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Just transition: Moving to a low carbon economy is about more than just cutting emissions

Holyrood

Just transition: Moving to a low carbon economy is about more than just cutting emissions

Take a look at the plans contained in the Scottish general election manifestos and you will see the need to decarbonise the economy and move to green energy sources, while protecting jobs and livelihoods, writ large. Some call it ‘just transition’, others see it as a green new deal, otherwise it could probably just be called common sense, but the importance of considering wider social and economic factors in the push for low carbon energy has now become common currency.

The Scottish Greens have been calling for a green new deal for years, based in using “every lever available to Scotland to respond to this emergency with the transformational change that is needed”.

The plan, which the Greens say could create 200,000 Scottish jobs through interventions across the entire economy, would be based in a 10-year economic and public investment strategy to promote “an inclusive and sustainable economy” that prioritises decarbonisation, the eradication of inequality and the restoration of Scotland’s environment in a way that supports community and employee-led actions.

The SNP manifesto, in contrast, calls for a green energy deal, based in providing long-term certainty to renewable projects and delivering a wave and tidal energy industrial strategy with adequate funding. According to the SNP, investment for the deal would come from ringfencing oil and gas revenues until 2023/24, which it says would build the transition “toward a greener, sustainable future”.

Scottish Labour, meanwhile, has promised a “green industrial revolution”, which it says would create 100,000 well paid, high skilled, unionised jobs.

Explaining how Labour’s National Transformation Fund could build a carbon neutral economy by 2030, Scottish Labour leader Richard Leonard said: “A vote for Labour is a vote to make Scotland a global player in renewables; a vote for Labour is a vote for a rebalanced and sustainable economy with a plan and a vote for Labour is a vote for the future of our planet.”

The terms may change but ‘just transition’ is clearly in fashion. Yet the idea goes far further back than the 2019 general election, stemming from the trade union movement and based in the idea that structural economic changes, necessary to mitigate the worst effects of climate change, must be made in a way that – unlike previous industrial change – does not leave workers and communities behind. In this sense, change must be considered in social and economic terms, as well as environmental.

Francis Stuart, Policy Officer at the Scottish Trades Union Congress (STUC), told Holyrood: “Trade unions are clear that we need to urgently tackle the climate emergency. However, that means radical change to ensure workers and communities do not pay the price for these changes, in Scotland and beyond.

“The current market approach to the climate transition is palpably failing to deliver either a climate transition or justice for workers and communities. Rates of investment in green energy have actually fallen in recent years while the level of jobs promised has also failed to materialise.”

With the importance of managing the change to a low carbon economy rising up the agenda, the STUC released a report earlier this year, examining how past promises of employment in the low-carbon and renewable energy (LCRE) economy have not translated into the jobs boom promised.

Stressing that the STUC supports transitioning to a low carbon economy, the report takes aim at “the failure of industrial policy to ensure that workers, businesses and government in Scotland benefit from Scotland’s natural resources”, adding: “Without a domestic industrial base for the LCRE economy, not only will workers in Scotland miss out, but there are serious implications in terms of tax, transparency, economic democracy and meeting climate targets.”

The report, ‘Broken promises and offshored jobs’ offers a look at the gap between political promises and the reality of the new opportunities created in renewables. It found that, despite ministers forecasting up to 130,000 jobs in the LCRE economy by 2020, current figures sit at just 46,400, with 21,400 direct and 25,000 indirect.

So what caused this gap, between hope and reality? To the STUC, the problem comes from a failure to build a Scottish supply chain, through producing and, ideally exporting, domestic content rather than importing from overseas.

As the report warns, “a number of current renewable energy development projects illustrate the failure to build a domestic industrial base and an over-reliance on imported goods and services”, with the authors castigating “a web of financial interests which leads to overseas state-protected, loss-making industries gaining an uncompetitive advantage within Scotland’s LCRE economy, while simultaneously driving down working conditions”.

Stuart told Holyrood: “The current UK energy system is failing. The principal low-carbon funding mechanism, the ‘contract for difference’ scheme, effectively involves auctioning off renewable energy projects by establishing a long-term, guaranteed, risk-free, publicly subsidised income stream for producers. This is funded through a levy on consumers’ bills rather than through general taxation, disproportionately impacting on low-income households.

“The alternative to the current [system] is a huge programme of public-led, planned investment in green infrastructure, including in ports and yards like Methil in Fife, and a change in energy policy based on public control and local benefit. The wind and the waves belong to us, the people, so it is only right that communities benefit in the form of jobs and economic value.

