Biggest challenge in energy transition is social justice, EU official says

by Frederic Simon

While legitimate worries are being expressed about funding for low-carbon technologies to meet EU climate goals, the biggest challenge will be to manage the energy transition in a way that does not deepen social inequalities, a senior EU official has said.

“By far the biggest challenge is to create a just transition” that ensures fairness for the poorest people, said Diederik Samson, the chief of staff of European Commission vice president Frans Timmermans.

Previous industrial transitions, even though they have lifted millions out of poverty, have also tended to cement the power of the ruling class, he told a EURACTIV online event, held on Monday (30 November).

“It always tends to end up with more money and more power in the hands of fewer people,” Samson said, warning about the risk of growing inequalities with the energy transition.

In Europe, what governments have done in the past is “to repair the damage afterwards,” he said, noting that European countries have until now been “pretty good” at ensuring fairness in society.

“But we cannot afford to repeat this recipe this time,” Samson added, saying the energy transition “is way too big” in size and scope to ignore the social dimension.

If that were to happen, “the population will not accept it,” he warned.

One recent example is the 2018 carbon tax on petroleum products in France, which led to an average increase of €0.10 to the price of petrol and diesel. Even though the price increase was small, it triggered angry protests in the streets of Paris, which snowballed into a wider anti-government movement known as the “yellow vests”.

This is why the European Commission will pay particular attention to social justice when putting forward its June package of climate legislation, Samson said.

The European Commission will propose reforms to its carbon market next year, and has mooted the idea of extending the scheme – which forces companies to buy permits to cover their pollution – to areas such as shipping, buildings and road transport.

But Frans Timmermans, the EU Commission vice-president in charge of the Green Deal, has said he was “personally not convinced that this is the right way forward,” echoing criticisms from environmental groups who warned that including road transport in the ETS would raise fuel prices and feed popular discontent.

A “more efficient” way of cutting emissions in road transport would be to tighten up CO2 standards, Timmermans said, a stance also backed by environmentalists because it places the burden on car manufacturers, not consumers.

Those views were echoed by Simone Mori, Europe director at Italian energy utility Enel, which supported the EURACTIV event.

Although the ETS must be celebrated for squeezing out coal from the power sector, it is not a silver bullet for road transport, where “standards and targets are a lot more effective,” Mori said.

Similar worries have been expressed about the idea of including buildings into the ETS, with some studies warning it would drive up the cost of heating for the poorest households without bringing much in terms of emissions reductions.

In Italy, Mori said, the government has put in place an eco-bonus scheme to promote energy efficiency renovations in the housing sector. In his view, such schemes are more effective because they act as incentives for households to renovate, not as a punishment.

“You need some very simple mechanism easy to be understood by citizens. The energy transition will fly because the citizens will buy,” Mori said.

Earlier this year, a study led by the Enel foundation found carbon pricing policies can sometimes impact low-income households unequally.

“There could be more Yellow Vests in the future,” the study warned, referring to the riots that swept through France in 2018.

*first published in: www.euractiv.com