2024 needs bold action for a just energy transition

Opinion

8 January 2024

reading time 4 minutes

As we welcome 2024, the imperative for a transition to sustainable energy sources is no longer up for debate – even the thousands of oil industry lobbyists at COP28(opens in new window) could not prevent a call to “transition away” from fossil fuels(opens in new window) . However, how the energy transition takes place is both of enormous consequence and still largely up in the air. There is a growing recognition that achieving a just energy transition involves more than technological advancements—it requires a fundamental re-evaluation of the extractivist economic model that got us into the climate crisis in the first place and which continues to drive the current corporate-led energy transition.

Baby steps

Before COP28’s call for a “transition away” from fossil fuels, 2023 saw the OECD Guidelines for Multinational Enterprises(opens in new window) updated to include new expectations of business concerning climate change and the just transition. They insist that all companies have a responsibility to bring their emissions in line with the 1.5-degree target established by the Paris Agreement(opens in new window) and to do so in a way which is fair and inclusive. In December 2023, there was a breakthrough on the EU Corporate Sustainability Due Diligence Directive(opens in new window) , with legislators agreeing to make key portions of those normative standards binding, including obligating large European companies to draft and implement a just transition plan for their business. Compared with the enormity and urgency of the climate crisis, these can only be described as baby steps. This year will need to see bolder action and a more fundamental challenge to the prevailing paradigm if we are to fulfil the just transition imperative.

Challenging the ‘maximising shareholder value’ model

Currently, the energy sector – fossil fuels as well as renewables – is guided by the principle of maximising shareholder value. This model prioritises short-term financial gains for investors, often at the expense of long-term sustainability, social responsibility, and environmental stewardship. To continue maximising short-term shareholder value, oil companies like Shell and BP continue to invest in fossil fuels. The same model drives multinational renewable energy companies to cause widespread human rights and environmental impacts(opens in new window) in mineral-rich countries in their frantic rush to secure resources for “clean” energy technology to be deployed largely in the Global North. However, the just energy transition demands a departure from this profit-centric approach, urging a more holistic perspective that prioritises the well-being of communities, the environment, and future generations.

Bold action to meet the just energy transition imperative

Thus, the just energy transition calls for a paradigm shift that places people and the planet at the heart of our energy decisions. It requires an economic model that values long-term sustainability, environmental justice, and social equity over short-term profits. It also means that we must radically shift our relation to energy, especially the high levels of energy consumption driven by multinationals and the Global North. Only then can we start thinking of transitioning away from fossil fuels. To this end, the just energy transition has three key imperatives:

1. Workers, communities, and Indigenous Peoples – not corporate shareholders – at the helm

A just transition requires workers and communities to be leaders in local and global decisions about how the energy transition takes place. Indigenous leadership(opens in new window) has already provided a wealth of learning for the just transition when it comes to shared prosperity and the duty of care for communities and the environment. Given the majority of the world’s mineral reserves are on Indigenous, community and peasant lands(opens in new window) , it is essential that Indigenous Peoples’ right to free, prior, and informed consent to any development of these lands and resources be respected. By fostering worker, community and Indigenous-led models of governance and decision-making in the transition, we can ensure that the economic costs and benefits are justly distributed.

2. Avoid entrenching unjust power relations through “offsetting” carbon emissions

Carbon offsetting has become a convenient way for governments and companies to “cancel out” their emissions by investing in projects established elsewhere which claim to be removing, reducing, or avoiding equivalent emissions. This has created a $2 billion industry(opens in new window) that ‘produces’ carbon credits for sale to companies seeking to continue business as usual. However, carbon offset projects reproduce colonial models (opens in new window) of control and use of land, forests, and livelihoods as well as of exploitation of particular groups of people and of nature itself. It is an industry that relies on and amplifies inequality(opens in new window) and is fundamentally at odds with a just transition.

3. Responsible divestment and disengagement from fossil fuels

As the transition proceeds, there will be massive divestment from current fossil fuel projects. Many coal mines and oil wells will need to be decommissioned, remediated, and abandoned. Driven by the maximising shareholder value model, fossil fuel companies attempt to maintain power and profit margins by offloading the costs of decommissioning and remediating mines and oil wells onto local communities and governments. In Colombia, mining and energy companies are preparing to disengage from coal mines without addressing the severe human rights and environmental harm to which they contributed. And in the Niger Delta, arguably the most oil-polluted region in the world, Big Oil is attempting to wash its hands of the mess and dump its liabilities onto local communities. In response, civil society in the Niger Delta have agreed on a set of National Principles for Responsible Petroleum Industry Divestment, calling for robust action by the government to prevent the oil companies from leaving behind substantial social, economic, and environmental costs.

The just energy transition necessitates a profound shift in our economic thinking and our relationship to energy. Challenging the prevailing model of maximising shareholder value is not only a moral imperative but a strategic move towards long-term resilience. An economic model that prioritises people and the planet is not just a vision but a necessity for the billions of people around the globe that are already feeling the devastating impacts of climate change and for the generations that will inherit the choices we make today.