Navigating the path to a just transition

It will help if China establishes a task force to oversee it, supports affected groups, strengthens social protection, accelerates economic diversification and ensures adequate funding support

The COP28 climate summit hosted in the United Arab Emirates adopted outcomes of the first global stock-taking since the Paris Agreement in 2016, emphasizing a transition away from fossil fuels rather than phasing down or phasing out coal consumption, noting that a shift away from fossil fuel energy should happen "in a just, orderly, and equitable manner". Under the United Nations' new "Just Transition Work Program", just transition pathways to achieve the Paris Agreement climate goals are also highlighted.

To maximize the positive impacts and minimize the negative impacts caused by the energy transition on the economy and society, several pathways, such as creating new jobs for the labor force impacted by the energy transition, slowing down the economic downturn in fossil-energy-rich regions, and promoting economic diversification, are being broadly implemented. Increasingly, countries are accelerating their just transition efforts, adapting to their own circumstances.

For tipping the goals of the Paris Agreement and China's dual-carbon goals — peaking carbon dioxide emissions before 2030 and going carbon neutral before 2060 — it is important to advance a low-carbon transition in China's economic structure, energy mix, production methods and lifestyles. With the implementation of these policies and measures, it is certain that the labor market will face significant impacts.

According to the International Energy Agency, more than 3.6 million jobs will be created in China's energy sector during the energy transition phase. However, the transition may also have a disproportionate impact on certain sectors, regions and groups. Crucially, not all of them will have equal access to those new jobs.

China's coal industry is going to be directly affected by the energy transition. A study by the Peking University's Institute of Energy and the United Nations Development Programme indicates that, based on China's current policy trajectory, about 52 percent of jobs in the coal industry could disappear by 2030, and approximately 90-94 percent by 2050. In terms of total numbers, China may see a direct loss of more than 1 million jobs in the coal sector by 2030. While the scale of employment change is still smaller than that experienced during China's supply-side structural reform, the study also found that for every job lost in the coal industry, there will be a corresponding 1.08 jobs lost in related industries. Additionally, this ratio has been decreasing since 2010, suggesting that the negative employment effects of the energy transition are expected to be mostly limited to the coal industry itself.

As the downstream of the coal industry and a focal area for carbon reduction in the power sector, jobs in the electric power sector are also gradually declining as the energy transition deepens. A study indicates that employment in the coal power sector is projected to decrease, and by 2060 the workforce will be reduced by about 30,000, a 95 percent decrease compared to 2020 levels. However, overall employment in the electric power industry is expected to see an increase due to new jobs created in renewable energy. The study maintains that employment in wind and solar power generation is expected to double and quadruple respectively within 50 years. Employment numbers in the electric power industry are expected to increase, up to 68 percent by 2060 compared to 2020 levels.

More evidence shows that women are more vulnerable in the energy transition. The share of female employees in the coal industry has declined from 21.9 percent in 2003 to 13.3 percent in 2020, while men's share has climbed from 78.1 percent to 86.7 percent, suggesting women are at a higher risk of unemployment when the industry shrinks. Particular attention needs to be paid to those more vulnerable groups during a just transition.

The Proposal of the People's Republic of China on the Reform and Development of Global Governance, launched in September 2023, stated that China supports the pursuit of green and low-carbon development. In the course of a just energy transition, the different national realities and capabilities of countries should be fully respected, and traditional energy should be phased out for ensuring safe and reliable alternative energy sources.

To ensure the outcomes of the transition can benefit everyone. A just energy transition may be promoted in five areas, including establishing a task force to oversee the just transition, supporting affected groups, strengthening social protection, accelerating economic diversification and ensuring adequate funding support.

A task force should be established to enhance inter-agency coordination and stakeholder engagement. China could consider either establishing a new task force for its just transition or expanding the scope of an existing coordination mechanism, such as the State Council's leading group on employment.

Workers in need can be supported by strengthening China's existing employment policy, including by continuously evaluating and adapting policies to ensure their effectiveness in a fast-changing environment. Revising the eligibility criteria for employment stabilization subsidies and specifying the proportion of financial assistance that needs to be set aside for supporting affected workers are two ways to ensure that such support reaches the companies and workers that need it most. Additionally, China should formulate medium- and long-term national plans for green employment, setting clear targets and establishing key priorities to guide efforts in this area.

Social protection and employment policies should be mutually reinforcing. To effectively assist laid-off workers, targeted measures should also be designed based on their willingness to work, age, gender and skill level. A tailored combination of social protection and employment policy tools should be employed to address the needs of diverse groups.

The economy should be upgraded through industrial restructuring and coordination between economic transitions and job creation should be enhanced. To achieve balanced progress in environmental protection, economic development and employment generation, policies must be implemented in a more synchronized manner. This proposes that any new industrial policy should be accompanied by complementary environmental and employment policies to mitigate potential environmental or social impacts that it might cause.

China should pool funds from diverse sources and guard against financial risks. It is vital to leverage private capital, along with public finance, to support the energy transition. This involves promoting transition finance and incorporating social considerations in lending decisions. China could draw on the experience of the European Union and create transition funds that direct resources toward vulnerable and negatively affected areas and companies.

The author is a guest research fellow at the Institute of Energy at Peking University. The author contributed this article to China Watch, a think tank powered by China Daily.

Contact the editor at editor@chinawatch.cn