Sunday, June 4

Green Revolution: How to Defuse the Inequality Bomb | Ideas

Like a powerful whirlpool, inequality has churned the waters of Western societies in recent decades. Several currents have come together to generate this effect: globalization and its manufacturing relocation, which have generated job losses and feelings of uncertainty and frustration in broad social layers; the excesses of financial capitalism, which precipitated a deep crisis, the price of which was largely paid by the most vulnerable; the technological revolution, which rewards some —the most educated, the new generations— and marginalizes others; and, finally, the pandemic, an asymmetric blow to which some have been much more exposed than others, both in terms of job loss and health risks. These are broad and strong currents that have shaken large segments of society: not only those who have plunged into the whirlpool of inequality, but also those who fear doing so, see their expectations frustrated, feel losers of dynamics that favor , and a lot, to others. It is a base of unease that explains some of the destabilizing political phenomena of recent years, from Trumpism and Brexit to the coming to power in Italy of an anti-establishment coalition.

To all these currents there is now another one that threatens to give a new powerful turn to the whirlpool: that of the ecological transition. It is a necessary and urgent revolution as science warns beyond any rational doubt. And, in addition, of a systemic change that according to most of the analyzes will have a balance not only environmentally, but also economically positive – except in the cases of countries highly dependent on the sale of hydrocarbons. But it is, at the same time, a revolution fraught with problematic side effects in terms of inequality along the way. Climate change has a profound, and sometimes paradoxical, relationship with the concept of inequality. In citizen terms, the elites are usually the main emitters of pollution, and it is the most vulnerable who suffer its worst consequences, in terms of catastrophic events, deterioration of the living environment or impact on health. This reading is transferred to the geopolitical plane: the developed countries have been the great polluters; those in development stand out among those most likely to be affected. The fight to stop climate change is, therefore, a fundamentally progressive factor, protecting the most exposed. But the way to get there contemplates, once again, regressive elements, problems that the weakest can suffer especially.

The impact is systemic and complex, but it can be simplified on two main levels. On the one hand, the consequences of the industrial reconversion precipitated by the transition. This is about the jobs lost in the sectors of primary impact – mines and coal plants, other fuels that will be reduced, etc. – and secondary – for example, industries in the mobility sector. On the other hand, the impact on citizens of the instability of the energy market stands out, in terms of bills for electricity consumption, for example. This hits everyone, but proportionally weighs more for some than others.

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In this regard, it is important to consider that the current price spike has many reasons that are not related to the energy transition – an especially cold winter that has depleted reserves, probable geopolitical calculations of Russia, the sudden rebound in demand after the pandemic depression -. But there are other elements that are, such as the incidence of the increasing cost of CO2 emission rights or the involution of investments in the hydrocarbon sector, which affects supply and contributes to raising prices. In its latest annual report, published this October, the International Energy Agency warns of the serious mismatch between investment in hydrocarbons – which regresses adequately to meet zero emissions targets – and that directed at renewables – completely insufficient. This mismatch and the necessary progressive incorporation of the cost of pollution into energy prices suggest that periods of intense volatility are possible, even probable.

The risk that this scenario will inflate pockets of strong social unrest is considerable. Recent history teaches how energy issues have explosive potential to ignite protests. The mobilizations of the yellow vests in France (2018) or Ecuador (2019), both for issues related to fuel prices. The rise in the subway transport rate in the capital was the trigger (also in 2019) of large protests in Chile in which, as in the two previous cases, various reasons for unrest converged. Energy and transport are key sectors, explosives. Discontent can erupt and cause a double effect: resistance to the transition itself and a political push for formations with a broader spectrum of retrograde positions. This is the ghost that worries so many governments and flies over the Climate Summit, COP26, which begins on the 31st in Glasgow. How to defuse this bomb?

To a certain extent, the instruments for reaching a solution are clear. The challenge is to activate them with sufficient determination and efficiency. Jan Rosenow, director of the European program of the Regulatory Assistance Project (a group of experts in the energy sector) and honorary associate researcher at the Institute on Environmental Change at the University of Oxford, points out in videoconference some considerations regarding measures to mitigate the impact of energy prices. “In the short term, the main courses of action are the reduction of taxes for the most vulnerable and direct payments,” he says. The central challenge is to adequately define these aid, support those who need it and not dilute the effort by protecting too wide a range, says the expert. An eye on the following choices can produce unfocused reactions.

