Four ways climate policy continuity can contribute to a competitive and resilient EU

by Leave a Comment

Key points:

  • Climate action remains a priority for EU citizens, showing the need for future EU decision makers to continue to take this area forward. A focus on energy security, cost, competitiveness, and social concerns can provide a winning approach.
  • Policies that reduce emissions have been found to increase energy security, with the RePowerEU Plan illustrating how the EU can take decisive action to lower energy dependence and emissions at the same time.
  • Investing in green technology now can increase competitiveness in the long term and provide cost savings for citizens. Investments in wind and solar have saved EU consumers around EUR 100 billion between 2021 and 2023.
  • Social policy, including retraining programmes and social safety nets, will help ensure people benefit from the development of green industry and technology.

While the June 2024 European Parliament election has moved the ideological needle to the right, this does not erase the pride that citizens have in the EU being a frontrunner in climate action. The most recent Eurobarometer public opinion survey on climate change shows that 77% of people in the EU think climate change is a very serious problem, and a pre-election survey showed 68.5% of people listing climate action among their top priorities when voting, highlighting continued public support for action. This briefing lays out how the EU can continue to act on this strong climate sentiment while accounting for energy security, cost, competitiveness, and social concerns.

Climate policies enhance energy security

In today’s complicated geopolitical context, energy security has become a key political priority, which is being supported by renewable energy development.

In the immediate aftermath of Russia’s invasion of Ukraine, the EU worked to cut dependence on Russian gas and oil while also limiting the extent of energy price increases. The RePowerEU Plan was designed to reduce dependence on Russian fuels by increasing the speed of energy system transition. It did this by reducing energy demand, diversifying energy supply and promoting the production of clean energy, particularly through expanding renewable energy capacity.

The impact of RePowerEU has been dramatic. In 2023, the EU imported just 15% of its gas from Russia, compared with 45% in 2021. Fossil fuels now make up only a third of EU electricity generation, while renewables accounted for 44% in 2023. More electricity was generated from wind alone than from gas last year.

The International Monetary Fund (IMF) examined whether Europe’s climate policies can improve energy security for the region both by their contribution to supply security and resilience to economic shocks.1Europe here means the European Union (EU), the UK and European Free Trade Association (EFTA) countries. The full definition of energy security that the IMF uses is the following: “security of supply, which improves as dependence on energy imports falls and/or imports become more diversified, and economic resilience to energy shocks, which is enhanced when the overall weight of energy spending in GDP declines.” It found that policies to reduce greenhouse gas emissions limit Europe’s reliance on imported energy, diversify sources of energy imports and reduce vulnerability to energy shocks. The IMF report finds that a package of climate measures intended to lower emissions in line with the EU’s Fit for 55 package – which aims to reduce emissions by at least 55% by 2030, compared with 1990 levels – would improve energy security nearly 8% over the same period.2The paper considers the following policy measures: increased carbon prices in the EU and UK emissions trading schemes, increased emissions and performance standards for road transport and buildings, improved permitting processes for renewables, public investment in heat pumps in buildings, and removing fossil fuel subsidies. The same measures would also reduce the energy expenditure of firms and households by improving energy efficiency and increasing renewable capacity, thus expanding available energy supply.

Climate action cuts costs for citizens

Climate action has been shown to cut costs for citizens in a number of cases, meaning it can help tackle the cost of living crisis. Going forward, environmental and climate policy can focus on areas with clear cost savings for citizens to build political support.

The cost of renewable energy has fallen dramatically over the last ten years – renewable energy technologies were out-competing fossil fuels globally even before the Russian invasion of Ukraine and the resulting energy crisis. The most dramatic cost declines between 2010 and 2022 were seen in solar PV (89% cost decrease), onshore wind (69%) and offshore wind (59%).3These are presented here as the global-weighted average levelised cost of electricity (LCOE). In 2022, for example, the average cost of power from new onshore wind projects was 52% lower than the cheapest fossil fuel-fired option.

At times of peak generation for wind and solar PV, electricity prices have been driven down in wholesale markets, and have sometimes turned negative. The International Energy Agency (IEA) estimates that electricity consumers in the EU saved around EUR 100 billion between 2021 and 2023 as a result of wind and solar power replacing fossil fuel generation. This could have been 15% higher if renewable generation had increased more quickly.

The benefits of increasing levels of renewable generation are expected to continue into the future. The IEA projects that electricity prices for EU households will be 22% lower in 2030 compared with 2022 if countries achieve the low-carbon measures in its most ambitious Net Zero Emissions scenario. Electricity prices for EU industry would fall by around 14% in the same period.

