5 Elements of a Just Transition to a Green Economy

TEXT: Hanna Dedial – 23. September 2021

The climate emergency calls for swift action. Yet there are people whose livelihoods depend on the traditional economy, such as fossil fuel-based industries.  

The dilemma of ensuring swift climate reforms without stripping the poor and disadvantaged of their income has led to the call for a just transition from labor unions across the world. Just transition is an approach that must ensure that no one is left behind in the shift to a greener economy.  

“On the one hand, we have the demand for climate justice by those most impacted by climate change, who have contributed the least to its causative factors,” says Rupa Mukerji, director of Advisory Services at Helvetas. “On the other hand, we have the need for fairness to workers employed in fossil fuel-based industries as they transition to cleaner technologies. Both are vulnerable and often disempowered groups.”  

“The burden of past transitions, such as in the textile or mining sectors, towards cleaner and higher technologies has been disproportionately carried by the workers.” 

Given this complexity and the pressures brought by different interest groups, what are the best practices for planning a just transition? Seven experts share their views. 

1 – Understand societal costs and benefits  

“One must well understand the complex landscape of actors and interrelations,” says Dimitrija Sekovski from Skat Consulting Ltd. “For example, by applying a systems thinking or political economy analysis approach. Quantifying the flows of societal costs and benefits across different interest groups will improve insights into the ‘size and complexity’ of the challenges and the expected ‘strength’ of opposition towards systemic change.”  

Oksana Aliieva, Climate Change and Energy Policy Program Coordinator for the Heinrich Boell Foundation, Kyiv Office - Ukraine shared an example of a societal benefit of the pre-transition status quo that may be overlooked: “In Ukraine, big industries like coal mining come with their own ‘ecosystems’ of schools, hospitals and daycare.” Closing a coal plant would not only mean the loss of jobs, but also the loss of a whole system that accompanies employment. This affects many aspects of coal workers’ life, from children’s education to their spouses’ careers.  

An example of a societal cost could be environmental pollution or even public environmental resources being exploited for the benefit of certain elites. “The main inhibitors to a just transition are the deeply rooted, often hidden power relations in society,” explains Sekovski. “Access to and use of common resources are practiced in a way to benefit only a small group of centers of power, in most cases at the expense of the public interest and for short-term gains. In such contexts, the interests of the poor and disadvantaged are routinely disregarded, which contributes to ever-growing socio-economic gaps.”  

Martin Schön-Chanishvili, Senior Policy Advisor for structural change in Eastern and Southeastern Europe at Germanwatch, adds a reminder about the importance of analyzing long-term impacts: “Looking into the future would generate a better understanding of the possible transgenerational anomalies in the distribution of these costs and benefits and how socio-economic gaps could be addressed.” 

2 – Give everyone a chance to be heard  

“All significant changes start with small steps,” says Victoria Shevchuk, Coordinator for Just Transition in the Western Balkans, Bankwatch. “And such a small step is to open the negotiations with all stakeholders. This reveals issues at the early planning stage.”  

“Oftentimes, governments plan and draft strategies that are more or less good on paper but were done without consultation with the people from the regions that will actually implement them. So there is no sense of ownership of these measures. They do not actually reflect the troubles, needs and solutions of the local citizens. And they are perceived as something that was forced on them, something that was devised by the people who don't really know them and their region,” says Kostiantyn Krynytskyi, Head of the Energy Department at the Centre of Environmental Initiatives “Ecoaction”, Ukraine. 

It’s not enough to just formally involve diverse groups. “This must be ‘real’ participation,” says Schön-Chanishvili. “Stakeholders must have the chance to speak up and be heard. They must take part in dialogic cooperation formats that enable them to overcome conflict and develop a common view of the transition. To create ownership and understanding, they must be included in defining goals and indicators for measuring the results and managing the transition. To ensure the inclusiveness of the process, the most vulnerable should be represented by advocacy organizations.” 

“Make certain marginalized groups are in the driver’s seat and making the choices that are going to take us to our future,” agrees Heather McGray, Director of the Climate Justice Resilience Fund.  

While including marginalized groups may be a priority for civil society, making sure the dialogue is diverse means also involving political and business elites. Schön-Chanishvili warns against leaving industrial champions of the fossil era behind out of “moral purity,” because, as a systems analysis can reveal, “these companies can contribute significantly to a successful transition through their resources and knowledge.” 

