By Nigel Topping, CEO, We Mean Business
The world economy is in a transition to a low-carbon one that respects the planet’s climate and its other vital global commons. But will it be just, or unjust?
Just transitions happen when a failing sector or business is helped to move towards a new, low-carbon growth area. Some quite widespread examples are already under way. The former steel city of Pittsburgh, for example, is reinventing itself as a leading centre for developing self-driving autonomous cars.
As we move into a low emissions future, we need to ensure that the impact on local employment and economies is managed in a way that allows obsolete jobs to be replaced by equally skilled and well-paid, low-carbon ones. The B Team and Sharan Burrow of the International Trade Union Confederation have done a great deal to highlight how important this is.
But there is also a very real danger of an unjust transition. Blindness to unintended consequences – or a lack of adequate planning to ensure that opportunities for local jobs and economies are maximised – could lead to public sentiment quickly turning against efforts to combat climate change and safeguard the global commons.
The shift to electric vehicles continues apace. A recent report by Climate Action Tracker suggests that the last gasoline-powered car will have to be sold by around 2035 if the world is to be on track to meet its target of keeping the rise in average global temperature below two degrees above pre-industrial levels. Certain car makers, including Volkswagen, have warned that this is likely to cost jobs because fewer components will be needed in production. Many companies, such as Tesla, are focusing on autonomous electric car prototypes. Unmanaged, these structural changes to the automotive sector will have huge implications for jobs in the automotive supply chain, and for professional drivers.
Some of this is creative destruction, as businesses either adapt or become gobbled up in the new order. And while, at a macro level, progress of this kind is exciting and paradigm-shifting from both an economic and a low-carbon perspective, that’s not how it is likely to feel to the people whose usurped businesses and jobs are at stake. Instead of celebrating the closing of coal-fired power stations, we need both to acknowledge sensitively the impact of such a transition on individual people and communities, and to mitigate it as far as possible. Otherwise we only exacerbate divisions that already exist.
The current political polarisation around the world, particularly in Europe and America – the sense of injustice, of being left behind – whether justified or not, is fuelling populism and is potentially destabilising for society. We can’t think narrowly about climate and the other global commons in future. We must also think more politically about the overall balance of jobs and wealth distribution.
A resurgence of protectionism and anti-globalisation is both bad for business and likely to slow down positive change. When populist governments move in that direction they typically prop up industries that would otherwise die out. Businesses should seek out new opportunities, rather than ask for the hand-outs that come from government protection. There are plenty of examples of businesses that have skilfully made such transitions. DSM used to be a coal mining company; now it’s a materials and nutritional science one.
It is possible to engage constructively with the inevitable transition, supporting communities where jobs are being lost by attracting the industries of the future. Nissan’s success in the north-east of England required bold private sector investment into a geographical market of available, trainable and skilled labour.
We can also take hope from the story of Ed Woolsey, a fifth-generation farmer from Iowa, whose crop has recently changed radically. “Before, I raised corn and soybeans and cattle”, he told Bloomberg. “Now … I’m a wind farmer.” He’s part of a community collective that manages 10 wind turbines and sells the power to rural electric cooperatives. By 2030, it is projected that rural landowners in the US will generate as much as $900m (£729m) a year in revenues from wind energy.
Importantly, this is investing in the future, not the past. Woolsey had seen the price of corn fall from $7 a bushel to $4.20 and finally to around $2.70. He could have continued what he was doing and watch his situation slowly become untenable. Or, with a nudge from government (in this case a federal tax credit), he could transition to a profitable future. He chose the latter. We need to help others to do the same.