As both the IEA and the IMF argue, taking early action to transition to a more sustainable energy system would be cheaper for countries than delaying action until the last minute. Early action allows planning and incremental steps while delay means that polices will need to be much more stringent and costly in order to succeed, and as a result energy prices will be higher. For example, a study in the UK compared lost savings from delayed green policies on energy, food, housing and cars, and found that delaying their implementation had cost households as much as GBP 4,350 over the span of two years.

Electromobility is another example where cost savings are there for the taking, as running and maintaining electric vehicles (EV) is cheaper than internal combustion engine (ICE) vehicles. The IEA estimates that electric cars will reach price parity by 2030, and as early as 2026 for medium-sized cars in Europe, a timely change as the EU’s 2035 phase out goal for new ICE vehicles approaches.4In Germany, for example, EVs already have lower net costs than ICE vehicles. European car manufacturers have stepped up to lower costs, and policy support through initiatives like social leasing can help lower-income consumers get access to EVs.

Investing in green technology increases competitiveness

While technological solutions cannot solve every environmental challenge on their own, there are a number of green technology investments that can have big returns and have been receiving political support.

Europe aims to nearly double renewable energy capacity by 2030, reaching 20% of total global capacity. Almost all of the European total comes from within the EU, making the bloc a key global player in decarbonisation, second only to China in its capacity ambitions.

The global market for key net zero technologies is projected to triple from 2023 levels to around USD 650 billion per year by 2030. The IEA highlights the unprecedented investment that is currently taking place in renewable energy: for example, almost twice as much was invested in clean energy than in fossil fuels globally in 2023.5The IEA defines clean energy as renewables, grids and storage, hydrogen, large-scale heat pumps and energy efficiency. It also includes relatively small investments in nuclear power and fossil fuels with carbon capture, utilisation and storage (CCUS). This trend is expected to continue as countries decarbonise their energy systems. In electricity, solar power investment exceeded investment in all other generating technologies combined in 2023.

In response, the leading economies in the net zero transition – China, the US and the EU – have all set out industrial strategies to encourage the growth of renewable energy technology manufacture, as well as targets for deploying the technologies. This reflects a ‘race to the top’ as countries compete to build, export and deploy renewables, electric vehicles and heat pumps. The EU’s Net Zero Industry Act is designed to reduce reliance on imports and promote net zero technology manufacture, with the aim that green technologies produced in the EU provide at least 40% of EU deployment by 2030,6The technologies covered are solar PV and thermal, electrolysers and fuel cells, on- and off-shore wind, sustainable biomass and biomethane, batteries and storage, heat pumps, geothermal, electricity grid technologies, and carbon capture and storage. thereby increasing the EU’s competitiveness and energy independence.

The current EU Green Deal and larger policy framework helps the EU compete on green technology, although more investment is needed to consolidate its green tech industries. Cap and trade policies can also further spur investment in sustainable technologies, as they create an expectation that emissions will need to be reduced. The EU Emissions Trading System (ETS) already covers emissions from the manufacturing and energy industries, maritime transport and aviation, while ETS2 will phase in emissions from buildings and road transport over the next three years.

Putting climate and social action together

The shift to new, clean industries brings with it opportunities to create new jobs. Employment in the clean energy sector increased by more than 5% globally in 2022, largely driven by the solar PV and electric vehicle sectors. In comparison, fossil fuel-related jobs fell by 4% in 2022. Clean energy jobs now outnumber those in fossil fuels globally.

The IEA expects high-skilled energy positions to increase by 6.6% per year in the EU between 2022 and 2030, and medium-skilled jobs to increase by 7.8% per year. Up to 1 million new jobs could be created in green transition industries in the EU by 2030.

One of the critiques leveled at the European Green Deal by trade union groups and researchers was that it was leaving people behind, particularly already-vulnerable groups like women and those on low incomes due to distributive effects or workers in sectors that need to shift course dramatically.

Support for retraining will ensure that people have the skills to take up new green jobs. The EU’s Green Deal Industrial Plan puts forward a course of action and the 2020 European Skills Agenda set ambitious goals to ensure that the region has enough skilled workers to meet the increasing demand in the clean energy sector. This includes reskilling and upskilling workers from fossil fuel sectors to transfer their expertise to new technologies.

In terms of policy to support this, OECD analysts suggest a number of tools including targeted social protection, housing allowances, and compensatory transfers to offset any economic effects on the poorest citizens. Incentives can be put in place to rebuild green employment opportunities in areas where polluting industry jobs are lost, where possible. Other researchers have pointed towards the need for a new social contract that takes into account the reality of the changes to be wrought by climate change – and the effects of those that may occur in mitigating them.

