Industry Transition: A Question of Equitable Financing and Technology

“My country needs to develop, but we want to develop sustainably,” said Prakash Javadekar, Indian Minister of Environment, Forest and Climate Change at the UN Climate Action Summit’s Energy Transition coalition meeting on Saturday.

For Minister Javadekar, the question of how to enable and accelerate industry transition depends on two things: technology and finance. Indeed, there is no doubt that we will continue to rely on our industries’ help to alleviate poverty using innovative tools, discover new drugs, and advance our technology. The journey of human ingenuity will never come to an end since it is in our DNA to explore, discover, and continue to create newer, better things. However, at what cost are we advancing our technology to further our capitalistic consumerism? We must differentiate technological innovations that help transition our society into a greener future and technologies that are not compatible with a sustainable future.

Common but Differentiated Responsibilities

The impacts of climate change are not equal, nor are its causes. At the UN, many developing countries often bring up the notion of common but differentiated responsibilities (CBDR). In short, CBDR are there to address the historical emissions by developed countries and their direct relation to today’s climate crisis, and to ensure that climate mitigation efforts are undertaken on the basis of equity, and in the context of sustainable development and efforts to eradicate poverty. Many developing countries require a longer time to transition into a clean economy since economic development and alleviation of poverty are still many developing nation’s priorities.

In the spirit of CBDR, developed countries must provide technological transfer or financial aid to developing countries to support local innovation, transition, and climate action. These are essential steps to further the global collective action to combat climate change and adapt to climate impacts.

Industry Transition

What do we mean by industry transition? Well, we focus on the ‘hard-to-abate’ sectors such as manufacturing, long-range transportation, steel and cement. These industries require innovative solutions to rid of or reduce its high emission tendency. And to help create these new sustainable innovations, countries need to invest heavily in supporting research and innovation in new zero-carbon technologies such as zero-carbon plastic and zero-carbon cement. However, will these zero-carbon technologies really help us in the fight against climate change?

Lord Adair Turner from the Energy Transitions Commission’s answer is: yes! The IPCC 1.5ºC Special Report demonstrated to the world community that to have a hope of achieving the long-term goal of the Paris Agreement, the world must reach net-zero carbon emissions by 2050. And for Lord Turner, zero means zero. The main pushback on these zero-carbon products is that the high cost of these new technologies will translate into a higher end-cost for the whole economy and the end-consumer. This is to say that our daily expenses will become more and more expensive. However, the actual end-cost increase to consumers is less than 1% in the cases of zero-carbon steel and plastic bottles and a trivial 2-3% increase in the end-price of buildings using non-carbon concrete. Compare to the carbon emissions avoided in the production of these zero-carbon products, the less than 1% increase in daily-life consumer products and 2-3% in building prices are trivial.

Yet, we run into another issue here: the competitive problem. Not all companies will transition into using zero-carbon technology. Sticking to the old method of production would mean that companies that use zero-carbon technology will have a disadvantage in the capitalistic market since their product will cost more than their non-transition counterparts. To address this, Lord Turner emphasized that industry leaders must take charge in this transition to break the vicious cycle of gridlock and solve the cooperation problem. Governments can also implement carbon pricing to incentivize industries to adjust to this new reality and transition into lower-emission or zero-emission technologies. In addition, Lord Turner also recommended to include carbon pricing in bilateral or multilateral trade agreements, because countries that do not have a carbon pricing system would have a comparative advantage in the international market compared to countries that have a carbon pricing system. Imposing tariffs on goods from countries that lack carbon pricing would solve the comparative advantage gap.

Just Transition

For Sharan Burrow from the International Trade Union Confederation, industry transition means striking a balance between ambitious action and caring for the workers in the ‘hard-to-abate’ sectors. Countries and their civil society must pay close attention to the issue of just transition, to ensure that while the economies are shifting to sustainable production, workers’ rights and livelihoods are considered and secured.

We need to give people hope towards high ambition. Burrow reminded us that labour unions have evolved over the past decade. The then supporters of the fossil fuel industry have shifted to allies of the climate movement for one simple but compelling reason: there will be no jobs on a dead planet.

We need to work with the labour unions of the world to bring innovative solutions to the transition to a sustainable future. When the climate community is talking about the response to climate change, we also need to pay close attention to the impact on jobs and the livelihoods of the people who work in traditional sectors; and utilize their skills and innovation to bring about just transition.

Lastly, it is crucial to mention that multilateralism is the key to global cooperation on climate action. Competitive and cooperation problems hurt collective action. Attacking and refusing to engage in multilateralism send the global response down a spiral, without innovation, without ambition, and without cooperation.

This article is a part of BCCIC Climate Change’s coverage on the United Nations Climate Action Summit 2019 and the New York Climate Week 2019. This article is produced by BCCIC Climate Change’s Multilateral Affairs Division, written by Jeffrey Qi with support from YOUNGO, the Children and Youth NGO Constituency to the UN Climate

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