FE Today Logo

Navigating 'Just Energy Transition'

The inclusive path to sustainability

Mohammed Salman Rahman | December 10, 2023 00:00:00

When I was younger, I used to watch a film on the television called 'Water World'. The 'used to watch' part mainly stems from networks re-running popular films multiple times, and my parents would not let me finish a movie in one sitting. The movie is set almost 7000 years in the future, where the world is entirely submerged as polar ice caps have fully melted. Hence, 'Water World.' The inhabitants of these worlds lived in immense hardship, where 'dirt', a commodity used to make small atolls, was precious. When the Intergovernmental Panel on Climate Change (IPCC) warned of potential sea level increases of 1 to 3 feet by 2100, which could escalate, if Antarctic ice sheets destabilise faster than anticipated, I had a small flashback of Water World.

In recent years, the global shift toward a low-carbon economy, aimed at promoting climate-resilient development, has gained significant attention for all the right reasons. In 2015, the Paris Agreement united nearly every nation in a pledge to cap Earth's temperature rise at 1.5 degrees Celsius above pre-industrial levels. To achieve this, the IPCC asserts that global net emissions must reach zero by 2050, demanding a balance between emissions released from fossil fuels and those removed from the atmosphere. When it comes to GHG emission, Electricity and Heat Generation is the largest sector accounting for 25 per cent. However, it is not an outlier. The agriculture sector (especially animal rearing) stands a close second at 24 per cent. However, for GHG emission reduction, Energy stands as a sector where the biggest potential reform can be done, since we can agree on ditching coal, but we may not agree on ditching burgers anytime soon.

A global energy transition is thus essential; however, the pathways and impact of the energy transition is not the same of all countries and all economies. Especially in low-and middle-income countries, where pressing development objectives must be met alongside a transition away from fossil fuels, and sufficient capital and technology accumulation as well as adequate public support have not been built. Such transformational efforts can unintentionally place a heavier burden on specific communities, regions, and industries more than others. While the conventional energy transition primarily focuses on the shift from fossil fuels to renewable or clean energy sources, a "Just Energy Transition" takes an additional step by considering the social consequences, particularly in terms of employment and income, for those reliant on energy-related economic activities. Unless justice is served in the global energy transition, we stand to create two worlds based on their energy usage, creating another dystopia.

Towards a sustainable energy shift in Bangladesh

According to the Annual Report 2021-22 of Bangladesh Power Development Board (BPDB), the total installed capacity was 22,482 MW (Hydro 230 MW, Gas 11,476 MW, Furnace Oil 6,329 MW, Diesel 1,290 MW, Coal 1,768 MW, Solar PV 229 MW, Power Import 1,160 MW). To reduce dependence on fossil fuels, initiatives of renewable and nuclear-based power generation have been considered to ensure clean energy penetration in power generation. Over the past decade, Bangladesh has redirected its energy sector towards greater diversity and renewable sources, aligning with its commitment to reduce carbon emissions outlined in its National Determined Contributions (NDC) for 2021. Several solar projects have been successfully implemented that provide 600 MW power to the national grid and 366 MW on an off-grid basis. Despite currently relying on renewable sources for only 3.5 per cent of its power generation, the government aims to boost this share to 40 per cent in the next two decades. The target was later revised as a plan to achieve 'clean energy' up to 40 per cent of total energy. As per plan, 3,000 MW of renewable energy will be generated by 2030. The government strongly believes that the new development of domestic coal should be avoided due to the problems faced by residents as well as its environmental impacts. Therefore, no expansion of coal import facilities is assumed except a coal transshipment terminal in Matarbari.

Bangladesh's government is focusing on increasing the production and use of renewable energy and improving energy efficiency. The Renewable Energy Policy-2023 has brought several changes in the implementation and spread of renewable energy, which is more detailed and richer in new proposals than the original 2008 policy. Additionally, the Mujib Climate Prosperity Plan (MCPP) has set a target to source 30 per cent of the nation's energy from renewable sources, indicating a strong commitment to a sustainable and low-carbon energy future. The Integrated Energy & Power Sector Master Plan (IEPMP) 2022, which is the first ever unified and structured master plan for the power sector of Bangladesh, is focusing on clean energy. Our Nationally Determined Contributions (NDCs) to the UN Framework Convention on Climate Change (UNFCC) show a target of around 4100 MW of renewable energy by 2030.

The draft IEPMP highlights the scope and possibilities for renewable energy in Bangladesh but lacks a specific work plan with a timeline for the transition to sustainable energy. There is no detailed plan for the necessary financial estimates for investment and maintenance of RE technologies that could be used to attain the goal of low-carbon emission. It is necessary to consider additional measures such as implementing stronger regulations, increasing funding for research and development of clean energy technologies, and encouraging public-private partnerships to accelerate the transition towards a sustainable and low-carbon economy.