Building the consensus to get it done

This approach to climate policy at the nexus of technology, competitiveness, security and social sustainability creates the opportunity to build up a new, broad coalition in favour of European climate action in the post-election context.

Decision-makers have spoken up in support of this new approach to climate. Current heads of state and government, as assembled in the European Council, agree, writing “We will anticipate potential challenges and seize the opportunities for our Union in the green and digital transitions, in order to ensure the sustainability of our economic model, leaving no one behind.” Platforms of all parties except ECR largely include references to renewables for security and boosting greentech investment. French President Emmanuel Macron (Renew) and German Chancellor Olaf Scholz (Socialists & Democrats) wrote that to take on global geopolitical issues, there is a need to “[strengthen] our global competitiveness and [enhance] our resilience while making the Green Deal and the digital transition a success.”

In the business community, BusinessEurope and the German Chamber for Industry and Commerce have remained firm that they want the climate targets to remain, but stated that there needs to be a bigger emphasis on competitiveness. Furthermore, green businesses have called for a continuation of the Green Deal to maintain regulatory stability and support competitiveness.

EU cities, regions, worker and civil society groups are on board. The European Committee of the Regions, which represents cities and regions in EU policy making, created 29 recommendations, including continuing the Green Deal while reinforcing its competitiveness, inclusivity and social elements. EU civil society, employers, and workers, as represented by the European Economic and Social Committee, have proposed a social deal to go along with the Green Deal 2.0 to make sure that no one gets left behind.

  • 1
    Europe here means the European Union (EU), the UK and European Free Trade Association (EFTA) countries. The full definition of energy security that the IMF uses is the following: “security of supply, which improves as dependence on energy imports falls and/or imports become more diversified, and economic resilience to energy shocks, which is enhanced when the overall weight of energy spending in GDP declines.”
  • 2
    The paper considers the following policy measures: increased carbon prices in the EU and UK emissions trading schemes, increased emissions and performance standards for road transport and buildings, improved permitting processes for renewables, public investment in heat pumps in buildings, and removing fossil fuel subsidies.
  • 3
    These are presented here as the global-weighted average levelised cost of electricity (LCOE).
  • 4
    In Germany, for example, EVs already have lower net costs than ICE vehicles.
  • 5
    The IEA defines clean energy as renewables, grids and storage, hydrogen, large-scale heat pumps and energy efficiency. It also includes relatively small investments in nuclear power and fossil fuels with carbon capture, utilisation and storage (CCUS).
  • 6
    The technologies covered are solar PV and thermal, electrolysers and fuel cells, on- and off-shore wind, sustainable biomass and biomethane, batteries and storage, heat pumps, geothermal, electricity grid technologies, and carbon capture and storage.

Loss and Damage in the Sundarbans

by Leave a Comment

Key points:

  • The Sundarban region, home to 7.2 million of the world’s most vulnerable people and the largest single mangrove forest in the world, is increasingly at threat from catastrophic impacts of climate change
  • Climate change is contributing to the absence of employment opportunities, the destruction of property from extreme weather events and the loss of vital mangroves and land from sea level rise. With homes and livelihoods under threat, many are left with no choice but to migrate elsewhere
  • The increasing scale and frequency of climate impacts mean the limits of adaptation have already been reached in many cases. The most affected argue that the extensive loss and damage needs to be addressed by those responsible with the financial means to do so.

What are the Sundarbans?

The Sundarbans are a cluster of low-lying islands in the Bay of Bengal, spread across India and Bangladesh. The region is recognised internationally for its unique biodiversity and ecological importance – including the single largest mangrove forest in the world, encompassing a total area of 10,200 km2.  

The Sundarbans ecosystem offers a wide range of vital ecological services, including cyclone protection for millions of people, wildlife habitat, food and natural resource provision, and carbon sequestration. It is also home to about 7.2 million people (4.5 million in India and 2.7 million in Bangladesh), including some of South Asia’s poorest and most vulnerable communities. Around half the population lives below the poverty line.

Due to a lack of employment opportunities, most are dependent on the land and natural resources that are increasingly being depleted by climate change. Most rely on subsistence agriculture, supplemented with fishing, crab and honey collection. Millions are unable to meet their basic nutritional requirements, leading to health issues such as anaemia, malnutrition and childhood stunting. At the same time, climate impacts are exacerbated by other factors, such as poverty, lack of livelihood options, reliance on land, uneven land ownership and limited government support.

