It is tempting to think that an energy transition is a simple and straightforward solution to mitigating the effects of rising global temperatures. As the logic goes, by using less fossil fuels as energy sources and switching to renewable sources such as solar, wind, geothermal, and hydropower, we can reduce carbon emissions and limit global warming to below 1.5°C by 2050.
But the journey from fossil fuel dependence to renewable energy sources for Asian countries is fraught with obstacles and complications. A slow and cumbersome logistical process, it requires a massive amount of financial capital and is highly disruptive to those who work in and live around energy-related industries.
What does a just energy transition entail?
In Asia, civil society are demanding greater transparency and accountability in implementing just transition initiatives. Fair Finance Asia (FFA), a regional network of over 90 allied civil society organizations engaged in sustainable finance advocacy, defines a Just Energy Transition (JET) through the following nine principles:
1. No financing for new coal projects for electricity generation and phasing out existing coal based power generation
While coal’s share of the global energy mix is shrinking, in large part due to a sharp fall in coal consumption in European countries, the Asia-Pacific region is still heavily dependent on electricity generated by coal combustion.
Source: Fair Finance Asia.
Source: Fair Finance Asia.
On average, 13 countries assessed in a new study by FFA and Stockholm Environment Institute (SEI), alongside research partners Profundo and and Strategia Development Research Institute (SDRI), depend on coal, oil, and natural gas to meet 77 per cent of their electricity demands. The report, Financing the Just Transition: Powering Asia’s Sustainable Energy Future, also found that seven out of the 13 rely on fossil fuels for at least 80 per cent of their power production. Notably, Singapore is the most fossil-fuel reliant country in the study, relying on fossil gas to produce almost 97 per cent of its electricity.
A just energy transition would require that there are no more new coal projects being financed, while reducing the funding for current projects.
2. Development of a time-bound transition away from other fossil fuels for electricity generation
As the world ramped up production post-pandemic, global coal-fired generation reached an all-time high in 2021, pushing CO2 emissions from coal power plants to record levels.
Coal-fired power in Southeast Asia is on the rise, and consumption has doubled in the past decade, according to FFA’s 2021 study, A Future Without Coal: Banking on Asia’s Just Energy Transition.
Clear road maps and action plans are critical to ensure meaningful commitments and timelines. There should be clear emission target reductions set by each country with net-zero pledges for a specific year – such as 2030, the year by which many countries have pledged to halve global emissions, and 2050, in line with Paris Agreement frameworks to reach carbon neutrality.
3. Active investment in renewable energy generation
Governments need to lead the way in developing, in collaboration with other stakeholders, a national scenario to speed up the transition away from fossil fuel-generated energy towards renewable energy.
Public and private investments are needed to further develop electricity grids and energy storage facilities. Increasing carbon taxes and reducing fossil fuel subsidies, while promoting green bonds to raise funding for renewable energy projects, can make investing in renewable energy more attractive.
A solar farm in Thailand. Image: Asian Development Bank, CC BY-NC-ND 2.0.
A solar farm in Thailand. Image: Asian Development Bank, CC BY-NC-ND 2.0.
The construction of the Three Gorges Dam across the Yangtze River in China displaced approximately 1.4 million people, who lost their ancestral homes, farmlands and communities. Image: water.alternatives, CC BY-NC 2.0.
The construction of the Three Gorges Dam across the Yangtze River in China displaced approximately 1.4 million people, who lost their ancestral homes, farmlands and communities. Image: water.alternatives, CC BY-NC 2.0.
4. Long-term planning and strategies to mitigate the adverse environmental and social impacts of renewables
Fossil fuels cannot be quickly or easily replaced with renewable energy. Careful long-term planning is required to ensure that renewable energy projects do not harm the land upon which they will be developed or the communities that live in the area.
While renewable energy projects are more climate-friendly than fossil fuels, such transitions should still be considered for their socio-ecological impacts.
Environmental impacts can occur in the short- and long-term in the life cycles of renewable energy sources. For example, solar power requires a high land footprint and solar photovoltaics (PVs) are made from toxic heavy and rare earth metals which complicate their end-of-life environmental impact.
If possible, the strategic use of land, such as offshore wind projects and solar energy projects combined with agriculture, need to be explored, especially in countries with land scarcity.
Source: Fair Finance Asia.
Source: Fair Finance Asia.
5. Respect for land rights and Free, Prior and Informed Consent (FPIC), and clear policies for community participation, gender sensitivity and consultation with civil society organisations (CSOs) in large energy projects
“When talking about just transitions, there are usually four types of justices that come to mind,” explains Niall O’Connor, centre director of SEI Asia.
“Procedural justice, which argues that in the process of energy transitions, many stakeholders should be included in the decision-making process. Distributive justice, which argues that energy transitions should benefit the many and not the elite few. Recognition justice, which argues that actors shaping the energy transitions should include diverging visions of what exactly energy transitions should look like. And restorative justice, which argues that besides restoring the ecosystems around disturbed sites, it is also important to give decision-making power back to the people living around or in close vicinity of sites.”
