During the first week of COP26 climate change conference in Glasgow, a 190-strong coalition of countries and organisations announced their commitment to phase out coal energy by 2030 for major economies, and by 2040 globally. In their Global Coal To Clean Power Transition Statement, the signatories further agreed to scale deployment of clean power generation, cease issuance of new permits for coal projects, and, importantly, provide a robust framework of support to ensure an inclusive transition away from coal. This latest point is important since a rapid phase-out of coal may put many climate-vulnerable yet coal-dependent economies at risk of a disorderly and unjust transition.
Against this context, COP26 Just Transition Declaration was issued on the Energy day of the conference. This is an important development in the transition to net zero, putting into operation concepts of just transition and climate justice mentioned in the preamble of the Paris Agreement. This milestone recognises that climate transition relies on a paradigm of fairness, help, and solidarity acknowledging that some technologies and funds are inaccessible to vulnerable countries, whose socio-economic development may depend on more traditional forms of energy. For net zero transition to be just, livelihoods of those who hinge on carbon-intensive energy must not be disturbed overnight. Sufficient capital must be guaranteed to allow for sustainable growth and transition of industries, such that local governments, communities, and stakeholders have a role and say in shaping this transition.
Public and private financing is inevitable for just transition. In the public sector, for instance, an international partnership involving the UK, US, France, Germany, and the EU announced a $8.5 billion fund to be made available in the next 3-5 years to support South Africa’s transition away from coal. South Africa is currently the world’s 12th biggest carbon dioxide emitter with most of its electricity generated from coal.
In the private sector, private financial institutions also took a step to ensure that existing and future investments are aligned to the global goal of net zero. Nevertheless, this still falls short of the trillions of dollars of private finance that will need to be directed towards the mechanisms and technologies needed to adapt to climate change and support the transition to the net zero economy. It also remains unclear how much of this investment will be made in climate-vulnerable countries.
That is why not only the private sector as a whole, but also every individual company has its role to play in the just transition. Some companies are already leading in this sphere – at a Blue Zone event, Plotting an Efficient and Just Path to a Net Zero Energy System, for instance, Scottish Power, a renewable energy company based in Scotland, announced their Just Transition Strategy, which embodies the company’s commitment to a fair and equitable transition and their continued support of communities, consumers and employees while being at the forefront of the green energy market transition.