microscope of traditional energy developments on Social Performance rigor and commitments, and their host communities are beginning to feel the downsides of this halo effect. See for example the late December case in which wind turbines were ordered to be removed due to inadequate consultation with the Osage Nation[4]. The need for better social impact management and engagement will become more pronounced as the capacity of transmission infrastructure becomes more saturated, forcing the development of new transmission lines (including new lines through communities familiar to each of us) to connect remote renewable power sources to energy demand markets.

3. Building social equity commitments into the asset retirement wave

Much of the world’s oil and gas infrastructure is over 40 years old, and not until recently have approved plans for abandonment included consideration of the risks and benefits to host communities. The average age of refineries still operating in the US is about 80 years, and half the country’s two million miles of oil and gas transmission lines have been in place for more than 50 years. Energy ministries throughout Latin America, Africa and Asia are looking to “leapfrog” over needed upgrades by retiring their aging oil and gas infrastructure in favor of cleaner fuel sources to meet urgent demands for more equitable access to energy[5]. Based on our experience, virtually none of these assets have decommissioning plans with commitments for the job replacement and economic development opportunities that are equitable, accessible, and sustainable for host communities that have disproportionately borne the impact of these operations for generations.

The just transition plan that is under review by the Scottish Government for the Grangemouth Refinery and the experience of coal power plant closures in the US and Europe[6] may serve as good models for assets in helping host communities transition to equitable outcomes following the retirement of these facilities. The lesson learned in these cases may help illuminate:

• how engagement with host community, unions and adjacent industries ultimately influenced the decommissioning and post-closure plan
• what workforce development solutions proved truly effective for laid-off local workers to enter good new jobs with sustainable futures
• what investments in upskilling cost – directly and indirectly – and what level of commitment from both public and private sources are needed to make these programs work over the long term

Finally, as we anticipate a wave of energy infrastructure retirement and as the easier opportunities for replacing jobs and benefits from adjacent industry or new energy developments are taken, we’ll want to look more at engaging and incentivizing tech and other fast-growing industries as solution partners in traditionally underserved host communities.

4. Strengthening Community/Regional Capacity

As tangible, responsive, and just solutions are developed, the disadvantaged host communities and regions will need more resources and skills to ensure social equity benefits of energy and adaptation developments are actually realized and retained.

A recent article by the Grantham Research Institute foretells the social injustices[7] looming from the disproportionately high impact of climate change on low-income economies and the disproportionately low availability of resources in those economies to manage climate impacts.

Central to making headway on (climate) priorities are the transformational twins of climate action: climate justice and the just transition. Climate justice means overcoming what Adam Tooze has called the ‘triple inequality’ at the heart of the climate crisis: it is predominantly high-income groups and nations that have caused the problem, while those harmed by climate impacts are mostly low-income groups and developing countries, and the resources needed to turn the tide are unevenly distributed.[8]

A recent report[9] from the World Resources Institute highlighted the urgent need that developing countries have for support from developed in defining, implementing, and assuring equitable access to benefits through clean energy transition plans. Programs such as the UN’s Work Programme for Just Transition Pathways (JTWP) and European Commission’s Just Energy Transition Partnership (JTEP) with Senegal are emerging examples of how to deliver this support.

Where to and What’s Needed to Get There?

Creating solutions to our climate crisis and transitioning away from fossil fuels is hard. Ensuring we do so in a manner that does not continue to add disproportionate risks to disadvantaged groups and ensures equitable access to solutions and their benefits – is even harder. To do so, we need to act[10] on four key challenges:

• Just Accountability – Business and political leaders worldwide need to ensure their commitments yield results by working in partnership with (and building the capacity of) host communities before, during, and after just transition solutions are deployed to ensure they are realistic and sustainable over time.
• Just Renewables Development – Renewables developers need to ensure that, “whether required for permitting/financing or not”, their development and operating plans integrate long-term and equitable benefits programs for host communities – at a level similar to what is being required for low carbon technologies being funded by the US DOE.
• Just Retirement – Owners of aging, traditional energy assets needs to update decommissioning plans to highlight social justice impacts and need to ensure solutions proposed include funding for communities to mitigate long-term, equitable workforce, and community development needs.
• Just Capacity Building – OECD countries need to join global corporations and investors in committing resources to help developing countries have the incentives, resources, and assurance mechanisms in place to ensure adaptation plans prioritize the urgent needs of their most vulnerable communities.

And as social scientists and advisors, we need to continue our commitment to keeping the principles of climate justice and the just transition at the forefront of our research and analysis and developing innovative solutions to the challenges that lie ahead.

[1] See https://acornintllc.com/issue-54-why-the-energy-transition-will-fail-without-good-social-science/

[2] https://www.un.org/sg/en/content/sg/statement/2024-01-17/secretary-generals-special-address-the-world-economic-forum-delivered

[3] See https://www.energy.gov/justice/justice40-initiative

[4] See https://osagenews.org/federal-judge-orders-removal-of-wind-turbines-from-osage-mineral-estate/

[5] See further discussion at https://unctad.org/news/improving-energy-access-key-meeting-development-goals-africa

[6] See https://www.gov.scot/publications/discussion-paper-transition-grangemouth-industrial-cluster/ and https://www.bbc.com/news/uk-scotland-scotland-politics-67706485, and follow updates from Scotland’s Just Transition Commission at https://www.gov.scot/groups/just-transition-commission/

[7] The JTEP is intended to support Senegal’s efforts to achieve universal access to energy and consolidate a low-carbon, resilient and sustainable energy system. See https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3448

[8] See https://www.lse.ac.uk/granthaminstitute/news/cop28-the-irresistible-rise-of-the-just-transition/

[9] See https://www.wri.org/technical-perspectives/5-essential-principles-just-transition-work-programme-climate-action

[10] Where can we start? Ask your elected officials/candidates and energy companies, for example, what they are doing to ensure equitable benefits to host communities in the transition. The companies we work with regularly review comments received as one input to decisions on updating their policies and business plans. Ask the same of renewables developers, government sponsors and owners planning asset retirements at public meetings and online forums after taking time to get informed of development/retirement plans, prior engagement, and DOE’s Community Benefit Plan and engagement requirements.