The land on which renewable energy projects are sited should be acquired in a just manner, compensations must be adequate, and the adverse impacts on communities and the environment must be minimised. Consideration needs to be given to local practices in environment and biodiversity conversation, as well to minority and disadvantaged groups, and this is where social dialogue and participation from civil society is key in government planning.
Indigenous people leave Bato Kelau village for the last time due to the construction of Bakun Dam in Malaysian Borneo in 2009. Image: International Rivers, CC BY-NC-SA 2.0.
Indigenous people leave Bato Kelau village for the last time due to the construction of Bakun Dam in Malaysian Borneo in 2009. Image: International Rivers, CC BY-NC-SA 2.0.
A farmer works next to Cirebon CFPP. Image: ResponsiBank Indonesia.
A farmer works next to Cirebon CFPP. Image: ResponsiBank Indonesia.
6. Protection of the rights of workers and mainstreaming of Human Rights Due Diligence (HRDD) during the energy transition
Workers in the fossil fuel industry and their communities will be impacted by the transition to a lower carbon economy. Their rights and needs should be considered, and benefits should be distributed as fairly as possible.
Switching to alternative energy sources has the potential to contribute to enormous social problem in countries such as India, where coal takes up 55 per cent share in the energy mix. According to FFA-SEI's new report, Jharkhand, the state with the largest coal reserves in India, directly employs 300,000 people and supports another 1 million workers indirectly. Millions also work as illegal miners as part of the ecosystem. About 10 per cent of total employment in the state can be attributed to the coal sector, and an energy transition without social safety nets could create coal ghost towns, with significant job losses and falling local and state government revenues.
Reskilling and relocating displaced workers and their families will require massive but necessary coordination between the energy industry, governments, and educational and training institutions.
7. Safeguarding the health, livelihoods, culture and heritage of communities impacted by the continued use of fossil fuels
Asia’s dependence on fossil fuels, especially coal, comes at a heavy cost, spewing nitrogen oxides, sulphur dioxide, particulate matter, and heavy metals into the air, all of which are dangerous to humans. Among fossil fuels, coal is the dirtiest, producing the most carbon dioxide per unit of energy.
Energy transitions also need to take into account the needs of under-privileged, under-resourced, and vulnerable minority groups who may be affected by land acquisition or metals mining activities related to renewable energy generation.
“Asian civil society understands that [a] simplistic view on the transition could very well lead to the rise of new forms of injustices in other parts of the global energy supply chain, e.g., increased human and labour rights violations in the extractive industries or the legalisation of deep-sea mining,” points out Bernadette Victorio, program lead at FFA. Safeguarding “the health, livelihoods, culture and heritage of communities,” she says, is often overlooked.
A woman rummages through overburden to look for leftover coal to sell in Jharkhand. Image: lecercle, CC BY-NC-SA 2.0.
A woman rummages through overburden to look for leftover coal to sell in Jharkhand. Image: lecercle, CC BY-NC-SA 2.0.
8. Active and meaningful engagement and participation of women in the energy transition
There is a long way to go for women to fully achieve active and meaningful engagement and participation in the energy transition. Although projects relating to sustainable energy have a better chance of success if women are involved in the decision-making process, gender is still not yet in the purview of many stakeholders.
Predominantly male-led societies often fail to consider women in the choice of energy sources. An International Renewable Energy Agency (IRENA) study cites the example of how fuel-gathering is historically a task for women in the family, who can spend up to an average of 100 hours a year collecting wood for fuel
When growing the renewable energy sectors, the ideal framework for a just and inclusive energy transition is one that encourages greater participation of women in the workforce by giving them access to decent work with adequate remuneration, and public services that may open opportunities for part-time work and income-generating activities. The IRENA study shows that gender inclusivity benefits not just women, but organisations – women are likely to bring new perspectives into their work, are more likely to act collaboratively in the workplace, and may contribute to greater fairness.
9. Investments in access to electricity for all
Renewable energy presents an opportunity to transform the lives of millions of people who still do not have access to electricity. A further development of the electricity grid requires government backing and support, especially in countries with geographically disconnected communities.
Governments should also create dedicated departments or specific programmes for renewable energy development and planning, and should explore other means of private participation in the energy sector.
Furthermore, “almost all of the agri-food systems in Asia are reliant on fossil fuels, whether for machinery and production processes, fertilisers (nitrogen-based fertilisers are most often made from fossil fuels), storage or distribution,” points out Dr Darian McBain, executive, advisor and board member in sustainability, supply chains, human rights and sustainable finance, and board member for Be Slavery Free, a not-for-profit based in Australia. “Asia supplies food to the world, and shocks to food production in Asia will reverberate globally.”
What needs to be done
More forward-looking climate and energy policies by governments
As recently as 2021, G20 countries provided nearly US$200 billion in fossil fuel subsidies, and this amount will continue to rise in the next financial year partly due to increasing prices due to the Russo–Ukraine conflict.
