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The green transition is unfolding: Daring to harness its transformative power

Women miners at work in a coal mine in Mpumalanga. (Photo: Dudu Zitha /G allo Images)

If you’ve stumbled upon debates on climate change, the future of coal or the transition to a green economy, you must have heard about the need for a ‘just transition’. But what is the just transition debate actually about?

Gaylor Montmasson-Clair is a senior economist at Trade & Industrial Policy Strategies (TIPS), an independent, non-profit, economic research institution established in 1996 to support economic policy development.

The short answer is: people. The long answer depends on who you ask. Indeed, there is no agreed definition of a just transition (globally or nationally), nor is there a blueprint to use as a reference. In fact, stakeholders vary greatly in their understanding of the concept, only looking at it from their own vantage point. 

Some say it’s about “leaving no one behind”. Others contend it is a case of “maintaining the competitiveness of the economy”. Yet another group argues that it is about “transforming the system”.

Of course, everyone agrees on the need for economic development, social progress and environmental sustainability. How to achieve these intertwined goals is the question. Important differences exist between the preferred strategies of various stakeholders.

Take the situation in Mpumalanga, for instance, which hosts the bulk of South Africa’s coal mines and coal-fired power stations. Not surprisingly, workers there want jobs. Not any job, though. They desire well-paying jobs in their current industry. More surprisingly, miners want to be miners — a fact most people struggle with.

power station
Matla power station in Secunda. The power station is a coal-fired plant operated by Eskom that consumes the output from the Matla coal mine. (Photo by Gallo Images / Lefty Shivambu)

Community members want jobs too, but place a lot more emphasis on the quality of the environment in which they live. They reject the pollution and health problems that come with the current economic activities.

On their side, local businesses are looking to preserve existing industries, including mining, and attract strong anchor industries that can drive the region’s economic activity. The bigger the better.

Local government introduces yet another focus. It is primarily interested in working on synergies, using new economic activities to address municipal problems such as waste management, air quality or service delivery, and enhancing the business environment by improving infrastructure such as roads and telecommunications networks.

At its core, a just transition to an inclusive green economy is about ensuring that vulnerable stakeholders are better off through the transition process, or at least not negatively affected by it. 

Three dimensions of transitional justice

A meaningful and ambitious just transition addresses three dimensions of transitional justice.

What most people understand (narrowly) as a just transition is termed distributive justice — who bears the costs and who reaps the benefits. It aims to address the direct impacts of the transition on affected stakeholders. Think here of workers in the coal value chain who are set to lose their jobs, but also of small businesses relying on the sector for their livelihoods.

Procedural justice is the second dimension. It focuses on facilitating an inclusive decision-making and implementation process, paying particular attention to enabling and empowering vulnerable and oft-neglected stakeholders to take part. The underlying assumption here is that a just outcome can only emerge out of an inclusive process.

The third dimension is where the truly transformative nature of the just transition agenda lies. It involves pursuing restorative justice. This consists in rectifying or ameliorating the situation of harmed or disenfranchised communities which have suffered historical damages. Indeed, too many communities run the risk of being left stranded once more, after having been scarred (for decades) at the hands of an extractive economic model.

Transformative potential

Effectively, the just transition agenda has the potential to be hugely transformative. A high degree of ambition on these three dimensions of transitional justice leads to challenging the underlying structure of economic and political power and promoting alternative (more inclusive and sustainable) development pathways. 

From this, flows a wide understanding of the scope of the just transition agenda. Triggering society-wide change implies including all vulnerable stakeholders within the ambit of action, from workers and small businesses to women, youth and the elderly, to low-income communities as a whole. It also makes the just transition agenda relevant to any transition, be it related to climate change or not.

Of course, some stakeholders have a much narrower understanding of the just transition, limiting its scope to a soft transition in the existing fossil fuels industry and the parallel development of so-called green jobs (or green industries). Vulnerabilities are largely ignored here.

In denial, others even consider it as an avenue to maintain the status quo and hinder the transition altogether. However, using the just transition argument to prompt a longer role for fossil fuels — by preserving coal or opening the door wide for natural gas — is misunderstanding the idea completely, sweeping vulnerabilities under the rug.

Combating climate change requires an urgent shift out of fossil fuels. 

