Energy providers from Scotland to Scandinavia must work with trade unions and consumers to ensure a just transition to renewables, says María Mendiluce of the climate-focused We Mean Business Coalition
With COP26 under way in Glasgow, countries across Europe are facing an energy crisis that is trapping consumers between rising prices and market volatility and preventing businesses from supporting the economic recovery from the pandemic.
This latest crisis has seen prices for oil and natural gas, which on average supply 35 per cent of the EU's total energy, soar to multi-year levels.
France has promised a €100 cheque to each low-income citizen to help with their energy bills. Elsewhere, Chinese factories are closing to preserve energy supplies, and millions of people in India are at risk of blackouts.
All this shows that the green transition will come with a period of uncertainty. This can be minimised through careful planning, and through cooperation between governments and business.
It means scaling up renewables, transitioning workers from fossil fuels to green alternatives. It also means supporting the most vulnerable through this transition.
Break the cycle of fossil fuel consumption
Firstly, to avoid these crises in the future we must accelerate the shift towards renewable energy. A diversified system, along with adequate storage, interconnectivity, and a strengthened electricity grid, is the most resilient solution to price shocks.
Renewables aren’t an instant solution and cannot fix the deep problems with the global energy system overnight. But in many parts of the world they are more competitive, and in fact they create more jobs than fossil fuels.
Advances in green hydrogen will also open myriad new opportunities that will accelerate the path towards net zero economies.
By planning ahead, and building more storage capacity and resilience into the energy system, it will be possible to scale up renewable sources to meet demand.
These developments will create new markets in the countries that lead the way, as well as ensuring greater stability and value for consumers. But the transition of workers will also become critical.
Workers must be supported through any transition
In Scotland, where oil and gas supports around 100,000 jobs, a carefully planned transition is a top priority. Working with its own Just Transition Commission, the Scottish government has already announced plans to support workers. But this needs to be backed up with real policies and investments.
Any transition must place industry workers at its core, ensuring that jobs and skills are not lost. States need to work with business and unions to define policies that protect workers, for example through reskilling and the redeployment of skilled workers.
The Danish energy company Ørsted recently unveiled plans to invest £12 billion in wind farms off the Scottish coast, and also struck a deal with trade unions in the US to reskill and build up an offshore wind construction workforce.
Meanwhile, the French utility company, EDF, has worked with unions and employees to help manage the closure of one of the UK’s last coal-fired power plants.
But the responsibility cannot be in the hands of business alone, and close collaboration between workers, companies and local and national governments around the world is key.
Show consumers that opportunity awaits
Finally, governments and businesses must take measures to protect consumers from the kinds of instability and volatility we are witnessing in the energy market today.
A net-zero energy strategy that consumers can’t afford will not only fail, but will damage the credibility of climate action across all sectors.
The risk of high energy prices will need to be addressed in the short term, with public policies that protect the most vulnerable. In the medium term, tailored incentives can then help to speed up the transition towards renewables.
Governments should not be tempted to subsidise fossil fuels to keep energy prices low, as this will only stop the behavioural change and investment shifts needed for the transition.
This is why more than 750 businesses have called on G20 governments to remove fossil fuel subsidies by 2025.
Governments can provide short-term compensation to protect the poorest. Longer-running incentives, for new transportation or heating systems, for instance, will then help people reduce consumption and boost those sectors, creating a virtuous investment circle.
Research shows that 'building back better' with accessible and affordable net-zero products, services, and business models that are inclusive for consumers are also better for jobs and growth.
With the right decisions made at COP26 to channel finance away from carbon-intensive activities, the transition to net-zero could unleash an incredible wave of innovation, creativity and jobs, along with reliable energy for all.
The principle of a 'just transition' must be at the heart of climate policies and energy plans. This is the only way to ensure that both people and the planet are protected.
María Mendiluce is CEO of the We Mean Business Coalition, a group of seven non-profit organisations including CLG Europe and the London-based Climate Group that works with businesses to take action on climate change.