In 2019–2020, 65 per cent of the G20’s public finance for energy went to fossil fuels. These subsidies artificially reduce the costs of fossil fuels and encourage its continued use. Eliminating these subsidies could free up significant capital to invest in, or subsidise, renewable energy projects.
Source: Fair Finance Asia.
Source: Fair Finance Asia.
Financial institutions led the way in coal-attributable loans, accounting for 99 per cent of all creditors in the 15 countries surveyed in FFA’s 2021 study.
Central banks or financial sector regulators should require their countries to pay attention to the sustainability of their financing activities such as with the standardised and mandatory taxonomies for what constitutes “green” and “brown” activities, clearly excluding all coal-related activities from financing and investments.
There need to be nationally-based scenarios for governments and other stakeholders to speed up the transition from coal to renewable energy. New coal projects should be banned by governments, and existing coal-based power generation should be phased out. At the same time, banks should lead in the financing of net-zero business models and transition finance, and stop funding coal projects.
Source: Fair Finance Asia.
Source: Fair Finance Asia.
More funding
McKinsey estimates that US$9.2 trillion needs to be spent per year on average between 2021 and 2050 in capital spending for the net-zero transition. For developing countries in Asia, funding an energy transition will take up a larger share of their GDP. Philanthropic funding is one of the ways that can help ease this economic burden.
Source: Fair Finance Asia.
Source: Fair Finance Asia.
Philanthropic capital can be used to support clean energy projects in developing countries. McKinsey suggest that they can be used to invest money in clean energy projects by de-risking investments to attract more financial resources from development banks and private sectors that do not want to take risks in developing countries. This capital can also fund efforts to boost the health education, women’s rights and alleviate poverty, which are important considerations in a just energy transition.
Greater emphasis on social policies
Almost always an afterthought, social policies concerning just energy transitions are seldom deemed critical to the overarching narrative of official government policies. Fears faced by displaced workers are seldom adequately addressed, which include the instability of their livelihoods.
“There are numerous communities impacted by the energy transition,” explains Saksham Nijhawan, principal strategist for energy and climate change at Forum for the Future. “There are the people who work as part of the coal sector or other allied fossil fuel processing sectors, the workforce powering fossil fuel-based power plants, and the ones who are contributing to a rapid deployment of renewable energy throughout the value chain, including mining, processing, manufacturing, providing land and end of life recycling.”
This is where civil society organisations (CSOs), grassroots organisations and non-governmental organisations (NGOs) play an important role, as they can raise awareness on the social issues faced by communities in their social and political dialogues.
A people-centred policy, stemming from community-driven decision-making, is necessary to accelerate the energy transition. It not only empowers people, but also brings back the trust in institutions regarding policy transitions. Policies and programmes need to be designed in line with the unique needs conditions of individual countries and communities.
Employment in the renewable energy sector is growing, and over the next three decades, may increase to as many as 43 million jobs worldwide. However, the skills of workers from the fossil fuel sector are not immediately transferable to these new jobs. In preparation for the demand in the future, there is a need to skill, reskill, reorient, and recertify skills.
“It is important that if you want to transition from one system to another, that the new system can meet the demands of the people,” says O’Connor. “Without an adequate plan on how to give people in the region where fossil fuels will be phased out the opportunity to earn a living, a fossil fuel phase-out will fail.”
The Cirebon Coal Fired Power Plant (CFPP) and nearby housing communities in West Java, Indonesia. Image: ResponsiBank Indonesia.
The Cirebon Coal Fired Power Plant (CFPP) and nearby housing communities in West Java, Indonesia. Image: ResponsiBank Indonesia.
A salt farmer works on land on the outskirts of the Cirebon 2 CFPP construction site. Image: ResponsiBank Indonesia.
A salt farmer works on land on the outskirts of the Cirebon 2 CFPP construction site. Image: ResponsiBank Indonesia.
A just energy transition in Asia
A new vision of an energy future is urgently needed in Asia.
On the one hand, the world needs to switch rapidly from fossil fuels to renewable sources. The Intergovernmental Panel on Climate Change has projected that with every additional tenth of a degree rise in world temperatures, there will even more extreme weather conditions that will threaten the lives of millions of people. And the world is not making the changes that are needed nearly quickly enough to reach Paris Agreement goals.
On the other hand, for a just energy transition to occur that takes into account the needs of 4.7 billion people living in Asia, climate policies need to be tailored to each specific country depending on its socio-economic profile.
Dr McBain suggests looking back to the 17 sustainable development goals (SDGs) as a guide to ensure as just an energy transition as possible. “We need to look at not only risks, but also the impacts of the decision being made and the unintended consequences of carbon tunnel vision,” she asserts. “A [green] revolution cannot take place without people and society.”
A just energy transition needs to be made – carefully, but quickly. The clock is ticking.
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