Energy transition is inevitable. The global push to move from the use of fossil fuels to renewable sources of energy is not only a global movement but a necessity for life as we know it.
TT is among 197 signatories that devoted itself to reversing the effects of climate change through the Conference of the Parties to the UN Framework Convention on Climate Change (COP) initiative, first established 27 years ago. However, balancing the overall desire for a cleaner planet and the macro- and micro- needs of each nation is no easy task. The policies that could solve one problem could have unintended consequences which could have an equally damaging effect on peoples lives and livelihoods.
This is where just-transition policy comes in. This is the strategy of ensuring that no group of people is left behind while restructuring to a more sustainable society.
Every nation, including TT, has been involved in putting policies and strategies in place to achieve the goal of global transition. But for these policies to work people have to be serious.
The carrot and the stick
Luca Corradi, director of the Net Zero Technology Center in Aberdeen, Scotland, and Kishan Kumarsingh, head of multi-lateral environmental agreements in the Ministry of Planning and Development in a conversation with Business Day last week, said there were many ways that those involved in putting policy in place could ensure that country and parties that sign on follow these policies. But there is a "carrot and stick" element to most policies.
Corradi was in TT during the Energy Chamber’s 2023 conference January 23-25, and lectured government officials on just-energy transition policy. He said the North Sea Transition Deal – a plan set out between the UK government and the oil and gas industry to collaborate to transform the sector – was a good example of a transition policy with teeth.
He said the plan – aimed at reducing operation emissions from the production of oil and gas in UK industries – saw companies committing to the reduction of emissions by 50 per cent by 2030, 90 per cent by 2040 and to get to net zero by 2050. He said the policymakers in this regard saw a need for strong measures, as they established the North Sea Transition Authority, a governmental agency which kept the policy and all who signed on to it, on the right track.
“It is a collaborative conversation but it is also able to impose fines, and even revoke the licence to operate for companies that do not comply with the policies,” he said.
Corradi said policy can act in different ways – some may be through enforcement and banning and other ways could be through incentivising and stimulating discussion and debate.
The UK government’s policy decision in 2018 to ban the export and sale of internal combustion engine (ICE) vehicles from January 1, 2030 is another good example.
“It was placed about 12 years in advance, and that gives an element of certainty to industries that in a reasonable amount of time they should change the marketing strategy, as there will be a new market. That policy was a massive stimulus for companies to develop better cars and as a consequence saw the reduction in the cost of EV batteries, motors, etc,” Corradi said.
Locally, Kumarsingh said that incentives such as the reduction of taxes on electric vehicles were incentive-based assertions by the government that encouraged the adherence to transition policy.
“A ‘carrot’ could be incentivisation – fiscal and otherwise,” he said. “It is generally viewed that any subsidies or fiscal incentives for clean energy, if you internalise the social and environmental costs, are not viewed as perverse subsidies (a waste of money), it is considered money well invested.”
But he said part of the “stick” for local policy in energy transition has to come in the form of legislation to support the policies put in place, especially as TT has, historically, had a problem with enforcement of policies. He said that while legislation can keep the policy on track, the policy itself – the plan for which the nation has to move forward must be put in place first.
Elements of a just-transition policy
When conversations about just transition began in the 1990s, it was less of an environmental issue, and more of a union issue.
American trade unions began developing the idea of just-transition policy as a means of support for workers who had lost employment because of environmental protection policies.
With the introduction of the Paris Agreement and COP just transition evolved into an exercise in ensuring that the benefits and the burdens of transition are distributed fairly.
“The point is we try to understand and steer the ship in a way that doesn’t leave anyone behind and doesn’t create additional problems,” Corradi said.
He said for every country looking at transition policies and implementing them in a just manner each country has to look at three things – the first of which is each country’s starting point.
“What makes the emissions in each country, how are people employed and what are the basics of the society in that country are some questions to ask,” he said.
The destination or end-goal of the policy is another key element. Corradi said each nation has to imagine the long-term future of energy transition, imagine the elements of that future and build policies to reach that end-goal.
