Rich nations are opening the funding tap to help coal-reliant emerging economies shift to clean energy – but it must happen in a transparent way that includes workers and communities who risk losing their incomes, politicians and analysts say.
An $8.5-billion partnership announced at November’s COP26 climate summit to wean South Africa off coal, backed by Britain, the United States, Germany, France and the European Union, has raised hopes of similar deals for India, Indonesia and others.
This week, U.N. Secretary-General Antonio Guterres told the World Economic Forum that countries with an energy mix relying on coal face “enormous structural obstacles” and need assistance to move to clean power.
“To help key emerging economies accelerate the transition, I’m calling for the creation of coalitions of countries, public and private financial institutions, investment funds and companies with the technological know-how to provide targeted financial and technical support,” Guterres said in a speech.
The governments of Indonesia and Vietnam recently announced their intention to get out of coal and adopt more renewable energy, he noted, while South Africa now has in place a just energy transition partnership to move beyond coal.
The donor-backed Climate Investment Funds launched another $2.5-billion funding programme at COP26 to help South Africa, India, Indonesia and the Philippines phase out coal power in a swifter and socially fair way.
Bim Afolami, a Conservative Party politician in Britain, which brokered the headline-grabbing South Africa package, told journalists this week that other “just transition” partnerships are being worked on, but did not provide further details.
The money promised at the U.N. talks in Glasgow will fund South Africa’s efforts to cut its climate-changing emissions and pursue a green transition that provides support to workers and vulnerable groups, especially coal miners, women and youth.
But the hard work of deciding how it will happen is only now getting underway, with the structure and operations of the donor partnership to be hammered out in the coming months.
Afolami stressed the importance of showing “how we’re doing it”, with the aim of building public trust and “so that people can get a sense of what we’re trying to achieve”.
FAMILIES FIRST
Ani Dasgupta, president and CEO of the U.S-based World Resources Institute (WRI), said that with such a large amount of funding on the table for South Africa, there was a need to make the process “as transparent as possible”.
That would enable other countries to learn from it and be motivated to take up opportunities if they arise, he noted.
Another reason for making clear how the money is being used is to ensure frontline communities that will be affected by the shift away from fossil fuels receive their fair share and the assistance they need, he told the Thomson Reuters Foundation.
In many countries, coal-fired electricity production is owned and run by the richest groups in society, Dasgupta noted.
“We don’t want a situation where the (just transition) deal results in the same rich people – who benefited from the past system and polluted the world – also benefiting from this transaction,” he added.
Discussions about the economics of cutting planet-heating emissions to zero often focus on headline numbers of how many millions of jobs will be created in solar or wind power against those that may be lost in coal, gas and oil.
But these topline figures fail to reflect the realities for workers facing an uncertain future, Dasgupta said.
More locally relevant pictures of how the green transition will play out must be built, by putting together employment and demographic data, for instance, he added.
“We are having a discussion about the absolute number of jobs… and it should be a discussion about the family,” he said. “Let’s not make it more abstract than is needed.”
WHO LEADS?
One key issue facing those working to secure a “just” energy transition is that the best locations for new clean power facilities – such as solar plants or offshore wind farms – often are not the same places fossil fuel employment is lost.
That is why coalitions of governments, unions, communities and companies are being set up to plan alternative futures for specific regions in countries such as Britain, Spain and Canada.
South Africa, the world’s 12th biggest emitter of greenhouse gases, won the first major international “just transition” partnership not only because of its heavy dependence on coal power and its targets to cut carbon pollution, but because political and public support there for a shift is growing.
British officials noted its mine workers’ union had accepted the need for change, state-owned power utility Eskom had developed a “just energy transition” plan and a national-level strategy is being crafted by the Presidential Climate Commission.
Bernice Lee, a research director at UK-based think-tank Chatham House, said the task now was to hammer out a feasible plan to retire old coal-power plants and bring new renewable energy on-stream while creating employment opportunities.
“If last year was about headlines, this year will be about the detail and nitty-gritty of policies and measures,” she said.
How the donor partnership is perceived within South Africa – by politicians, business and the public – will also be key, WRI’s Dasgupta said in an interview.
Days after COP26, President Cyril Ramaphosa told lawmakers back home that South Africa would only accept the $8.5-billion deal if the terms suited national goals like debt reduction and job creation. He said most of the money should come as grants.
Dasgupta said wealthy governments putting up the cash for such partnerships need to be aware of “internal politics” and let countries making the shift from coal take the lead in shaping how the transition happens within their borders.
GLOBAL JUSTICE
As efforts begin to translate South Africa’s just transition deal from paper to reality this year, broader issues of global justice in climate finance should not be overlooked, policy experts warned.
The new partnership raised eyebrows among smaller developing states hit hard by extreme weather and rising seas as a pledge by rich countries of $100 billion a year to help them tackle climate change remained unmet.
“It’s becoming quite clear that there is a bit of grumpiness by some developing nations that large emerging economies may be sucking up a lot of the $100 billion,” said Lee of Chatham House.
She and Dasgupta urged greater attention in 2022 to more balanced funding, including boosting currently low levels of finance for much-needed measures to adapt to a warming world and deal with the losses and damage already being caused.
“We don’t want to replicate the divisions of the past in the solutions of the future,” said Dasgupta.