Making sure the energy transition is just

There are no credible studies on the effects of energy transition globally, as this is a relatively new phenomenon. There are little or no available data, particularly on employment that would arise from a significant shift towards renewable energy in Bangladesh. A study by the ILO in 2019 revealed that between 2011 and 2016, jobs in the solar energy sector of Bangladesh grew steadily at a rate of 18.5 per cent annually, increasing from 60,000 to 140,000, compared to the national job growth rate of 1.9 per cent. However, most of these jobs came from the SHS programme, which sharply declined after 2018. Also, an energy transition in many industries, especially apparel sector, may have an effect on employment.

The International Energy Agency (IEA) anticipates that the transition to green energy will result in a net increase in new jobs in clean energy and mining sectors. It's important to note that while these new jobs will outweigh losses in fossil fuel industries, addressing job losses as countries' shift away from coal, oil, and gas is crucial.

To safeguard workers, communities, and women from the negative consequences of this energy transition, social protection measures are essential. The government can facilitate the shift to a green energy system by investing in green technology and retraining affected workers, particularly considering potential layoffs in the fossil fuel and non-renewable energy sector.

The new energy sector presents an opportunity to address deficiencies in well-being policies and gender disparities, provided that jobs are made more accessible to women, youths, and marginalised groups. Furthermore, if these new green jobs are in the formal sector, it can ensure that workers have greater access to union representation and social protection systems.

Traversing challenges of Just Energy Transition across key sectors

The largest energy consumers in Bangladesh are industries (28.4 per cent) and the residential sector (56.42 per cent), followed by the commercial (12.74 per cent) and agricultural (2.43 per cent) sectors. Highlighting high consumption sectors in Bangladesh, the Ready-Made Garments (RMG) sector, a major contributor to the country's gross domestic product (GDP), grapples with the energy crisis and environmental challenges such as water resource consumption and untreated wastewater discharge, along with socio-economic issues like poor working conditions and job insecurity. The energy sector seeks to shift from fossil fuel dependence to renewable sources, potentially creating new job opportunities, but faces challenges including financial constraints and concerns about green growth's impact on the economy. On top of that, some buyers are pushing energy transition as they have their own goals of decarbonising their supply chain. Energy transition remains a crucial challenge for the export sectors. Meanwhile, the agriculture sector, vital to the country's economy, is vulnerable to high energy costs, climate change impacts, particularly affecting smallholder farmers and women.

Inclusive strategies like Just Energy Transition strategies are crucial for reducing emissions, increasing equity, and enhancing resilience in these sectors, with potential for positive economic and environmental impacts, if executed effectively. Foreign buyers are seeking higher apparel prices to make supply chains environmentally friendly. For Bangladesh's garment sector to transition to sustainability, it requires technology and financial support. However, upgrading technology must coincide with training workers to prevent displacement of unskilled, especially female, labour. Ensuring environmental compliance should also include ensuring decent living standards for workers.

Model to mirror: Indonesia Just Energy Transition Plan

Indonesia's work towards Just Energy Transition would be an ideal model for Bangladesh to take lessons from. The Indonesia Just Energy Transition Partnership (JETP) is a US$20 billion agreement to decarbonise the coal-powered economy. This partnership was launched on November 15, 2022, at the G20 summit. The JETP aims to develop a comprehensive investment plan to achieve Indonesia's decarbonisation goals. Under the JETP, Indonesia aims to reach net-zero emission of greenhouse gases from electricity production by 2050, bringing forward its target by a decade, and reach a peak in those emissions by 2030.

The partnership involves all G7 countries as partners, including Canada, Italy, and Japan. It also includes Denmark and Norway. The JETP will mobilise US$20 billion over three to five years. US$10 billion of public money will be mobilised by the International Partners Group members, and at least US$10bn of private finance will be mobilised and facilitated by the Glasgow Financial Alliance for Net Zero (GFANZ) Working Group.

Bangladesh endeavours to transition towards a more sustainable and environmentally friendly energy system, it must not lose sight of the social and economic implications. A just energy transition is not only about reducing carbon emissions and embracing renewable energy; it's about ensuring that the transition benefits all, leaving no one behind. By addressing these challenges and implementing inclusive policies, Bangladesh can lead the way in achieving a just and sustainable energy future. The duty bearers, especially the government, should make sure Bangladesh is not alone in its journey, there is adequate capital, knowledge and technology support so that Bangladesh can have a just energy transition. If not, we stand to become one of the first areas of 'Water World'.

The writer is a Partner at Inspira Advisory and Consulting.

[email protected]

Share if you like