Energy transition can only work if we deal with labour disruptions

Sabina Dewan is the President and Executive Director of the JustJobs Network.

Against a backdrop of record heat levels across the globe, deadly wildfires in Hawaii, and fatal floods in Libya, governments at COP28 in December made a commitment to transition away from planet-heating fossil fuels in the world’s energy systems. The urgent need to curb carbon emissions, replace dirty fuels with cleaner sources of energy, and provide the necessary financing and technology to shift countries to low-carbon growth trajectories could not be more urgent. Yet the transition has so far been painstakingly slow: Why?

Among the reasons is the fact that the energy transition will restructure economies and labour markets with significant economic, political and social ramifications. The pressures are even more pronounced for developing countries like India with large and growing youth populations that need jobs faster than their economies can provide them. Many also face fiscal and capacity constraints that manifest in inadequate health, education, skills training, and social welfare architectures to protect workers and help them transition between sectors. Among the worst-affected are always the most vulnerable, including women.

These challenges add to the disruptions that climate change - but also technology - are already inflicting. Against this backdrop, decision-makers have little choice, and even less incentive, but to act slowly. If the world is serious about wanting to address climate change, then ensuring a just transition must be central to the conversation along with the financial support, technology transfers, and the technical capacity-building to make it happen.

An understanding of the realistic impact of moving from fossil-dependent and -producing economies to greener ones - not to mention the more granular impact of this structural change on different kinds of workers, communities, and local economies - has to underpin efforts to mitigate climate change.

For instance, in India, there is little overlap between the coal-producing regions and the renewable energy-producing ones. The coal belt is concentrated in the states of Bihar, Jharkhand, West Bengal, Odisha, and Chhattisgarh - all of which are some of the poorest states in India. Closing mines and power plants in these areas would mean workers will be forced to migrate to other geographies, uprooting their communities and networks with few, if any, portable entitlements such as social security.

For women, this further entrenches patterns of dependency and vulnerability. The first priority is securing the livelihood for the male breadwinner. In this equation, women are either forced to stay behind to care for the children and the elderly, or they follow their husbands and take up menial work to supplement income in-between care-giving responsibilities that, in the absence of their community, now falls entirely to them. For unmarried women, mobility is severely constrained by patriarchal norms. How will the new jobs align with their ability and willingness to move?

Ripple effects

The energy transition will not only affect fossil fuel sectors but will have cascading effects economy-wide. Coal, for instance, constitutes 44 percent of the Indian railway’s freight revenues. A drop in these revenues will inevitably affect Indian Railways - a highly desirable public-sector employer of 1.2 million workers.

And the notion that workers can simply be (re)skilled to occupy jobs in different sectors is grossly over-simplified. In India, despite significant emphasis on skills training, in 2021-22, 80 percent of respondents in the labour force survey identified as having no formal or informal training, while 88 percent of female and 74 percent of male respondents said they had no training at all.

Many emerging sectors - for instance, manufacturing of electric vehicles (EV) - will require a different and higher order of knowledge and skills. For EVs, this could range from operating computers, coding and data analysis, to industrial and automotive design. Moreover, replacing the petrol tank affects a whole host of workers downstream who produce pipes, valves and other inputs. This is but one example.

Not only does greening these sectors require a significant overhaul of the system to cultivate relevant skills and achieve scale, it also requires mechanisms to ensure equitable access across gender and social segments.

The transition to clean energy presents opportunities too: jobs will be lost but many may be created; the net effects are uncertain. Harnessing the opportunities can only happen, however, if we first address the challenges. This entails a deep understanding of the spatial and socio-economic distribution of jobs in a new, greener economy, and challenges related to worker mobility and equitable access to those jobs and the skills needed for them.

For decisionmakers in the developing world, who are grappling with the unprecedented confluence of labour-market restructuring arising from climate change, technological advancement, and demographic shifts, also taking on a full-blown energy transition within the short window of time available is likely biting off more than they can chew.

There is an urgent need for significant support to build the policy, regulatory and institutional architecture to manage this transition in a way that protects - or even advances - economic security and livelihoods among those who will be affected by climate change, and equally importantly, those who face dislocation by the energy transition.

Climate change mitigation hinges on addressing the economy-wide, drastic labour market disruptions of that transition. Without efforts to do so, especially in the developing world, these economies cannot transition. Ensuring a just transition is as much an economic and survival imperative as it is a moral one.