OPINION: Climate finance must foster a just transition in developing countries

by Aaron Atteridge and Tari Lestari | Climate Strategies
Thursday, 9 June 2022 13:45 GMT

A coal miner stands inside his temporary shelter at a village near Samarinda, East Kalimantan province, Indonesia, March 2, 2016. REUTERS/Beawiharta

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* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

The Global South needs international funding to help decision-makers tackle the inequities that could be created by a shift to greener economies

Aaron Atteridge is research lead for Climate Strategies’ South to South Just Transitions initiative, and Tari Lestari is an associate with the Dala Institute in Indonesia.

Developing countries face the monumental task of tackling climate change while dealing with significant social and economic challenges. These include persistent poverty, inequality and energy access gaps, as well as degradation and loss of their natural resources.

Responses to the climate challenge may, if not carefully designed, introduce new hardships and deepen inequalities: workers might lose their jobs as polluting factories close down and new green businesses might open only in cities rather than rural areas. A just climate transition is thus about making sure that everyone affected can have their say, and no one is left behind.

It is also about the opportunity for decision-makers to use climate action to tackle the root causes of inequality and vulnerability, helping reduce resistance to change, and to deploy limited resources wisely to achieve broader sustainable development goals.

Our recent report on just transitions in the Global South summarises findings from research partners in Argentina, Bangladesh, Colombia, Indonesia, Ghana, Kenya, Laos, Malawi and Vietnam.

“Just transition” is now featuring more often in climate discussions in developing countries but among decision-makers, there is limited understanding of the equity issues a climate transition might create, and little planning to ensure these are being addressed.  

Here are six ways to help improve this: 

  • Governments should implement their commitments to manage transitions justly and build momentum for inclusive planning processes. Countries like Indonesia, Colombia and Argentina mention just transition in their nationally determined contributions (NDCs) to tackling climate change, submitted to the United Nations. But these documents do not always inform domestic policy and budget planning. A better approach would be to incorporate the objective of just transition into national development plans. By offering more strategic direction and involving various government institutions, this can be a foundation for dialogue and resourcing of transition efforts.

  • We need to fill data gaps on how climate action and sectoral transitions might affect different people. This knowledge is key to help decision-makers recognise potential equity issues and devise strategies to tackle them. In Indonesia, the Ministry of Manpower is preparing a study on the impact of climate change on employment and planning to draft a ‘Critical Occupational List’ that maps out the jobs that are disappearing and others emerging as part of the transition.#

  • We need to build the capacity of decision-makers and vulnerable groups to understand the implications of climate action and the opportunities of transition. Beyond filling research and analysis gaps, this might include knowledge-sharing and exchange visits to other countries with similar experiences. Resources should also be made accessible for people who otherwise would not be able to take part in the just transition process. In Indonesia, for example, comic strips written in Bahasa to explain the concept to local communities are being planned, aimed at sparking interest and dialogue around the changes.

  • Just transition implies a broad planning process because the social and economic impacts of transition go well beyond individual sectors or government portfolios. This means more areas of government, civil society organisations and other kinds of institutions, such as those in education, should be involved.

  • Much of the labour force in developing countries is in informal sectors that are unregistered, sometimes illegal and with limited social protection. Just transition strategies need to meaningfully engage these workers, in ways that are adapted to the local context. In Ghana, building trust through face-to-face meetings has been an effective approach.

  • Achieving broad engagement implies strong government coordination. Local governments, particularly, will bear many of the costs and impacts of transition, for example in coal-producing regions such as East Kalimantan in Indonesia or La Guajira in Colombia. At the same time, they often lack resources to cope. To play a central role in dialogue and planning, they will need financial and technical support.

As the “just transition” debate is nascent in many countries, it is difficult to identify all the funding gaps and investment needs to implement a green and fair shift. Countries will require finance for re-skilling programmes for workers and communities, public policy reform to strengthen social safety nets, and infrastructure investments to help regions diversify their economies, among others.

In the short term, funding is needed to help countries overcome some of the barriers described above, and to create spaces for greater dialogue around a just transition. Here, international development partners and climate finance providers have a key role to play.

Climate finance should not only target the technical part of transitions – that is reducing emissions or adapting to climate impacts. It must also support communities with managing the socio-economic impacts and addressing inequality more broadly.

As the world prepares for the next U.N. climate conference in Egypt in November, it is time to integrate equity and justice – the foundation of impactful climate action – into the way we plan, and finance, climate transitions.