Just Energy Transition: India Should Weigh Options Before G7 Partnership

India is next in line for a partnership which accelerates the shift from fossil fuel to renewable energy.

Thousands of people are directly employed in coal mines across India.

Photo: Biswarup Ganguly/Wikimedia Commons.

• The G7 countries recently announced a just energy transition partnership with Indonesia. India is one of the countries next in line for such a partnership which accelerates the shift from fossil fuel to renewable energy in a socially and environmentally just way.

• After a breakthrough in the 2022 climate talks in Egypt, on setting up a fund for loss and damage, there could be a hardened focus on a just transition to tackle the impact on millions dependent on the coal economy.

• A just transition in India requires more attention to socioeconomic aspects as mine closures affect a large number of informal workers, upending lives and livelihoods that require support through reskilling and economic diversification.

The G7 countries recently announced a partnership with Indonesia to accelerate a just energy transition, away from fossil fuels and towards renewable energy.

Next in line, is likely to be India, which, along with Vietnam and Senegal, is one among the four countries that is set to sign a similar pact with the G7 countries for initiatives towards decarbonising energy systems and increasing energy efficiency.

The U.S. President Joe Biden, Japan Prime Minister Fumio Kishida, and Indonesia President Joko Widodo on November 15 announced the Just Energy Transition Partnership (JETP) for Indonesia at the G20 Leaders’ Summit in Bali.

They pledged an initial $20 billion in public and private finance in 3-5 years to help Indonesia phase out coal and hasten the clean energy transition. It is said to be the largest single country-specific climate investment ever.

JETP is the second energy transition partnership between developed economies and developing countries, following South Africa’s $8.5 billion agreement announced at last year’s UN climate summit in Glasgow. South Africa’s investment plan and the composition of public financing were unveiled on the eve of this year’s UN climate summit in Egypt.

The South African model of just transition, where more than 95% of the funding is in low-interest loans, may not be appropriate in India, according to Chandra Bhushan, CEO of the International Forum for Environment, Sustainability & Technology, a non-profit that has published several reports on the coal economy.

“There has been a lot of international pressure on India to adopt a similar plan, but the country has done well not to have submitted to it.”

Chandra Bhushan, CEO of the International Forum for Environment, Sustainability & Technology

In addition, the scale and challenges of the coal sector in India, as compared to that in South Africa, is different. The coal sector in South Africa is highly unionised, said Crispian Olver, executive director of the Presidential Climate Commission in South Africa. At around 100,000 workers, it is also much smaller than India’s.

Coal India alone employs more than a quarter million people. A few million more are directly or indirectly involved in the sector that, includes washeries, transport, and ancillary services.

The Indian government should prepare and negotiate a JETP that works for the country and is significant in solving the climate problem, given the size of the coal ecosystem and the country’s substantial dependence on coal, said Sandeep Pai, senior research lead at the Center for Strategic and International Studies.

So far, there are no specific estimates on how much funding will be needed to shut down India’s coal infrastructure and at the same time protect the livelihoods of the millions of people dependent on the industry, Pai said, suggesting a detailed assessment of the need.

Indian prime minister Narendra Modi with U.S. president Joe Biden and Indonesian premiere Joko Widodo at the recently concluded G20 summit in Bali.

Photo: PIB.

In recent months, there have been multiple developments related to just transition at the global and national levels. India is planning to establish a “work program” on climate action in agriculture and food security, according to a recent government press release. 

Meanwhile, Jharkhand became the first state in India to set up a task force to assess the impact of shutting coal mines on its people.

Additionally, just transition was also discussed at the recently-concluded COP27 climate conference in Egypt, where it was agreed that a just energy transition should take into consideration all socioeconomic aspects based on the principles of common but differentiated responsibility and different national circumstances.