The Sundarbans were declared a reserve forest before the partition of India in 1875, and UNESCO declared the Indian and Bangladesh portions of the Sundarbans World Heritage Sites in 1987 and 1997, respectively. The region is also recognised under the Ramsar Convention on Wetlands. Despite this recognition, including conservation obligations under international conventions and treaties, the Sundarbans are under threat from climate change, along with a combination of natural factors and human impacts.

Climate impacts in the Sundarbans

Land mass is declining year by year

In 2015-16, the total area of the Sundarbans had shrunk  by 210 km2 since 1967, and by 451 km2 since 1904. This declining trend holds true whether the Indian and Bangladesh portions of the Sundarbans are considered separately or grouped together. The main reason is the surrounding sea level, which is rising more than twice as fast as the global average. Satellite imagery shows the sea level has risen in the Sundarbans by an average of three centimetres a year over the past twenty years, and the area has lost almost 12% of its shoreline in the last forty. In addition to sea level rise, a gradual reduction in sediment flow from rivers to the Sundarban region has resulted in loss of land mass. 

Due to these factors, the rate of retreat of coastlines is as high as 40m a year for some of the islands, which will disappear completely within the next 50–100 years at the current rate. Already some islands have been submerged and it is predicted that many more will vanish if sea level rise maintains its current pace.

Salinisation is threatening agriculture and health

Where land is not yet lost, frequent flooding with salty water from rising sea levels and extreme weather events renders affected land unproductive. Increasing water and soil salinity are also caused by climate-induced changes in temperature and rainfall, along with reduced freshwater flows from the Himalayas in the dry season. In the last 40 years, approximately 25% of glacial ice has been lost in the mountain range, posing a significant risk to stable and reliable freshwater supplies to major rivers, such as the Ganges and Brahmaputra, that flow into the Sundarbans. 

In the Sundarban region, water and soil salinity has increased dramatically, with projections that many parts of the region will reach near ocean-level salinity by 2050. In Bangladesh, soil salinity increased six times, and up to fifteen times in certain areas, from 1984 to 2014. The salinisation of soil ruins crops and devastates farmer livelihoods. Research estimates a one metre increase in sea level would cause losses as high as USD 597 million in agriculture from salinity-induced land degradation. Some villages no longer support agriculture due to recurrent salt water inundation. When households are no longer able to grow crops on land due to lack of access or salty soil, they are unable to engage in subsistence farming and are exposed to the cash economy, increasing their risk of food insecurity.

Progressive salinisation of rivers and groundwater has also resulted in the decline of available fresh drinking water, with numerous adverse effects on mother-child health, including dehydration, hypertension, prenatal complications and increased infant mortality. Collection of data from drinking wells in the Indian Sundarbans found that 17 out of 50 wells sampled contained salinity levels unsuitable for drinking. Increased saline water levels also cause high blood pressure and fever, as well as respiratory and skin diseases. A vulnerability assessment of Mousuni Island in the Sundarban region found that 80% of the villagers experienced skin disease caused by salty water. Additionally, 42% of households suffered infectious diseases, such as malaria and dengue fever, during flooding. Under high emissions scenarios, climate change is expected to make the prevalence of disease, particularly water-borne illnesses, even higher.

Mangroves and biodiversity are being depleted

Mangrove forests are a crucial natural blockade against cyclones, storm surges and tides, and sustain the high levels of biodiversity in the region. One study estimates that between 2000 and 2020, 110 km2 of mangroves disappeared from the reserve forest of the Indian Sundarbans due to erosion. While 81km2 of mangroves were gained through plantation and regeneration, the gains were all outside the existing mangrove forest. Another study looking at the coverage of mangrove forests between 1975 and 2020 found that mangrove forests have been decreasing in density by an estimated annual rate of 1.3%.

Researchers also observed a deterioration in the health of mangrove forests over the last twenty years due to increased salinity, temperature rise and rainfall reduction in pre and post-monsoon periods. While mangroves are known for their resilience, they are sensitive to changes in the salinity of water and soils, which is already resulting in shifts away from high-value timber species towards more salt-tolerant mangrove species. This is reducing the quality and overall availability of timber stocks, with implications for those relying on the forest for their livelihoods. Researchers estimate that there has been a loss of USD 3.3 billion in ecosystem services of the Sundarban Biosphere Reserve during the last 30 years, over 80% of which is provided by mangroves.