“At Westminster, the grid needs to be taken back into public hands and the ‘contract for difference’ market approach to renewables needs to be scrapped in favour of public developments.

“At Holyrood, the Scottish Government stake in BiFab could form the basis for a publicly-owned offshore wind manufacturing industry, ensuring real benefit to working-class communities in post-industrial ports and harbours across Scotland.”

He added: “The climate emergency and the failure of multinational companies to deliver strategically important assets presents an opportunity to renew working-class communities and tackle climate change through a green industrial revolution built on public ownership.”

To just transition campaigners, BiFab offers a prime example of a local company, which, given it provides fabrication works from facilities for both oil and gas and renewables, should be ideally placed to enable its employees to shift from work in the carbon-intensive economy to renewables without having to sacrifice wages and conditions.

Yet, again, theory and reality diverge, with the struggles facing the firm well known. This was a company that should have acted as an example of how to navigate that transition, but the Scottish Government was forced to loan BiFab £19m in 2017-18, before converting the investment into shares in the business. BiFab’s yards in Methil and Burntisland were mothballed during a search to find secure work and by August 2019, Audit Scotland had assessed the government’s equity stake to be worth just £6m.

The firm at least received some good news last week with the announcement from EDF that BiFab would build a number of the foundation jackets for the Neart na Gaoithe (NnG) offshore wind farm. All of the project’s 54 turbines will be assembled at the Port of Dundee before being sailed to the site while reports suggest BiFab has a contract for at least eight jackets.

Project servicing and maintenance will take place at the Scottish NnG Operations and Maintenance base where there will be 50 permanent jobs over the 25-year lifetime of the wind farm.

To Scottish Renewables chief executive Claire Mack, the announcement was “great news” for the offshore wind industry, and a lesson in “what can be achieved when developers, supply chain and government work together”.

She said: “Scotland’s offshore wind resource is tremendous. Couple with that world-class universities and colleges and our enormous experience in subsea engineering, and the recipe is impressive.

“Today’s announcement shows not just the diversity of skilled professions involved in the creation of an offshore wind project, but also the geographic diversity of its impact.”

Yet the STUC remained skeptical, with General Secretary Grahame Smith suggesting public pressure was the real driving force behind the move.

He said: “We have no doubt that were it not for the ‘Fife is Ready for Renewal’ campaign the construction of even these eight jackets would have been offshored too. It is sadly reflective of a sector dominated by multinationals intent on chasing a quick buck rather than investing in communities and building a long-term industrial base.

“When energy corporations like EDF chase profits and move manufacturing to Indonesia, not only do they offshore jobs, carbon emissions and tax revenues, but they risk creating a backlash to climate action.”

And so, calls have continued for greater governmental intervention in the sector, to ensure jobs are maintained and supply chain benefits are felt by communities across Scotland.

Part of that work should fall to the Just Transition Commission, established by the Scottish Government, in line with objectives in the Paris climate agreement to reduce greenhouse gas emissions, while taking into account “the imperatives of a just transition of the workforce and the creation of decent work and quality jobs”.

Established last year, the commission is tasked with advising ministers on planning, investing and implementing a move to “environmentally and socially sustainable jobs, sectors and economies, building on Scotland’s economic and workforce strengths and potential”, while also addressing poverty and inequality.

Key to the transition, then, will be the role of investment, with a Stage 2 amendment to the Scottish National Investment Bank Bill tasking the institution with furthering the objectives characterised by a just transition.

Following the amendments, the SNIB will be required to promote environmental wellbeing, and in particular, support the transitions required to meet the net-zero emissions and circular economy initiatives, while also contributing to the achievement of the Scottish Government’s economic, social and environmental policy objectives.

Yet MSPs on the Economy, Energy and Fair Work Committee stopped short of setting minimum ethical standards for projects the bank will lend to. And, perhaps predictably, campaigners were unimpressed, with Friends of the Earth Scotland campaigner Ric Lander expressing concern over the potential outcomes of investments.

He said: “The breakdown of our climate is destroying lives and whole communities right now, and this won’t change until countries like ours prioritise finance for climate action and green jobs over dirty fossil fuels.

“The Scottish National Investment Bank can play an important part in financing a just transition to a zero-carbon economy. It is great that MSPs backed amendments that make that a legal requirement on the bank. However, without a credible ethical investment framework in law, Scottish citizens will rightly remain concerned that their new public bank could invest in fossil fuel extraction, illegal logging, plastic production and other projects that will push up climate emissions.”

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