In the longer run, as the transition inevitably unfolds (which it will), this reactionary type of approach is extremely detrimental to vulnerable stakeholders who will be left unsupported, without any alternative livelihood or safety net — pushing them further into poverty.

An ambitious (dare I say, true) just transition would require harnessing the full power of the state and public policy to drive and effect transformation. It would also demand significant action from businesses, workers and communities. It warrants a three-pronged response.

First, it calls for an inclusive process involving and empowering vulnerable stakeholders, to deliver participatory justice. Tick-box exercises are sadly more the norm than the exception these days. 

Participatory justice calls for open, transparent and ongoing (rather than ad hoc) public engagement, starting well before critical decisions have to be made, to foster co-creation, and carrying on well after decision-making, to ensure joint monitoring of implementation and, if needed, course correction. The establishment and persistence of trust between stakeholders is paramount here. All stakeholders should also be provided with the opportunity and resources (such as knowledge, finance and capacity) to participate meaningfully.

Second, dealing with direct impacts (distributive justice) requires a mix of measures made of labour market policies, industrial policy and social protection. 

Thousands of citizens and activists marched to Parliament in Cape Town on 20 September 2019, forming part of a global movement that demands an end to the age of fossil fuels and embraces a new age of renewable energy and climate justice. (Photo: Leila Dougan / Daily Maverick)

Labour market policies such as retraining, reskilling and job placement schemes, but also income support programmes and early retirement packages are crucial to improve working conditions and provide support and protection to workers. 

Such policies are necessary, but insufficient, to achieve distributive justice. 

They need to be complemented by strong industrial policy to drive or support the emergence of new economic activities and opportunities, particularly in regions that face declining industries. Policies here aim notably to shape market structures (such as ownership), provide finance, infrastructure and market institutions, and remove unnecessary regulatory blockages. 

In addition, social protection policies are required to provide a genuine safety net to workers and citizens in general, typically through monetary support (social transfers) or service provision (such as health and education).

Third, delivering restorative justice — that is, to right historical wrongs — involves challenging decision-making processes for the allocation of resources (such as land and budget), rehabilitating the environment (land, of course, but also water and air) and materially stepping up the delivery of services to disenfranchised communities, from housing, water, transport and energy, to education and health. 

It is also about ensuring that all stakeholders (ie not only high-income households and large businesses) benefit from new “green” technologies, either through direct access and/or indirect spillovers. 

Over and beyond access, socioeconomic empowerment speaks to ownership issues through the promotion of the social ownership of assets (such as energy supply and factories). 

Enforcing a non-predatory use of the land, including fundamental respect for local, indigenous culture, heritage and practices, is also part of a socio-cultural restoration process acknowledging the historical and longstanding marginalisation of vulnerable stakeholders.

Overall, within these three dimensions, the role of each stakeholder effectively depends on the degree of ambition being pursued. What is sure, though, is that a just transition is not achievable without all parties contributing. 

A fundamental issue is, who should pay for the required interventions. The burden-sharing agreement, in terms of financial cost, would de facto flow from the definition of a just transition. Too often, the costs of transition (as well as negative externalities) are socialised despite benefits having been (and remaining) privatised. A genuine just transition agenda aims to achieve more equitable repartition of costs and benefits between stakeholders.

This would demand shifting and redirecting a significant amount of funding towards inclusive and green activities, such as those channelled towards fossil fuel subsidies, which total some $0.6-billion per annum globally, and $5.2-billion when including unpriced externalities. 

Additional finance should also be raised through innovative instruments such as green and social bonds and the internalisation of externalities by wrongdoers (through, but not limited to, carbon pricing). Serious consideration also ought to be given to the financing of bottom-up, grassroots and other inclusive initiatives that generally do not meet the traditional investment criteria.

Achieving a just transition will be an incremental process made of small wins, important breakthroughs and, realistically, some setbacks. It will be a trial-and-error journey. Indeed, no blueprint exists. But many lessons and building blocks are present in the system. They should be harnessed for ambition. 

Consensus-building and political will from all stakeholders are the main driving forces, as the opposition of just one group can derail the process. Whether a truly just transition can be achieved depends on it. DM/MC

Absa OBP

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