In a changing climate, it is expected that the Sundarbans landscape will undergo significant fragmentation, causing habitat loss for many endangered species, including tigers and venomous snakes, and this is increasing the risk of human-wildlife conflicts in the region. Sea level rise is resulting in habitat loss for many terrestrial and amphibian species. Habitats for freshwater fish are also shrinking as water becomes more salty, threatening many small, indigenous freshwater species. This has adverse impacts on the livelihoods of fishermen, as well as on human health as fish is a critical source of protein and nutrients in the Sundarbans. For example, in regions with high levels of fish species loss, chronic and acute malnutrition among mothers and children is higher than the thresholds set by the World Health Organization for public health emergencies.

Extreme weather events are more frequent and severe

While the Sundarban region has always been affected by cyclones and extreme weather events, the rate and intensity of these events are increasing. In the last 23 years, the area has witnessed 13 supercyclones. In the Bay of Bengal along the Sundarbans, the occurrences of cyclones increased by 26% between 1881 and 2001. Additionally, research has shown there has been a significant rise in the frequency of very severe cyclones in the post-monsoon season from 2000 to 2018. Scientists project an increase of about 50% in the frequency of post-monsoon cyclones by 2041-2060. 

The rise in cyclone frequency and severity is in part attributed to the increase in sea surface temperature, which rose in the Indian Sundarbans at 0.5°C per decade from 1980 through to 2007 – around eight times higher than the globally-observed warming rate of 0.06°C per decade. Land surface temperature in Sundarban region has already increased about 1°C over the past century and is projected to warm by up to 3.7°C by 2100.

Due to the low elevation of the Sundarbans and reduced protection from mangroves, cyclones can cause catastrophic damage. Four major cyclones have hit the Sunderbans in the last three years, killing nearly 250 people and causing losses of nearly USD 20 billion. Cyclone Amphan in 2020 was estimated to have destroyed 28% of the Indian Sundarban region and caused USD 12 billion of damage. The Cyclone displaced 2.4 million people in India and 2.5 million people in Bangladesh. While many returned soon afterwards, damage to more than 2.8 million homes and lack of evacuation centres resulted in homelessness and prolonged displacement for many thousands.

Following Amphan, the government estimates over 100,000 farmers experienced heavy losses as salt water in fields and ponds killed off fish and rendered fields uncultivable. With hundreds and thousands of extra mouths to feed, conflicts between humans and tigers spiked as islanders began venturing deep into the forests in search of fish, crab, honey and firewood.

Livelihoods are being hit hard

About five million people are dependent on the Sundarbans for their livelihoods. According to the World Bank, almost 80% of households in the Sundarbans pursue livelihoods that involve inefficient agriculture, fishing and aquaculture production methods. Dependence on the land and natural resources paired with a lack of alternative employment opportunities means livelihoods are extremely vulnerable to changing climatic conditions.

Salinisation is threatening agriculture. Fishermen are impacted by the decline in fish populations. Forest-based livelihoods are adversely impacted by changes in the composition of mangrove species, which is reducing the value of standing timber and honey production. A study of three villages in the Indian Sundarbans found that 62% of the workforce has lost their original livelihoods and have been forced to rely on much more uncertain incomes. 

Even though the impacts of climate change put their livelihoods at greater risk, some households continue to live in vulnerable locations due to high land prices and a lack of employment opportunities elsewhere. Due to a lack of job opportunities, others need to migrate to seek out employment, temporarily or sometimes permanently. 

Young men and women have had to leave for nearby cities, or even states over 1,000 kilometres away. There they face a precarious existence as daily wage labourers and contract workers at construction sites and factories. Some estimates suggest that roughly 60% of the male workforce in the Indian Sundarbans has migrated. Migration has also increased the poverty of the population left behind since it takes considerable time for low-skilled migrant family members to save sufficient funds to send back home.

Migration as a last resort

An estimated 1.5 million people will have to be permanently relocated outside the Sundarbans because sea level rise will make it impossible for them to live there or earn a livelihood. As climate change is responsible for their forced migration, these people are climate refugees – however, the term is not formally recognised internationally.  Additionally, extreme poverty both arises from and contributes to their vulnerability to environmental hazards. 

Over the past 25 years, four islands in the Indian Sundarbans – Bedford, Lohachara, Kabasgadi and Suparibhanga – have already disappeared, causing 6,000 families to become displaced. Lohachara became well-known as the first inhabited island in the world to disappear. Neighbouring Ghoramara is already half underwater. Once home to 40,000 people, the 2011 census counted only 5,000 people still struggling on the island. 