But the most important element in making an energy-transition policy just is how to get to that destination point. This has a high element of engagement with people so that the policy is being built with the people rather than being imposed on people.
“That part is complicated,” he said, “It requires awareness, education, listening, co-ordination, and with regard to destination we won’t really know the place, and things change along the way. That is why the process is also important – to make it fair.”
Kumarsingh, who leads the Ministry of Planning in its collaboration with other members of the COP initiative, said that when dealing with international policies such as the Paris Agreement and policies coming out of COP, the international policies are bolstered by each nation adopting the policies into its own domestic framework.
“The efficacy of international law ultimately is a function of political will at a national level,” he said. “How you translate your international law into your domestic framework is a process as well. For us here, the process is first to set the policy basis.”
Kumarsingh said that TT is the first Caribbean country to submit a just-transition policy to the UN Framework Convention on Climate Change, the core body which convenes the COP meetings annually. The draft policy, which is currently before Parliament, is about achieving the ultimate objective of slowing climate change and reducing carbon emissions including the development and pursuance of low-emission development strategies (LEDS).
“Guiding principles for the development and implementation of these plans are a part of the Paris Agreement, including a just transition for workers that may be potentially affected in the shift of development paradigms. The recent report of the Inter-Governmental Panel on Climate Change (IPCC)3 underscores the need for urgent action by all countries if the objectives of the Paris Agreement are to be achieved,” the policy said.
In the TT transition policy seven objectives were established based on TT’s situational analysis. These objectives include supporting new low-carbon industries, business models and entrepreneurs; encouraging investment in low-carbon technologies and pathways that will benefit the nation as well as strengthen financial frameworks for clean-energy projects; developing and enhancing existing support measures for workers affected by transition policies, including upskilling and reskilling employees to make them competitive when applying for low-carbon job opportunities; ensuring gender equality is upheld and low-income families and less favoured groups of society are included by designing sectoral actions and financial-incentive mechanisms as well as developing measures to support vulnerable and marginalised groups.
The policy was largely driven by the Paris Agreement to which TT is a party, for the collective responsibility for reducing increasing global temperatures caused by carbon emissions.
The Paris Agreement identified the need to get to net zero. "If you want to manage climate change in the long term we have to get to net zero,” Kumarsingh said. “To get to net zero economies have to be reconfigured and industries will have to be restructured. Technologies will have to be re-engineered. It is a scientific fact. All countries are obligated to do that. But what the Paris Agreement says is if you do that, you must do it in a way that takes into consideration a just transition. When you do that transition and you analyse the trajectory you can get a sense of what the consequences would be. Transition must be such that any of those consequences be managed in a way that no one is disenfranchised. No one is left behind.”
Mutual commitment – the best strategy for transition
Both Kumarsingh and Corradi agreed that ultimately the best way to ensure that any policy is adhered to, is to ensure the mutual commitment of every stakeholder and party involved.
They both said that if a policy is fair and just for all parties involved, it would not require too much enforcement.
“If a policy is well designed then it should have ownership by all,” Kumarsingh said. “And if you have ownership by all then implementation shouldn’t be difficult.”
Kumarsingh said that while the idea that each party would be equally willing to adhere to policies would be utopia, it is necessary for people to begin thinking that way.
With COP for example, Kumarsingh pointed out that there is no regulatory body that would police countries signed on to the agreement.
“All countries have signed on, but there is no police that could lock up a state,” he said, “and to be subjected to any penalty you have to agree to be subjective.”
While this strategy could make implementation long-winded, for global initiatives such as those established by COP and the Paris Agreement it would be necessary to ensure that a balance is set between achieving the global objectives of reducing carbon emissions, and addressing the individual agendas of each of the COP’s signatories.
“But policies have different levels of intent, objectives and aims,” he said. “It varies from very critical expectations to softer frameworks. It depends on where you sit. Implementation could still be a problem, but if it is diffused between every agency involved, then it should not be that there would be too much of a need for a big stick. The point is that with the current climate, we have no choice to be serious; to be otherwise would be to our peril.”