Why should just transition be an integral part of the European Green Deal?

In our series on ‘just transition’, Béla Galgóczi focuses on what it means for the key sectors of coal and cars.

That there is a climate emergency has been widely acknowledged. New scientific evidence on the devastating effects of climate change, ever more dramatic, appears on a weekly basis. Scientists warn that global warming may reach a tipping point in the immediate future—one that triggers a sudden and violent shift in the system and catalyses a domino effect of dramatic further changes via positive-feedback mechanisms.

While the COP21 Paris agreement of 2015 was a historical milestone, the commitments of the signatories would only confine global warming to an estimated 3C by the end of the century, compared with pre-industrial levels. This would far overshoot the +1.5C ceiling which, according to the Intergovernmental Panel on Climate Change, is necessary to keep the impacts within bounds.

Long-term objective

Acknowledging the gap between the European Union’s earlier commitment and the Paris targets, in November 2018 the European Commission set the long-term objective of a climate-neutral Europe, to be achieved by 2050. The European Green Deal, announced by the new commission as its flagship initiative, is to transform this objective into concrete policies. One pillar is a large-scale investment plan, which would require estimated yearly commitments of between 175 and 290 billion euro to energy systems and infrastructure.

Stepping up the EU`s climate ambition is unquestionably the priority. But we need to be aware of what it means to reduce greenhouse gases in the next 30 years at four times the rate the EU will have achieved between 1990 and 2020. This would constitute a fundamental revision of the linear, extractive and fossil-fuel-based growth model of the past, with a restructuring of the entire economy—leading to major changes and adjustments which would affect jobs, livelihoods, working conditions, skills and employment prospects.

This paradigm change can only succeed if it happens in a socially balanced way. ‘Just transition’, a framework developed by the trade-union movement to encompass a range of social interventions needed to secure workers’ rights and livelihoods when economies are shifting to sustainable production, has become a recognised element of climate policies, referred to in the Paris agreement.

Early declarations about the European Green Deal suggest that a social dimension would be one of its integral elements. The cases of two key sectors of the European economy—energy and the automotive industry—demonstrate why this is important.

Phasing out coal

Meeting the commission’s objective of a net-zero-carbon economy by 2050 will not be possible without the timely phasing out of unabated coal from energy generation. In 2015, 18 per cent of the EU’s greenhouse-gas emissions came from the chimneys of just 284 coal-power plants, with a total employment of 52,700 across the union. In 2017, the number of coalmining jobs in the EU was just below 130,000.

Although the total number of coal-dependent jobs makes up only a small fraction (about 0.15 per cent) of European employment—and a much greater of jobs were lost during the financial crisis—the challenge is that these are concentrated in a small number of regions with wide-ranging potential impacts on the local and regional economy. Poland alone has nearly two thirds of the coalmining and nearly half of total coal-dependent jobs in Europe.

In many of these regions, the livelihood of a large part of the population is dependent on a coal-based economy. Although a lot of progress has been made in 2019, the current coal phase-out plans by member states are inadequate by far (see map) and substantial efforts remain to be made.

The status of coal phase-out in the EU (October 2019)

Phasing out coal is thus a manageable and highly rewarding ambition—indeed, it is seen as a ‘low-hanging fruit’. But dedicated and concentrated efforts are needed in terms of regional and employment initiatives, in which an EU-level Just Transition Fund must play a leading role.

Transport shift

Unlike coal, cars and individual transport will still have a future in a net zero-carbon world. But it will be a very different one from today, with a shift in modes of transport and a phase-out of the combustion engine. Although the automotive industry is not widely seen as a case for just-transition policies, the magnitude of employment change in this sector will definitely require that.

Unlike coal, the industry is a key employer in Europe, covering 13.8 million jobs altogether. It is undergoing three simultaneous transformations. First, regulation aimed at fulfilling climate objectives and improving environmental performance is pushing it towards powertrain electrification.

Secondly, there is a ‘mobility revolution’, whereby extensive digitalisation and vehicle electrification will boost the development of new business concepts and service-provision functions, based on new connectivity and autonomous features. Such change is truly revolutionary since it has the potential for overhauling vehicle usage and ownership, along with the industry’s traditional business model.

Thirdly, digitalisation across the automotive value chain promises to stretch the physical limits of flexible production further, with considerable impact on working environments. Intelligent production systems are building the interface between production machines and employees through an integrated communication network. In addition to the new automation potential opening up, this will also facilitate comprehensive control of the production process.

The paradigm change in mobility and transport will also have a disruptive effect on established patterns of globalisation in the industry. Car manufacturers in Europe will need to face these challenges, which will rewrite business models with reverberations throughout the supply chain.

Social dimension

An ambitious European Green Deal can only succeed if it has a strong social dimension. As the European Trade Union Confederation puts it, this must be ‘inclusive and supportive for the most vulnerable regions, sectors and workers’. The transport and energy sectors will deliver a large part of the decarbonisation of the European economy and deserve special attention—in terms of investment and social and employment policies.

Phasing out coal as soon as possible is the pre-eminent interest of the entire EU and will have a huge reward in terms of emission reductions, combined with very limited employment effects at the European level. At the same time, coal-based employment is concentrated in a small number of European regions. There is a clear case for European solidarity and the delimited scale of the problem allows of rapid progress.

European structural and cohesion policies need to prioritise Green Deal objectives but dedicated support is also required. The existing European Platform for Coal Regions in Transition needs to be equipped with appropriate finances and could be rebranded as the Just Coal Transition Platform.

The automobile industry faces even more complex challenges and its importance for the European economy is of a different magnitude. Its transitions will need tailored employment policies under a new framework. Social dialogue and plant-level agreements will have a key role in managing an epochal transformation process.

With higher climate ambition it must be clear that earlier ideas about a Just Transition Fund should also be upgraded. Pooling existing funds and attaching a ‘just transition’ label won’t do.