Many of those displaced relocated to nearby Sagar island with the aid of government programmes in the 1980s and 1990s. However, with a population of 200,000 and growing, and with the island having shrunk by a sixth of its original size, land and resources are being severely depleted. One case study calculated the total value of damage to 31 households forced to move from inundated areas of the Sundarbans to the island of Sagar at Rs 6,0742,225 crore (USD 700,000), 98% of which was due to loss of land assets. 

Back in 2002, it was estimated that climate change would displace over 69,000 people from the Sundarbans by 2020. In 2018, about 60,000 people had already migrated from the region.

Why adaptation is not enough

Climate adaptation is the process of adjusting to current or expected effects of climate change. However, it is clear that adapting to some impacts of climate change will not be possible and, in some cases, the limits of adaptation have already been reached. 

A key adaptation measure is the construction of storm surge walls and embankments. However, even with these measures, the loss and damage inflicted by a few hours’ battering by waves, winds, and storm surges during a cyclone can undo the gains from many years of measures to prevent flooding. After Cyclone Aila in 2009 destroyed 778 km of embankments in the Sundarbans, it cost Rs 5,032 crore (USD 670 million) to rebuild them, only for them to be breached again ten years later by Cyclone Amphan. One Sundarban village, after embankments to hold back the rising sea collapsed during Cyclone Aila, attempted three times to build sea walls, all of which collapsed against the power of the sea. 

Another adaptation approach is the introduction of salt-resistant crops. This has been met with some success, but may prove to be a temporary fix, with hurdles such as the availability of seeds, knowledge of farming and relatively low yields. 

Adaptation practices can also exacerbate and accelerate the ecological damage caused. For example, increasing salinity levels prevent the cultivation of rice or other crops, causing some to shift towards shrimp farming, which requires salt water and can be more profitable. However, the conversion of land to shrimp farms further accelerates the salinisation of water while profits often only benefit private investors. Workers – primarily women – receive little income and suffer health issues, such as infections, problems with eyesight and skin disease.

For the people of the Sundarbans, lives depend upon the land on which they live, produce food and sustain their livelihoods. Some inhabitants have already had to relocate multiple times. In the words of one resident: “People are resilient, but how much resilience can they have?” The outlook is bleak for the Sundarbans, with proposals that ‘managed retreat’ – the planned migration away from vulnerable regions over time – may be the only viable option.

Why financing for Loss and Damage is needed

Loss and damage is a term used to describe how climate change is already causing serious and, in many cases, irrevocable impacts around the world – particularly in vulnerable communities. According to the most recent assessment of climate impacts from the Intergovernmental Panel on Climate Change (IPCC), loss and damage can broadly be split into two categories – economic losses involving “income and physical assets”, and non-economic losses, including “mortality, mobility and mental wellbeing losses”. 

For the people of the Sundarbans, the economic and non-economic losses, such as loss of land, livelihood, mortality, health, culture, are beyond what the region can afford. According to a 2009 study, the annual costs of the environmental damage and health issues caused by climate change are estimated at Rs 1290 crore annually (USD 250 million) – equivalent to 10% of the Sundarbans GDP in 2009. 

The Sundarbans bear little responsibility for global emissions (for example, the whole country of Bangladesh is accountable only for only 0.56% of global emissions), but are forced to suffer the consequences. Alongside many other developing nations and vulnerable communities, the region argues strongly that it should not be forced to pay for the excessive loss and damage already incurred, and anticipated in the future.

Transitioning the UK’s workforce to a net-zero economy

by Leave a Comment

Key points: 

  • The value of the UK’s low-carbon economy increased by 48% between 2015 and 2018 to stand at GBP 8.1 billion, while the UK’s net-zero energy sector is going to need at least 400,000 new employees by 2050 to achieve its climate targets.
  • There will be significant opportunities in the North of England, where over 100,000 jobs may become available, and in the Midlands where 50,000 jobs are predicted. This will benefit the UK, where regional inequality is higher than any other comparable economy. 
  • The UK’s offshore oil and gas industry has seen employment fall by nearly 40% from 2014 to 2018. Analysts suggest that global oil demand could have peaked in 2019 and may never recover to previous levels, while the UK’s high-cost of operations presents a real risk of stranded assets. 

Globally, oil and gas companies are facing a significant decline in exploration and production, with serious ramifications for the UK’s North Sea oil and gas industry. Recently, BP wrote down USD 17.5 billion of its assets by trimming its long-term oil and gas price forecast, and warned that it will be laying off about 15% of its workforce. 

