Uniting the nation through climate action: Why the just transition could be the next big thing for Britain
One of the few issues on which the UK’s main political parties agreed in the December 2019 general election campaign was the importance of the climate emergency and the need for a transition to a net-zero carbon economy.
In his victory speech, Prime Minister Boris Johnson said that the people “voted to be carbon neutral by 2050 and we will do it”. The question is, of course, how, not least with the Conservative Party winning seats across the country’s manufacturing heartlands, places that are most exposed to the economic restructuring that the transition requires. And with the UK hosting COP26 in Glasgow in less than a year’s time, the Government also needs an ambitious narrative as it seeks redefine its global role post-Brexit.
The just transition is one strategic theme that could orientate the UK’s climate compass
Originating in the labour movement as a way of ensuring that workers do not lose out as the economy goes green, the just transition has now become central to modern climate strategy as the way of building the broad-based social licence for transformational change. It is embedded in the Paris Agreement and provides a key piece of connective tissue in the comprehensive European Green New Deal launched in early December.
For the new Government to fast-forward action on the just transition makes strategic sense. It is almost tailor-made for the current zeitgeist – where people want to do the right thing environmentally but are also acutely aware of the divisions that exist across the UK.
The just transition has already started to feature in UK policy. In its blueprint for net-zero in May 2019, the Committee on Climate Change stressed the need for the transition “to be fair and seen to be fair”. With its message of ‘leaving no one behind’, the just transition would complement existing success stories such as offshore wind and chime with the focus of the Treasury’s net-zero review.
Business leaders are also coming on board. National Grid chairman Sir Peter Gershon argued recently that, “the transition must be fair and equitable”, and pointed to the huge opportunity it presents in the form of cleaner air, access to new technologies for all communities and skills development and job creation in a growing green economy.
Crucially, the just transition is not an optional bolt-on. If the human dimension of the transition is not dealt with adequately, the country’s climate plans will fail, with catastrophic consequences for the UK’s long-term economic development prospects.
Five themes to make the just transition come alive
The task is how to turn this laudable goal into practical policy that connects with business, workers, communities, citizens and the public sector across the country. Five priorities could include:
- Build the policy architecture for a clean and inclusive economy: Policy reform will be essential to making the just transition a reality across skills and education, industrial and regional plans as well as tax and public spending. One place to start would be to establish an all-UK Just Transition Commission, with representatives from employers and employees, citizens and public authorities to work through how the distributional dimensions of the transition can be tackled. This would add another piece of governance innovation to the UK’s growing reputation for citizens juries and assemblies. The Commission could draw on emerging best practice across the country – not least in Scotland – and help to identify ways in which climate action can support revitalisation of towns and rural communities.
- Ramp up the focus on industrial clusters: The Government has already identified industrial clusters as a strategic focus for achieving net-zero. The Yorkshire and Humber region is leading the charge with its plans for an extensive carbon capture and storage system, anchored at Drax. The focus now needs to be broadened to include clean steel and the hydrogen economy along with a plan to decarbonise the country’s fossil fuel sectors (notably North Sea oil and gas). Building net-zero clusters across the economy offers the chance not only to protect employment and communities in crucial foundation sectors, but also to reshore jobs that have been lost in the past. Each manufacturing region needs to have a funded cluster plan by the end of the new parliament, from South Wales to Aberdeen and beyond.
- Back Britain’s entrepreneurs to go carbon-neutral: Small and medium sized enterprises (SMEs) form the backbone of the economy and are crucial to social cohesion. But they have been largely ignored in the climate conversation thus far. Worse, the diversity of a sector that stretches from the nano-businesses of the self-employed to well-established firms of 200-plus staff has often been overlooked, leading many entrepreneurs to feel put upon and patronised. SMEs are often among the most vulnerable to supply chains transitions. But they are also the firms that can offer good jobs and decent work in the growing green economy. Rather than a one-size-fits-all response, a clever mosaic of measures is needed, rooted in place-based and sectoral realities.
- Give the nation’s householders a climate bargain: Buildings are one of the big nuts that the Government will have to crack to succeed on climate, involving sensitive issues of intrusion into people’s homes. Past policies such as the Green Deal were technically elegant but operationally useless as they failed to offer householders a bargain in terms of price, value and convenience. There are also entrenched problems of fuel poverty to confront along with wider issues about the ability to pay for the deep retrofits that will be needed. The new Coalition for the Energy Efficiency of Buildings, launched by the Green Finance Institute, offers a welcome starting point. Making the links to these core questions of fairness for householders would take it to the next level, making the connection with good working practices, job creation and upskilling in the construction value chain (including for the supply of net-zero building materials).
- Harness mainstream finance for joined-up climate action: All of this will require additional upfront investment, from government, business and finance and UK citizens. The UK remains the second most important financial centre in the world, with assets six times the UK’s annual GDP. A decade after the financial crisis, the just transition provides a strategic opportunity for mainstream financial actors to reconnect with the UK economy. Fund managers, local authority pension funds and foundations are already developing a just transition angle to their climate plans. Banks are also realising that the just transition offers them a way of bridging their climate response with their primary purpose of serving the real economy across all parts of the UK. One way of bringing this to life would be to design and launch a Just Transition Investment Fund to channel institutional capital and private savings into green investments with positive social impact in left behind regions. With the UK leaving the EU in 2020, the mandate for the British Business Bank could also be extended to include a specific goal of supporting the transition across all parts of the country. And in the run-up to COP26, the UK could issue the world’s first sovereign Transition Bond, deliberately designed for savers to put into their ISAs, the proceeds ringfenced not just for classic green projects but also for public spending on the regional revitalisation, reskilling and SME support that will be needed.
Making the just transition a fundamental part of a refreshed climate strategy in 2020 would provide a new way of handling the domestic climate agenda and show the world how the great British value of fairness can be applied to the climate crisis.
 Sir Peter Gershon was speaking at a Local Authority Pension Fund Forum conference on 5 December 2019.
Nick Robins is Professor in Practice for Sustainable Finance at the Grantham Research Institute; Sophia Tickell is strategic adviser to Grantham’s work on finance and the just transition.
This commentary was first published in Business Green.
For more information about the Institute’s work in this area see www.lse.ac.uk/GranthamInstitute/financing-a-just-transition/