On May 28, the EU gave a strong signal of political support to the Just Transition Mechanism.
Ursula von der Leyen, the European Commission president, increased the funds involved from €7.5 billion to €40 billion as part of the EU’s €1.85 trillion Covid-19 recovery package.
And more recently, the European Parliament’s Economic and Monetary Affairs Committee approved a report on the fund, which endorsed the new €40 billion funding and called for increased urgency given the Covid-19 crisis.
The mechanism is designed to ensure that the transition towards a climate-neutral economy happens in a fair way, leaving no one behind, through the provision of targeted support.
As rapporteur for the European People’s Party (EPP) on the committee report, I have been working to ensure that the European Parliament, as the only democratically elected EU institution, has a strong voice in the just transition process.
We cannot underestimate the challenges involved. And most importantly, we cannot forget the potential hardship that will come of it, particularly for those workers whose factories and power plants will be shut down due to their carbon emissions.
We must also realise that the process of ensuring a climate-neutral economy presents significant opportunities to transform our societies and economies. We can look forward to a world where we no longer have to rely on fossil fuels, where we have a fully circular economy with minimal waste and where we no longer need to fear the adverse impact of carbon emissions on health and the environment.
The big question is: what is required to ensure that the transition is just? How much funding is needed to ensure that no one is left behind?
In the grand scheme of things, a €40 billion fund will only go so far to address the needs of the EU in the climate transition. But the political signal is vital. It demonstrates leadership in tackling the social implications of climate change and encourages member states to ramp up their own funding for affected workers.
The true cost of just transition will be many multiples of €40 billion when all is said and done. The phase-out of coal in Germany alone is expected to cost at least €40 billion. Across the EU, almost 250,000 people work either in coal power plants or coal mines. These jobs will all need to be phased out in the coming years.
As with all things, Covid-19 is testing our plans for just transition. Coal and peat regions are being hit by reduced energy demands. This means that workers in these industries face extra uncertainty. Therefore, funding for the just transition needs to be put into operation as soon as possible to help these regions cope with both the climate transition and the Covid-19 crisis.
In the committee report mentioned earlier, we have called for funding to be directed specifically at those regions that will be mostly affected in the EU. It says funding should be directed primarily towards sustainable employment opportunities in these regions, with investments focused on the development of new renewable energy facilities, retrofitting of old buildings, restoration of land and ecosystems, protecting biodiversity and restoring natural habitats.
In Ireland, the midlands has been identified as one of those regions most affected by the climate transition, with almost €180 million earmarked from the fund for it.
Communities in the midlands have been dependent on employment related to peat extraction for generations. Today almost 2,000 people work in Bord na Móna, in addition to the other 2,000 who work in supporting industries. Huge uncertainty faces these workers and communities.
The decision to close two peat-fuelled power plants at Shannonbridge in Offaly and Lanesboro in Longford has hit communities deeply. People have built up their livelihoods working either directly or indirectly for these power plants for decades. There is no doubt they have served families and communities well.
But the harsh reality is that these plants need to close down. We cannot continue to rely on electricity generation that harms the environment. We must live up to our international obligations on climate change.
Equally, we must live up to our promises to these communities that the transition will be just. The transition from peat is our first test as a country in this process and we must get it right.
We are only at the start of this process. We have another 30 years to go before the EU is expected to become climate neutral. We will face many more tests in the coming years and the funding demands will only become larger. The EU will be of important assistance as we go through this process but we need to show consistent political will to ensure that fairness is at the heart of our climate transition process.
Many trade union groups have espoused the saying: “Transition is inevitable. Justice is not.” We need to take heed of this advice if we are to stay on course.
Frances Fitzgerald is an MEP for Dublin and a full member of the European Parliament’s Economic and Monetary Affairs Committee