The UK’s main oil and gas trade body, OGUK, warned on 28 April that 30,000 jobs are expected to be lost in the industry as a result of the oil price shock and the slump in demand triggered by the COVID-19 pandemic. But job losses have in fact been quicker than expected, with 4,000 jobs already lost by 15 June, and projections suggesting a quarter of all UK oil workers may lose their jobs. Peak oil demand may have been pushed forward by as much as three years due to COVID-19, according to several analysts as well as oil giants Shell and BP.

As this reality hits a UK already suffering from climbing unemployment – between March and May the number of people claiming unemployment benefits shot up by 126% – it is crucial that the government invests in long-term, sustainable industries and jobs. Channeling funds into an already declining fossil fuel industry will bring no long-term benefits for workers, the economy or the climate.

There has been a gradual increase in jobs in the UK’s low-carbon industry since 2015, while fossil fuel jobs in the UK have been consistently decreasing:

The value of the low-carbon economy increased by 48% between 2015 and 2018 to stand at GBP 8.1 billion. The increase was mainly due to a rise in acquisitions by the offshore wind sector. According to the Office for National Statistics:

  • The UK’s Low Carbon and Renewable Energy Economy (LREE) employed 224,800 people in 2018 – a gradual increase of 24,000 jobs from 2015.
  • The energy efficiency product sector accounted for 51% of all LREE jobs in the UK (114,400), and 36% of the turnover in 2018. The two other sectors with the highest number of jobs in 2018 were energy efficient lighting (22,400) and energy monitoring and saving (16,800). 
  • The low emissions vehicles and infrastructure sector is the fourth largest employer in the sector (13,700), growing by 3,300 jobs from 2017 to 2018. 
  • Offshore and onshore wind combined accounted for nearly 6% of jobs, with offshore wind seeing a 60% increase in employment from 2015 to 2018, while onshore wind saw a 38% decrease. 
  • The vast majority of the UK’s low-carbon employees are in England – in 2018, 82.3% of the 224,800 jobs were in England, 10.2% in Scotland, 5.1% in Wales and 2.2% were in Northern Ireland.
Numbers employed across different low carbon sectors
Source: Data taken from the Office for National Statistics: Low carbon and renewable energy economy, UK: 2018

Employment in the UK’s offshore oil and gas industry fell by nearly 40% between 2014 and 2018.

  • The number of employees in the low-carbon industry was nearly on par with the UK’s offshore oil and gas industry in 2018, which stood at 259,900 jobs and estimated at 269,100 in 2019. 
  • Employment has been decreasing since 2014/2015, when the North Sea oil price fell 60% from summer 2014 to January 2015. Despite pledges to preserve jobs, the industry has not recovered its 2014 job numbers. 
Full-time equivalent employees in the UK’s LREE and offshore oil and gas sectors
Source: Data taken from the Office for National Statistics: ‘Low carbon and renewable energy economy, UK: 2018‘ and Oil and Gas UK’s ‘Workforce report 2019’. Red dashes indicate predicted estimates. 

The number of jobs in the UK’s low-carbon industry will have to increase if the government is to meet its binding climate targets of net-zero by 2050. 

  • The National Grid predicts that the UK’s energy sector will need at least 400,000 new employees in the ‘Net Zero Energy Workforce’ by 2050, an increase of over 40% from total LREE jobs in 2018. 
  • Of these, 260,000 will be in completely new roles, while 140,000 will be replacing those leaving the workforce. Between 2020 and 2030, the National Grid predicts 117,000 new employees, then 152,000 between 2031 and 2040, and later 131,000 between 2041 and 2050. These new roles will be linked to new technologies, such as electric vehicles, hydrogen and carbon capture and storage. 
  • Every region across the UK will require tens of thousands of new employees, with significant opportunities in the North of England where over 100,000 jobs may become available, and in the Midlands where 50,000 jobs are predicted. In Scotland, Wales and Northern Ireland, 90,000 jobs are expected to become available.
  • Diversifying new jobs would benefit an unequal UK. The UK was deemed to be more regionally divided than any other comparable economy in 2019, according to the Institute for Public Policy Research. Since 2010, job creation in the UK has been overwhelmingly concentrated in London. London and the South East – home to just a quarter of the UK’s population – account for almost a third of the country’s net increase in jobs since 2010.

With the right government support, and following the scenarios laid out by the Committee on Climate Change’s (CCC) core recommendations and National Grid’s Future Energy Scenario, the UK could create 700,000 new green jobs by 2030 and a further 488,000 through to 2050, according to new research by the Local Government Association (LGA).

Geographical breakdown of jobs needed to get the UK to newt zero by 2050
Source: National Grid report Building the net zero energy workforce, 2020. 

