2021/01 COMMONWEALTH SUSTAINABLE ENERGY TRANSITION SERIES SUSTAINABLE Inclusive Energy Transition ENERGYRaphael J Heffron TRANSITION SERIES Commonwealth Sustainable Energy Transition Series 2021/01 ISSN 2413-3175 © Commonwealth Secretariat 2021 By Raphael J Heffron. Please cite this paper as: Heffron, R J (2021), ‘Inclusive Energy Transition’,Commonwealth Sustainable Energy Transition Series 2021/01, Commonwealth Secretariat, London. Raphael J Heffron is Professor for Global Energy Law and Sustainability at the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee, UK. He is a Jean Monnet Professor in the Just Transition to a Low-Carbon Economy. His work combines energy law, policy and economics. He has held visiting academic positions in the UK, France, Greece, Australia, Mozambique, Colombia, Trinidad and Tobago, and the US. The Commonwealth Sustainable Energy Transition (CSET) Agenda encourages and promotes collaboration amongst Commonwealth member countries in the transition to sustainable energy systems and action towards achievement of the SDGs. It builds on the recognition at CHOGM 2018 of the critical importance of sustainable energy to economic development and the imperative to transition to cleaner forms of energy in view of commitments by member countries under the Paris Agreement. It is anchored on the following three key pillars drawn from the agreed outcomes of the inaugural CSET Forum in June 2019 and leverages existing programmes of the Commonwealth Secretariat: • Inclusive Transitions: advocating equitable and inclusive measures for energy transitions that recognise and address impacts on economies, communities and industries. • Technology: propagating advances in technology solutions and innovations as well as research and development for sustainable energy systems. • Enabling Frameworks: supporting the development of enabling frameworks, including policy, laws, regulations, standards and governance institutions for accelerating energy transitions. For more information, contact the Series Editors: Alache Fisho ([email protected]), Legal Adviser, and Victor Kitange ([email protected]), Economic Adviser, Trade, Oceans and Natural Resources Directorate, Commonwealth Secretariat. Abstract The threat of climate change has triggered a global transition to a low-carbon economy. The cen- tral challenge of this is to make sure that no one is left behind. Ensuring an inclusive energy transi- tion is vital to achieving sustainable, stable, people-centred development that reflects the broader goals of society. This paper identifies how to deliver an inclusive transition for all stakeholders, as the pace of change accelerates in the next decade and beyond. JEL Classifications: O13, Q01, Q48 Keywords: inclusivity, energy transition, sustainable development, environment, community Commonwealth Sustainable Energy Transition Series 2021/01 3 Contents Summary 5 1. Introduction 6 2. Key issues 8 3. Opportunities, challenges and barriers 12 4. Exploring actions at national level: Lessons from case studies 16 5. Practical actions, scenario planning and transition pathways 19 6. The implications of COVID-19 22 7. Recommendations 25 Notes 25 References 25 4 Inclusive Energy Transition Abbreviations and Acronyms CES co-ownership energy schemes CSEF Commonwealth Sustainable Energy Forum EFRO energy financial reserve obligation EIA environmental impact assessment EITI Extractive Industries Transparency Initiative EU European Union GDP gross domestic product IEA International Energy Agency SDGs Sustainable Development Goals UNFCCC UN Framework Convention on Climate Change Commonwealth Sustainable Energy Transition Series 2021/01 5 Summary The challenge to society today concerns ensur- attractiveness, (8) building flexibility and resil- ing that the energy sector transition contributes ience into policy-making, (9) law and policy to economic recovery with a new ‘heartbeat’ alignment, and (10) post-decision monitoring. of inclusivity, reflecting the goals of equity, fairness and equality. The energy transition is Key Recommendations playing an important role in society and in fur- thering sustainable economic growth. As the • Identify stakeholders and institutions and transition happens and society moves towards align policy which is supported by data 2030, 2040 and 2050 goals, no one should be management and analysis techniques to left behind. At the heart of the transition needs deliver new investment, new jobs and ensure to be inclusivity. Commonwealth countries industry competitiveness in a manner that can achieve this inclusive transition, broadly contributes to the inclusive and sustainable defined as ‘advocating and promoting equitable development of a society. and inclusive measures for