‘This transition will either work for everyone and be fair, or it will not work at all’. These were the words of European Commission President Ursula von der Leyen during her speech launching the Green Deal in December 2019. A key message that touches on all the actions that will be put in place in the coming years to achieve the ecological transition, but which will also have to be supported by massive investments, inclusive policies, and long-term visions.
The goal of achieving climate neutrality by 2050 on the one hand aims at a profound change of the entire production system by opening new economic opportunities. On the other hand, however, it risks affecting entire sections of the population who will see their jobs change or, in the worst case, disappear in the transition.
This is why, in conjunction with the Next Generation Eu funds, the European Commission proposed the creation of a Just Transition Mechanism (Just Transition Mechanism), which includes a fund (Just Transition Fund) designed primarily to support the regions and sectors that will be most affected by the transition due to their dependence on fossil fuels and greenhouse gas-intensive industrial processes. ‘Our ambition is to mobilise EUR 100 billion specifically for the most vulnerable regions and sectors,’ von der Leyen emphasised.
Just transition
‘The current production model created externalities that have not been taken into account. Within the transition, the socio-economic aspect is essential to reduce inequalities and redistribute the gains of the transition,’ explained by Giulia Colafrancesco, policy analyst at the think tank Ecco, dedicated to energy transition and climate change. ‘The transition in itself will not lead us to a different economic and development model if social inequalities remain the same as they are right now’.
If we look at Italy alone, the so-called hard-to-abate or energy intensive sectors, i.e., steel, chemicals, ceramics, paper, glass, cement, and foundries, count more than 700,000 jobs. Not to mention the automotive sector, which will have to reckon with the transformation already underway and the shift from endothermic to low-carbon engines. All sectors of the economy that will see major changes in the coming years.
New geography of work
But as is always the case with complex issues, the solutions to be deployed are also varied. And there is another side to the coin. In a study by the RFF-, CMCC European Institute on Economics and the Environment in collaboration with the University of British Columbia, Vancouver, and Chalmers University of Technology, an in-depth analysis of jobs in the global energy system and the impact of different climate and energy policies was carried out, showing that if we meet the Paris Agreement target of limiting the global temperature increase to well below 2°C, jobs in the energy sector could grow from the current 18 million to 26 million by 2050.
According to the research, 84 per cent of the new jobs would be in the renewable energy sector, 11 per cent in the fossil fuel sector, and 5 per cent in nuclear power. Those in the fossil fuel sector, particularly in mining, would decrease very rapidly but would be compensated by an increase in the number of jobs in the solar and wind energy sectors. A large share (7.7 million in 2050) would be attributable to the wind and photovoltaic sectors.
As the report states, ‘the human dimension, the issues of energy access, poverty and even the implications for the world of work are often still considered in insufficient detail. With our study, we helped to fill this gap by bringing together and using a large dataset, for many countries and technologies, which can also be used for other applications’.
But there is more. According to the Organisation for Economic Cooperation and Development (OECD), if the positive impacts of action to prevent climate damage are considered, the net positive effect on GDP would increase to almost 5 per cent in the developed and emerging economies of the G20 countries by 2050. While for the International Labour Organisation (llo), action to meet the Paris targets will create 24 million jobs in clean energy generation, electric vehicles and energy efficiency and lead to the loss of about 6 million jobs, thus a net gain of 18 million jobs.
Health costs and benefits
The health costs and benefits must also be considered. In the long run, climate change is considered the greatest health threat of this century and could cost between two and four billion dollars by 2030.
Globally, on the other hand, air pollution caused mostly by the extraction and combustion of fossil fuels is considered the biggest environmental threat to people’s health, responsible for about 7 million premature deaths each year.
If we look at the two largest consumers of coal for energy production in Europe, namely Poland and Germany, we see that in 2016, Polish coal- and lignite-fired power plants were estimated to have led to 2,596 premature deaths and 42,402 days with asthma symptoms in children, with health costs of around EUR 7.5 billion.
For Germany, on the other hand, it is estimated that power generation until phase-out from coal (i.e., 2038) would lead to 26,000 premature deaths, with losses of around EUR 73 billion.
‘Very often the link with the health factor is even more evident in the most polluted industrial areas, which at the same time have unfavourable socioeconomic conditions and underpaid jobs, linked to the fossil industry’, Colafrancesco emphasises.