More jobs will be created if the UK government invests in the low-carbon economy, verus oil and gas. 

  • The average employment creation across all renewable energy is 0.65 jobs per GWh of energy, and the average across both renewable energy and energy efficiency is 0.80 jobs/GWh. Average job creation for fossil fuels is only 0.14 jobs per GWh (coal 0.15, gas 0.12), according to a UK Energy Research Centre report.
  • Pre COVID-19, Sea Change International predicted that job creation in the clean energy industry could exceed losses in oil and gas by threefold, if progressive and green policies were pursued.  

The fossil fuel sector was already on the cusp of a structural change before the COVID-19 crisis and the UK’s North Sea oil and gas industry was already struggling. 

The UK’s Office for Budget Responsibility (OBR) projected in March 2019 that revenues from oil and gas would remain less than 0.1% of the UK’s GDP, after revenues fell by 90% from 2008-2009, when they accounted for 0.7% of GDP. 

  • Since 2008-2009, the UK’s oil and gas revenues fell from GBP 10.6 billion (0.7% GDP), to GBP 1.1 billion (0.1% GDP) in 2018-2019, representing a 90% drop in revenue. The OBR also predicted that production will continue to fall over the next five years. 
  • Receipts from oil and gas have underperformed in almost every year of every forecast since 2015, leading the OBR to consistently revise down its forecasts. 
  • The UK has the highest operation costs per barrel of all major offshore regions. This is due to a smaller field size, a fragmented operator landscape, a more mature continental shelf, and a higher number of personnel on board per produced barrel, according to Rystad. This has happened despite the UK hitting its 2015 cost-reduction target. 
  • As a result, annual investment could fall below USD 1 billion by 2024, creating stranded assets. OGUK has acknowledged that North Sea companies are vulnerable to oil price volatility, and high-cost offshore drilling will bear the brunt.

Transitions from oil and gas that benefit workers and local economies are possible and have been initiated in several geographies around the world. Below are two case studies:

Inclusive transition from offshore oil and gas, Taranaki, New Zealand, 2019-

The Taranaki region is located on the west coast of New Zealand’s North Island. It is fringed by the Tasman Sea and is home to more than 100,000 people. The region is also the centre of the country’s oil and gas industry. In 2018, New Zealand announced that it would end any new licences for offshore exploration, jeopardising jobs in the region at the time when the energy industry represented 28% of the region’s economic output. 

In response, the government announced the Just Transition Unit to support New Zealand’s transition to a low-emission economy. Transitioning to a clean, green and carbon neutral New Zealand is a key outcome of the government’s strategy for a more productive, sustainable and inclusive economy, with the first region of focus being Taranaki. 

To this end, the government set up a USD 17 million clean energy centre for the region granting USD 12.7 million for research and development and employing 45 people directly. The transition aims to be as inclusive and participatory as possible, with the government committed to working directly with five central society ‘pillars’: workers, business, central government, local government and indigenous people. 

During February to April 2019, a roadmap for 2050 was created through a large-scale co-design process. In total, more than 700 people took part in the process through 28 workshops.

This case study shows how participatory processes can lead to plans that include and account for local workers. The roadmap launched in May 2019 and was presented by consultants in over 40 locations. A programme of work is now being developed to decide on next steps (in the long and short-term) and to achieve the region’s low emissions vision by 2050. 
Preparing for coal phase-out and power sector transformation in Germany, 2018-

To align with the country’s climate targets, Germany launched a Commission for Just Transitions in 2018. The goal of the commission was to ensure a just transition for industry workers while maintaining Germany’s CO2  emissions reduction targets, and to set a final date for the complete phase-out of coal. 

Over a period of seven months, the commission discussed how to transition away from coal, while ensuring a just transition for the mining sector and in areas where coal power plants are located. The processes involved expert hearings from a broad range of involved parties, including representatives from affected industry sectors, regions and employees. 

A 278 page report was accepted nearly unanimously at the end of the negotiation period, with support from all stakeholders and the political sphere. Three union organisations were at the table – The German Trade Union Confederation, and two stakeholders unions, The Industrial Workers’ Union for Mining, Energy and Chemistry, and the United Services Trade Union. 

The final outcome was a clear pathway, outlining timelines and measures to ensure that workers’ rights are respected and central to the phasing out and reshaping of the conventional power industry. It included a goal of complete coal phase-out by 2038 (with the option of 2035), to create as many decent jobs as those that will be phased out, and the provision of structural aid of EUR 2 billion each year over the next 20 years.

Follow Us