Research institute Trade & Industrial Policy Strategies (TIPS) has unpacked how just energy transition (JET) projects require a different approach to planning, financing and development, away from the traditional model.

Addressing delegates during a webinar on March 24, TIPS senior economist Gaylor Montmasson-Clair pointed out that tools for JET projects were different to those used for traditional energy projects, and, as it stood, not enough on-the-ground thinking was being done to realise successful projects.

TIPS research fellow Sandy Lowitt said the overarching focus of JET projects was not only not leaving anyone behind, but also using them to overcome poverty, inequality and unemployment.

“The concept of justice is, therefore, crucial to framing the just transition discourse and action agenda,” she added.

To frame the necessary considerations when planning, financing and developing these projects, she discussed three types of justice that were brought about with these kinds of projects.

Procedural justice focuses on an inclusive process and recognises marginalised groups by including them in decision-making and empowering broader stakeholders.

Distributive justice deals with the distribution of risks and responsibilities, and aims to address a double inequality around responsibilities – who pays and who benefits, and how?

Restorative justice considers past, present and future damages that have occurred against individuals, communities and the environment. It provides opportunities to rectify or ameliorate the situations of harmed or disenfranchised communities.

Within those three dimensions of a JET, you can have different levels of ambition, varying from maintaining the status quo, through to transformation, involving a fundamental change to the socioeconomic trajectory of the country.

Projects are typically classified as “just transition” projects when it excludes fossil fuels as sources of energy and includes economic diversification opportunities.

TIPS has come up with a simplistic model to classify just transition projects to understand their overall nature and characteristics.

Lowitt explained that projects could be classified according to their levels of ambition, from low-level impact projects that just have the benefit of creating decent jobs, through to high-impact, high-ambition projects that created new livelihoods, retrained workers, increased access to service, increased asset ownership and rehabilitated the environment.

However, she highlighted that not all projects could be high-impact, but all had a role to play in achieving a just transition in the energy landscape.

“Some projects, which in themselves have low just transition ambition characteristics, may lead to important future downstream activities, which have meaningful social and economic impacts for employees and communities in the area.

“Many just transition projects are interdependent on other projects, which introduces a challenge in terms of financing and looking at the project cycle,” she noted.

Since almost all JET projects are based on some kind of novel technology, which tends to not have a long record, or multiple technologies being integrated, it makes for challenging financing criteria and, therefore, necessitates a rethink.

Another challenge is brought about when environmental protection-driven projects span across provinces and usher in more beneficiaries and stakeholders, which also impacts on project planning, financing and development in terms of the just transition.

To accommodate these kinds of challenges, Lowitt said the financial sector needed to be involved early on in the project life cycle to ensure deals were realised, to offer technical assistance and develop fundamentally different risk assessment frameworks.

“Banks will not be able to cherry-pick projects with the highest returns and will also have to consider funding parties with no records,” she mentioned.

Most importantly, Lowitt deemed it necessary for project developers and owners, as well as government, to know what people on the ground were thinking and feeling, and remain responsive to it. She referred to this as a “feedback loop” and said it was key to ensuring policies remain resilient.

GENERAL GUIDE

Wuppertal Institute for Climate, Environment and Energy (WI) junior researcher Lisa Kolde unpacked, during her presentation, a just transition toolbox that the institute had developed.

The toolbox provides concise information for practitioners in coal-fired power regions, with practical examples and case studies, supported by references for further information.

The topics covered in the toolbox comprise strategies for a just transition in coal regions, designing effective governance models, making the shift from fossil to renewable energy, decarbonising energy-intensive industries and paving the way for new business opportunities and sustainable employment.

In South Africa’s case, stakeholder engagement was central to governance and must be understood as an ongoing process, Kolde said. The alignment of governance and stakeholder engagement with goals and strategy was crucial, she added.

Steps in this process could include identifying relevant stakeholders, mobilising stakeholders, establishing contact with key actors, in-depth or focus interviews to identify their contributing areas, and workshops or meetings.

Transition strategies are an essential element of a just transition as they structure the process, guide choices and actions and give planning security to workers, industries, investors and communities.

Problems with stakeholder engagement are that it is often time-consuming and resource-intensive, with Kolde suggesting stakeholder engagement should start early and be sustained over time.

“It does not end when a region’s just transition strategy is launched.”

Another issue is that it is hard to achieve meaningful inclusion of certain stakeholders groups, leading Kolde to recommend raising awareness, empowering stakeholders and effective facilitation.

“Awareness-raising can bring certain stakeholders on board, while targeted support can strengthen the voice of those not usually involved in decision-making. A good facilitator ensures equal engagement of all stakeholders,” she elaborated.

There is also often lack of agreement regarding information needed to make decisions.

Kolde said a joint fact-finding process could help, highlighting that there were solutions to avoid contestation of the evidence available and build objective and constructive stakeholder debates.

A copy of WI’s Just Transition Toolbox can be found below.