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Protesters at a yellow vest protest in December 2018 in Paris, France.
Protesters at a yellow vest protest in December 2018 in Paris, France.ALAIN JOCARD (AFP via Getty Images)

Rosenow is more circumspect with respect to other types of measures. As for raising resources by influencing the benefits of suppliers that produce at low cost and charge a lot thanks to the electric power pricing system, the expert believes that this is a very delicate issue. “Depending on how it is done, it can have consequences in terms of calculations of future investments, which are so necessary to boost renewables,” he says. On the other hand, changing the pricing system itself is a really complex debate. “Some alternatives that are heard circulating, such as paying an average price to suppliers, make little sense. In any case, this route is not a solution in the short term. The real solution is to reduce dependency on sources like gas. We have to activate the renewable capacity facility. I believe that this crisis will signal to investors that it is necessary to accelerate in that direction. So it will probably be, in the long term, a more positive than negative factor for the transition ”, he concludes.

At the industrial level, experts agree that the balance of the transition will be positive: it will create more jobs than it will destroy (24 million compared to 6 million, according to a 2018 study by the ILO). The problem is that there is a mismatch between where and when jobs disappear and flourish. The basic tools to mitigate this problem are quite clear, perhaps more than in the prices section: social benefits for those who lose their jobs; training measures; support for the development of alternatives in the most affected areas. “It is important to plan. It takes time to find alternative models, ”says Isabel Blanco, Senior Green Transition Economist in the Economics and Sector Policies Group of the European Bank for Reconstruction and Development, active in support projects within this framework. In general, he explains, the transition involves moving from a mono-industry territory to a diversified system with smaller businesses. This requires, among other things, patient coordination work between administrations and social agents, and a lot of attention to the entire productive environment that is affected around the main business that falls. “Perhaps it is precisely this environment that is the most vulnerable part,” says the expert by videoconference from Poland, where she was on matters related to this matter in the coal region of Lower Silesia.

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White points out hopeful elements. On the one hand, the advance of digitization, which facilitates alternatives with teleworking; on the other, the attitude of increasing attention of the European Union to the issue, which considers a positive and important conceptual change with respect to the crisis that began in 2008. The economist points out, however, two problematic aspects: the need to act with speed – which complicates things – and the risk of leaving open angles. “The European Just Transition Fund focuses on particularly affected regions. It is good that this happens, but there is a more diffuse social mass that can have difficulties and we have to think about them ”, he observes.

One of the key aspects is that this potential pressure of inequality is superimposed on previous ones. Tim Gore, head of the circular economy and low emissions program at the Institute for European Environmental Policies, highlighted in a telephone conversation precisely the importance of a contextual vision. “It is essential to anchor reflection and action against inequality in this domain to a broader framework. For quite some time, there has been a technocratic approach to the climate question. Now there is a growing recognition that it must be addressed in a systemic way and that it must be moved on that path. Europe has not made enough progress against inequality, in some countries there has been a worsening in the last 20 or 30 years, “he says.

Political awareness with this issue, in Europe, is unquestionable. The EU has considerable initiatives underway to ensure a just transition in industrial and territorial terms. The long experience in cohesion policies, which specifically deal with disadvantaged territories and have improved cooperation practices between different institutions, is a good basis. National governments seek solutions to the impact of prices. But awareness and results are not the same. The risk of a breach of discomfort should not be underestimated. As the French geographer Christophe Guilluy points out in a telephone conversation, “there is a danger that the transition will be perceived in certain social sectors as a greenwashing (green image washing) of the consciousness of the elites ”, especially urban ones, who do not suffer a painful cost for it. It would be a new break between the booming sectors of our world – the heart of the metropolis, the great tourist centers – and those that are in decline or feel neglected – the rural areas, the peripheries. A new, haunting whirlpool.

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