Following the onset of the COVID-19 pandemic, “building back better” quickly became a global rallying cry holding the 2030 Agenda for Sustainable Development as an important reference point. The slogan acknowledges how our societies’ health, environmental, and economic crises are all interconnected. These profound interlinkages are also defining the Sustainable Development Agenda, with factors such as the access to clean and affordable energy at its core.
Governments now have a profound opportunity not only to “build back better” but to also “build differently better”. They can set in motion a lasting shift in the global energy mix, allowing the world to reap the multiple benefits of a cleaner energy system. In fact, whereas the fossil fuel sector has been hit hard by the crises, renewables have proven to be the most resilient energy sources.
In its report “Post-COVID Recovery: An Agenda for Resilience, Development and Equality”, the International Renewable Energy Agency (IRENA) elaborated an ambitious agenda that combines an investment package with a comprehensive set of policy interventions for a just energy transition. Linking the short-term recovery to medium and long-term strategies is in fact paramount to achieving the Sustainable Development Goals (SDGs) and the Paris Agreement on Climate Change.
Recommendations include investing in transition-related solutions as well as on the renewable-based power sector as the backbone of future energy markets and industries. Such transition-related solutions include battery storage; scaling up renewable heating and cooling, as well as energy efficiency; investing in renewable-based transport and electromobility, with incentives for EVs; continued investment in infrastructure (including smart grids and EV charging stations) as well as emerging solutions such as green hydrogen.
Doubling total annual transition investments to USD 2 trillion over the next three years will provide an effective stimulus. Governmental funds can leverage private sector investments by a factor of 3-4 (multiplier effect). IRENA’s analysis further shows that by 2030, scaling-up annual public and private energy spending to USD 4.5 trillion would boost the world economy by an additional 1.3%, creating 30 million renewable jobs and about 40 million jobs in other energy transition-related technologies. Every USD million invested in renewables would create 25 jobs - three times more jobs than in fossil fuels.
Furthermore, by 2023, the added investment stimulus under IRENA’s “Transforming Energy Scenario” would bring 5.5 million more jobs in energy transition-related technologies than would the less ambitious “Planned Energy Scenario” that reflects current governmental commitments and plans worldwide.
Overall, job gains in renewables far outweigh the loss of about 1 million jobs in the fossil fuel and nuclear sectors. The transition would in fact achieve net job gains in all regions of the world, including those where fossil-fuel jobs are now concentrated. This creates meaningful options to switch from fossil-fuel employment and provides new opportunities for both skilled and unskilled workers from other industries.
Nevertheless, jobs and other socio-economic benefits of the transition strategy hinge on adopting a comprehensive policy package. Policymakers must therefore work to overcome temporal, spatial, educational or sectoral misalignments during the energy transition.
Reforming fossil fuel prices, retiring fossil fuel assets, driving green financing as well as green bailouts and strategically use energy transformation investments are immediate priorities.
Such policies, as well as measures to drive the deployment of renewable energy and other transition technologies, must go hand-in-hand with other industrial and economic policies that ensure an alignment of capabilities with recovery and transition objectives.
Forward-looking industrial policies (including enterprise incubators, regional clusters, carefully-designed incentives, etc.) can create new green industries, in both developed and developing countries, leveraging on local manufacturing and industrial capacities. The latter would strengthen viable supply chains, expanding the available pool of skilled labor.
To foster a just transition, a set of policies must be tailored to the specific needs of each region and country. Putting in place adequate education and training programs (ranging from vocational programs to university courses) is essential. Labor-market interventions can include employment services (matching jobs with qualified applicants; offering relocation grants and other measures to facilitate labor mobility where necessary; etc.). Dedicated programs could also support the retention of fossil-fuel workers whose skills and expertise can be reoriented for the energy transition.
Social protection measures must consider both short- and longer-term needs. One key objective is to minimize social and economic dislocation. New jobs might be created in different locations –communities, regions or countries – with respect to the lost ones. Furthermore, the creation of new jobs might not necessarily take place on the same time scale as the loss of employment. Job gains and losses may affect different sectors of the economy, given different supply-chain structures and diverging sets of inputs between rising and declining industries. In addition, the skills associated with vanishing jobs do not always match those required by emerging jobs. Another key priority is in fact is to prevent the fabric of the energy sector – its skilled workforce, supply chains and complex web of relationships – from unravelling so as to avoid the need to recreate the sector’s capabilities from scratch.
The renewable energy sector will also benefit from workplace policies that embrace and encourage best practices in workers’ safety, remuneration, and workplace rights and quality standards. The desire to ensure that jobs are of high quality should be reflected in both short-term stimulus packages and longer-term policy responses. Flexible work arrangements, voluntary forms of part-time work, and work-from-home through video-conferencing software are important ways to recruit and retain talent as well, not only in the immediate aftermath of COVID-19 but also in the long term.
Moreover, social equity considerations, in particular gender aspects, must be integrated into policy and programme design, in order to fully tap societal potential and to ensure that no one is left behind.
The time to invest in a better future is now. The policies and investment choices of governments worldwide can create the necessary momentum to enact systemic change and move the energy transformation away from fossil fuels. Driving a structural shift towards cleaner energy systems and more resilient economies and societies is now more urgent than ever. Most of all, this is a global agenda, and we must leave no one behind.