3 - Advocate for a clear political commitment 

While all stakeholders must be involved in the decision-making process, there is one that has clearly more power than others: the government. The government has the financial resources at its disposal as well as the power to decide how they are used. The speed of the process and the chances of success depend on how governments weigh the issue and prioritize the transition to a green economy. So, a clear stance on its part is paramount for a smooth transition.  

“The success of just transition starts with a clear political commitment to the transition on the national level,” stresses Martin Schön-Chanishvili. 

“Sadly, many Eastern and Southeastern European countries are postponing this moment,” laments Victoria Shevchuk. “It requires thoughtful planning that may not immediately result in political support for such measures.”  

Shevchuk says regions leading by example include “the Polish coal region Eastern Wielkopolska, which started just transition independently, no longer waiting for the Polish government, and has committed to achieving climate neutrality by 2040. There’s also North Macedonia, which is the first country in the Western Balkans to announce a coal phase-out by 2028.” 

4 - Be prepared to face opposition 

Just transition may require an overhaul of the whole system. “There’s a lot of ‘business as usual’ thinking out there. It hasn’t worked in the past and needs to stop. Top-down solutions are problematic. They tend to exacerbate inequality in ways that don’t support a just transition,” says McGray. “Fixed power structures are challenging to dismantle. The system and structures that have created climate change and made different people more or less vulnerable to it – those systems are what we have to knock down. This is the heart of a just transition.  When we continue that status quo we are making it harder for ourselves.” 

“The just transition would inevitably involve redistribution of costs and benefits in society,” says Sekovski. “It is to be expected that the centers of power who enjoy the benefits of the status quo will resist at multiple levels. This may involve a complex set of interrelated business (e.g., mining, energy), political and corruptive interests. Although not necessarily obvious, some of these relationships are among the key forces inhibiting or driving change processes.”  

Those losing their political and economic privileges during a transition to a greener economy may use their resources to fight back. Aliieva gives an example from Ukraine, where oligarch groups are in control of big media outlets. “They are fearmongering with fake narratives about economic degrowth. This must be countered with open communication and long-term planning. No one wants to close the mines overnight. With a few years’ time, it will be possible to redirect the focus of vocational training in these regions to other sectors. In Ukraine, three times as many jobs will be created in the renewable sector than will be lost through mine closures. Fortunately, there are also influential people who stand up and talk about the fact that moving forward with just transition is a great advantage for a country, such as the mayors of the seven cities of the Donetsk region, who have voluntarily joined forces with the goal of moving forward with just transition and have founded a platform for this purpose - even if they do not make themselves popular with everyone in doing so.”  

Krynytskyi believes that information campaigns, especially on the local level, are very important in such cases. He says that honesty is the best policy: “To say straight away, that yes, the transition is difficult and there will be initial negative consequences, but this is also a chance for the development of the communities, rejuvenation of towns and regions. And focus on this positive potential, to imagine and show the benefits of the transition.” 

5 – Invest in progress 

A successful transition to green technology requires investments. But it’s important that these investments are not limited to replacing outdated infrastructure or buying parts. “The key success factors of the just transition process will be to build capacities through education and training, and to ensure access to finance for all through intermediaries like microfinance institutions or small-and medium enterprises,” explains Martin Stadelmann, Senior Director Climate Investments, South Pole. 

Shevchuk believes that one of the “success solutions” is to create a specialized Just Transition Fund. The Just Transition Fund is a pillar to sooner and smoother transition towards a green economy. Take the case of the European Union who newly launched the Just Transition Fund in May 2021. According to the EU press release, the fund will “finance job-seeking assistance, up-skilling and reskilling, as well as the active inclusion of workers and jobseekers as Europe’s economy shifts towards becoming climate neutral. It will also support micro-enterprises, business incubators, universities, and public research institutions, as well as investments in new energy technologies, energy efficiency, and sustainable local mobility.”Martin Stadelmann mentions another example, this time Pioneered by Chanel, a global luxury good company, and the Global Environment Facility, the oldest multilateral climate fund – the Landscape Resilience Fund, which his organization, SouthPole, has recently launched together with WWF. It will support the most vulnerable to adapt to climate change in selected areas in the global South through both capacity building and concessional financing, using small-and medium enterprises as intermediaries.  

McGray stresses that the funding should not just “help” the disadvantaged. Those affected by the transition must have a say in deciding how the funding is spent. “We’re working with partners to develop grassroots-led models that put community members in the driver’s seat in deciding how to deploy funding. Too often, there’s a sense at the top of the funding food chain that small-scale investments are risky or inefficient. We want to make the case to global investors that they should shift how they think about risk.” 

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