Prof. Dr. Pao-Yu Oei is full professor for “Economics of Sustainable Energy System Transition” at Europa Universität Flensburg (EUF) and head of the 30-member research group “FossilExit” at EUF, TU Berlin and DIW Berlin. Part of his work is reflected in his co-ordination of the independent research hub CoalTransitions, that examines the transition from fossil fuels towards renewable energy sources. He has been involved in numerous projects on the German and Global coal phase-out, and also takes part in the Advisory Board of the JUSTEM project.
Pao-Yu Oei, you are professor for “Sustainable Energy Transition Economics” at the European University Flensburg (EUF) and are leading the CoalExit project that focuses on the economy of the coal phase-out. Transitions away from coal are often associated with negative economic impacts for the affected regions. Do you see this association as inevitable? And what might be other impacts that should be considered?
I think that it is too narrow to only speak about negative economic impacts of upcoming coal phase-out for multiple reasons. At first, entering into coal extraction went along with numerous negative side effects, e.g. pollution, health impacts, water contamination, destruction of nature, CO2 emissions. These will be reduced by a coal phase-out. A coal phase-out therefore also has positive effects – economic as well as more widely for society and future generations. Also, only focusing on negative side-effects of a coal phase-out neglects two more things: 1) Continuing coal extraction is very often not an option – independent of climate policies. This might be due to too high costs or due to end of reserves. 2) We are not speaking of phasing out coal alone, but a replacement of coal with more sustainable renewable energies. These alternative forms of energy will bring positive economic side effects.
The overall energy transition therefore does have more positive than negative economic effects. It is on political decision makers to use distributional policies to ensure that especially people that need financial support should profit from these benefits.
Is that what a “Just transition” means? The term has become popular in the context of transitions from fossil fuels…
A Just transition means that we do not replicate existing injustices. Therefore, we must build a new energy system and society that enables those people that are currently discriminated against. Depending a bit on the local context, this means taking an intersectional approach to account e.g. for gender, race, religion and ethnicity.
Which demographic groups do you think are most vulnerable during coal transitions?
Most vulnerable groups of society will always be the most affected of any transition – as long as the government is not able to fully protect them. Next to coal workers, it is the elderly, young and sick people that mostly suffered from living nearby coal mines and therefore suffer from health problems.
Throughout the transition, empirical evidence shows, that it is especially women that shoulder the biggest challenges. While mostly male workers might lose their job, it is often women who consequently have to start taking up less-paid jobs in the service sector. Often men are physically not able to do/learn these new jobs due to health problems, or suffer from fragile masculinity and are therefore unwilling to take on such jobs. Furthermore, women still continue to bear the additional unpaid care work in the household and society. Very often, this “loss of masculinity” for men results in increased domestic violence against women and children. Most state programmes falsely only focus on the employment of direct (and mostly male) workers, hereby ignoring indirect workers (where the share of employed women is higher) as well as additional related effects across society. Ensuring dedicated programmes for enabling women can range from direct capacity building programmes to free childcare services which reduce care work.
Considering the large impacts of coal transitions on societies, how should affected people and communities be involved in the process? How do you envision the role of citizens in the design of just transition plans?
There is no blueprint from any successful coal transition that you could simply replicate or impose on any other coal region. It is therefore essential for the success of any transition to take into consideration local characteristics. This includes more techno-economic regional aspects such as the geographical or economic conditions – but of course also its people. These people have to be brought along the entire process to 1) understand the need for the transition, 2) have a say in the direction of the transition, 3) become an active part in the implementation of the transition. This, depending also on the societal and political background, can be done, for example, via public stakeholder forums or coal commissions.
Many people in coal regions are employed in coal or coal-related jobs. Does industry bear any responsibility for them? What should be its role within the transition process?
The industry bears a responsibility to clean up the damages that they have caused. This includes renaturation of coal mines and making sure that people in coal regions can live a safe life. Also, health and (early) retirement costs of workers should be financed by companies. In addition, smart industries would early on diversify the training of their staff – to ensure that these people can switch their jobs more easily after the coal exit. This is also a benefit to the industry, as the industry itself will have to switch its portfolio if it wants to survive, and therefore will need these workers.
How do you assess the impact of the current energy crisis on the implementation of just transition plans? Would you say they are at risk?
No. The attack of Russia and the resulting energy crisis of 2022 has shown that using fossil fuels increases (political) dependence. Europe and many other regions have therefore strengthened their efforts to 1) reduce their energy consumption and 2) shift to domestic sustainable energy forms. It is now important to support the speed of the transition and ensure that its implementation is just.
Given your experience in working on coal transitions in different countries – such as Germany and South Africa -, what advice would you give to coal regions such as the JUSTEM pilot regions (Stara Zagora, Istria, Western Macedonia and Megalopolis Arcadia, Śląskie Voivodeship, Jiu Valley, and Asturias) that are now about to implement their territorial just transition plans?
There is never a silver bullet to your transition. You will never know in advance what will work. Therefore, diversification is key. Also, closely monitor to steer your choices depending on the local success of some of these measures.
First moving regions will get the biggest financial support and become light posts attracting the best ideas and skilled workers. Regions waiting too long will have a delayed coal phase-out – however, having no left financial support, nor new ideas, nor skilled workers, will result in an economic collapse. Therefore, act early to build up an alternative system even while coal might still be running.
Thank you so much for the interview and the interesting insights, Pao-Yu Oei.