Livelihoods Linked to Coal Mines

Suraj Prasad, 28, is an unskilled labourer loading coal on trucks in a mine near Korba in central India’s Chhattisgarh state. He feared for his job when a section of the Chirimiri colliery, the coal mine he worked at, was closed.

The contractor he worked for, fired most of the daily wagers and shifted the remaining to loading trucks in other mines. Prasad was one of the lucky few who continued to have a job.

The economy that grows around a coal mine collapses when it closes and thousands of direct and indirect jobs are lost. This results in mass unemployment.

In Korba, India’s biggest coal-producing district that accounts for as much as 16% of the nation’s output, a fifth of all jobs depend on coal. As India shifts rapidly to renewable sources of energy for electricity, mining is expected to steadily decline in the region, and closures are to be increasingly common.

Declining reserves, unprofitable mines, and ageing thermal power plants in the chronically poor district foreshadow an end of coal in a few decades. While the formal workforce will ease into retirement, the informal workers will face uncertainty and economic shock.

The situation is similar in all coal mining districts of India, crowded mostly in the central and eastern parts.

Although coal has powered India’s economic growth, the regions where they are mined and burnt are typically poor, with a large proportion of the population from tribal and marginalised communities.

It is in this context that a just transition becomes relevant in a conversation that has been dominated till now by technological fixes and investments into cost-competitive renewable energy.

What seems to have remained neglected is the human cost the transition of coal will extract. Millions of livelihoods would be affected, and ways must be found to deal with the socioeconomic upheaval.

“Just transition can no longer be ignored or wished away. Indian policymakers will have to take increasing note of it, and there has to be a serious discussion on it in international climate negotiations.”

Chandra Bhushan, CEO of the International Forum for Environment, Sustainability & Technology

Socioeconomic Aspects Must Be Considered

Any discussion on just transition has to focus on its social aspects, experts said. “Just transition has to be viewed from the social justice aspect,” said Kanchi Kohli, senior researcher at the Centre for Policy Research, a think tank. “We need to ask whether it will be limited only to the transition of jobs of mine workers and those working around power plants, but also extend much wider to coal networks.”

A mining area in Jharkhand. The state has recently established a task force to study the impact of the closure of coal mines on people.

Photo: Manish Kumar/Mongabay.

Globally, there are lessons to be learnt from how just transition has been implemented in the developed world, according to Sandeep Pai.

The U.S., Canada, and countries in the European Union, like Germany, have implemented a just transition while phasing out coal in their respective jurisdictions.

Germany, in particular, has been phasing out coal in its highly industrialised Ruhr Valley for a few decades. It has spent billions of euros in rehabilitating workers in the coal sector, but not without widespread and lengthy discussions with all stakeholders. It has not only reskilled coal workers but has worked over decades to diversify the economy in the Ruhr.

“Now there is a second set of countries and economies such as South Africa and Indonesia, which have discussed the process of just transition for over a decade and are about to implement plans,” said Pai.

“There is now the third set of countries, such as India, where the concept of just energy transition is at the nascent stage, and our policymakers are still learning about the nuances.”

Sandeep Pai, senior research lead at the Center for Strategic and International Studies

Such initiatives will multiply, but care has to be taken that the socioeconomic aspects of just transition are not neglected, said Srestha Banerjee, director of the India Just Transition Centre.

“Just transition poses unique challenges in countries of the Global South. We must also realise that in India, the coal sector is highly unorganised, and sudden and unplanned closures impact the most vulnerable.”

Srestha Banerjee, director of the India Just Transition Centre

The move away from coal in producing areas will have to look at economic diversification, along with reskilling and reform in labour laws, Banerjee said. “We must also look to strengthen social security funds,” she said.

Although money from corporate social responsibility and just transition financing will help, much more funding will be required that only the government can organise.

India has, in recent times, imposed a cess on every ton of coal mined, and a large part of it should be channelled towards just transition instead of being subsumed in the government’s welfare funding, experts said.

(This article was originally published at Mongabay. It has been republished here with permission.)