Italy in transition
Regarding Italy, there are two areas affected by the Just transition fund, namely the Sulcis Iglesiente area and the province of Taranto.
The go-ahead from the European Commission arrived in December 2022, with a financial endowment of EUR 1,211,280,657, of which EUR 1,029,588,558 of European contribution and EUR 181,692,099 of national contribution.
The entire Taranto area is strongly linked to the former Ilva steel plant, which employs about 10.000 people, with a further 10.000 linked to the allied industries. In the Apulia region’s 2021 public consultation, possible areas of intervention were indicated, including in the field of site regeneration and decontamination, land rehabilitation and conversion projects, and investments in strengthening the circular economy, including through waste prevention and reduction, productive investments in small and medium-sized enterprises, including start-ups, aimed at diversification and economic reconversion.
As for the Sulcis coal area, the direction seems to be that of a change of direction in the mining sector, moving from coal (the mine was decommissioned in 2015) to other minerals that are more in demand on the market, such as nickel and lithium, until the complete energy reconversion of the island.
The decision by the Sardinian region to modify the ‘Grazia Deledda thermoelectric power plant, which envisages the installation of a lithium-ion storage system with a total capacity of 122 MW, is recent. In fact, this project is part of a broader one by Enel Green Power, which, in the Capacity Market 2024 auction called by Terna, was awarded about 1.1 GW of contracted capacity, which it will honour by installing about 1.6 GW/6.6 GWh of new capacity in storage systems, half of which will be installed precisely in Sardinia.
But the transition, as already mentioned, is also a social, cultural, and psychological issue, affecting the lives of local communities. In this context, psychological issue, affecting the lives of local communities. In this context, the project Entrances, ENergy TRANsitions from Coal and carbon: Effects on Societies, financed by the Horizon 2020 programme, attempts to give a holistic response to all these aspects, and aims to develop a theoretical and empirical understanding of the cross-cutting issues seen so far.
In particular for Sulcis, the case study concludes that ‘as it is taking shape in Sardinia, [the transition] is characterised by a shift towards a more centralised energy system and a centralisation of related decision-making, by a weak and opaque vision, and by a lack of capacity to respond to social and territorial needs’. Despite the investments of the companies involved, to date, ‘the transition to clean energy is not producing a new vision for the Sulcis territory, but rather is having a divisive effect on the local community and is further diminishing the territory’s autonomy’. Nonetheless, the research also showed how ‘the Sulcis territory is also endowed with an active civil society, a propensity for innovation and a rich cultural and natural heritage, the potential of which is still unexpressed’.
Two sides of the same coin that confront us with the opportunities of the ecological transition, but also with the enormous risks involved, which risk tearing the country apart even more. Without forgetting, as Colafrancesco explains, that ‘we are faced with employment distortions that have been evident for decades. That is why we should be ready to take a leap towards something that can create widespread opportunities and mend those inequalities that have plagued Italy for a long time’.
What vision
Back in 2015, the International labour organisation (Ilo) adopted a set of guidelines based on suggestions from governments, businesses and trade unions. As stated in the document ‘Il cambiamento climatico e la transizione giusta. Guida per l’investitore’ written by the London School of Economics, these guidelines ‘recommend actions to anticipate the need for skills development, assess health and safety risks, ensure social security during the transition (such as health care and worker pensions), develop international labour standards and actively promote social dialogue.
What worries the analysts, however, is not the lack of investment, but a vision that is as long-term as possible – while the funds for the just transition envisage too short a time horizon (2021-2027) – so that it can permeate entire areas and segments of the population. For example, the entire conversion of the German Ruhr steel area took more than 60 years for a complete transition. ‘We are talking about structural changes and that is why the Transition fund must be integrated into a long-term vision, otherwise it would not be a complete transition,’ Colafrancesco continues.
The just transition has a long history, from the United States to South Africa, via Germany and our country, at least since the post-war period. ‘We know the criticalities well,’ Colafrancesco concludes. ‘We must therefore look at the long term, pay attention to governance in order to distribute responsibilities and tasks’. It is not a ‘process that can be done without taking into account local specificities, with a much more active and participatory approach towards all stakeholders, to start the redevelopment process that is not only energetic but also social’. All with a view to creating a more prosperous future for society as a whole.