energy transitions • Establish a government unit, agency or that recognise and address in a meaningful commission (of experts) to deliver an inclu- way the impact on economies, communities sive transition and ensure that opportuni- and industries’. This paper focuses on how to ties from the energy transition are realised. operationalise an inclusive transition into prac- This new inclusive transition commission tice and identify practical solutions that can be can perform a number of functions, with applied by governments to deliver actionable a key one being to engage with stakehold- outcomes. Stakeholders and institutions have ers, collect data, and provide the evidence to be identified and allocated responsibility for to enable ministries to make decisions on achieving transformations across the spheres of ensuring inclusivity politics, economies and societies. New initia- • Plan scenarios to action and achieve an tives for inclusivity can happen at the interna- inclusive transition new pathways and begin tional, national and local levels and they can the following Inclusive Transition Action be implemented differently by Commonwealth Plan process: (1) data management, (2) lim- member states. Key actions to ensure the deliv- its and targets setting, (3) agency develop- ery of an inclusive energy transition include ment, (4) responsibility for decision-making, targeting action on the following ten issues: (1) (5) training and capacity for public servants, data management, (2) limits and targets setting, (6) public education for all, (7) investment (3) agency development, (4) responsibility for decision-making on cost and attractiveness, decision-making, (5) training and capacity for (8) building flexibility and resilience into public servants, (6) public education for all, policy-making, (9) law and policy align- (7) investment decision-making on cost and ment, and (10) post-decision monitoring. 6 Inclusive Energy Transition 1. Introduction 1.1 An inclusive transition that countries can undertake to achieve such a The energy transition can contribute to an recovery, through advocating and promoting economic recovery that is equitable and inclu- equitable and inclusive measures for energy sive. This paper examines practical solutions transitions that recognise and address in a Figure 1. The process of inclusive transition Commonwealth Sustainable Energy Transition Series 2021/01 7 meaningful way the impact on economies, com- low-carbon energy sources, given their geogra- munities and industries. phy and natural endowments, and can acceler- The move away from an unsustainable reli- ate towards the energy transition. However, for ance on fossil fuels at the lowest social and eco- other countries, there will be some institutional nomic cost is one of the major challenges faced challenges and indeed slower transitions for by humanity today. The need to curb carbon those countries which do not have such access. emissions and to adopt new energy systems calls There exists a significant volume of reports for a fundamental redesign of political, economic on the energy transition internationally (for and social systems. Accountability of decision- example, from the European Union [EU], makers and transparency of their decisions is World Bank, International Energy Agency fundamental to ensuring that the transition to a [IEA], etc.) and repeatedly they highlight the low-carbon economy is inclusive and just, where successful energy transition developments and fairness, equity and equality are evident and dif- pitfalls that Western European countries have ferent interests are taken into account. experienced. This can be attributed to key influ- Of importance also in this transition are ences, such as the creation and advancement of the institutions involved and their perspec- European Union policy, access to finance and tives regarding the pathways and different sce- consumer demand. Irrespective of the success narios for achieving an inclusive transition. of EU countries in achieving initial goals of the Fundamental for an institution is the data col- energy transition, there remains the need for lected and the lens through which policy can be an inclusive transition in the EU for the same viewed, that is, a local, national and/or inter- reasons as there is worldwide. Society has to national (including regional) lens. A further ensure that the energy transition has equity important issue centres on communication and and inclusiveness as key characteristics of the education around the inclusive transition and process. ensuring public confidence and acceptance. More recently, as the debate around an inclu- In this paper, the aim is to move beyond sive transition has grown, issues such as climate the term