Why is a ‘just transition’ so important for India?

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By Mani Juneja, Research Associate, The Energy and Resources Institute, India.

Tackling climate change and environmental issues is the need of the hour. It is good for the economy, for the people, and the environment. But while these measures taken to reduce emissions and decrease the impact of climate change will be good for many, they might create trouble for the people employed in those industries. As the economies lean more towards cleaner energy fuels, people employed in the conventional fuel industries might face the risk of losing their livelihoods.

This energy transition has led to the rise of a ‘just transition’ in the world now that ensures that it is inclusive in nature. This means taking account of the distributional consequences so that no one is left behind.

What does ‘just transition’ mean for India?

India is committed to decarbonising its economy through its Intended Nationally Determined Contribution (INDC) which primarily aims at reducing the emissions intensity of the Gross Domestic Product (GDP) by 33-35% by 2030 below 2005 levels. It has also pledged to increase the share of non-fossil fuels-based electricity to 40% by 2030 with international support on technology transfer and financing.

This includes an ambitious target of achieving 175GW of renewable energy (out of which 100GW will be from solar) by the year 2022. This means that India has to take the path of a just transition to commit to its targets. India is already on the way to energy transition now, as renewables constitute more than 24% of the total installed capacity with two-thirds of this in the western parts of the country. India’s thrust of renewables is also expanding as the capacity has more than doubled in the last decade, which will further increase in the future as the country eyes achieving its committed targets. The cost of solar is also projected to be as low as Rs. 1.9 per unit over the next decade through 2030, creating cost competitiveness for coal.

On the other hand, coal has been pointed out as “bad” and the need for phasing it out has been emerging in the country. The various impacts created along the value chain of coal are worrying. From soil and water contamination to loss of agricultural productivity to air pollution, coal creates serious environmental issues for the local communities. Coal is also one of the major contributors to air pollution and several studies have confirmed that air pollution, especially the presence of RPM (PM10) in the atmosphere, leads to human morbidity, reduced lung functions and an increase in respiratory syndromes.

This prognosis has led to the rising pressure on the phasing out of coal and its replacement with renewables. Last year 2,335MW of coal power plant capacity, across 21 units in 10 plants were retired or converted of the notified coal-fired thermal power plants, of which 15,000MW are in Uttar Pradesh, Andhra Pradesh, Telengana, and Haryana. The power ministry is also fast pacing the efforts to close down old coal plants amid rising outcry against air pollution and deepening concerns over climate change.

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But following this energy transition, questions concerning the fate of the local people and communities engaged in the coal sector arise. The mass socio-economic impacts on these local communities would be enormous and dealing with them would be a big challenge.

Vulnerabilities arising from the energy transition

Estimates show that around 1.2 million people are employed in India’s coal sector, additionally, a large unaccountable informal economy is attached with the coal sector that heavily depends on it for livelihood. Communities in coal-dominated regions have been dependent on coal for their incomes for decades and they are thought to resist any transition taking coal away. Such people might not have the ready skills to engage themselves in alternative professions, the jobs might be located in other locations or the materialisation of alternate jobs might take time.

The closure of the Badarpur power plant in New Delhi created similar havoc when more than 450 contractual workers were left with no work prior to its sudden closure in 2018. With the help of local labour unions, they sought urgent relief from the government which included support through alternative employment in the National Capital Region (NCR), adequate compensation, payment of all statutory dues and issuance of service certificates. These demands were not met and eventually, the workers were forced to take up other work at lower wages. There was no transition plan in place for these contractual workers leaving them worse off and vulnerable.

The coal sector not only supports employment and livelihoods, but it also makes a large chunk of the revenues of coal-dependent states. Since 2014, the government exchequers have a total of Rs. 2.03 lakh crore in revenue from Coal India. States like Chhattisgarh, Telengana, Madhya Pradesh, Odisha and West Bengal significantly depend on coal royalty. Coal royalty provided more than 43% to the non-tax revenue receipts of Jharkhand in 2018 and around 34% to Chhattisgarh’s.

In addition to the provision of local revenue, local employment and business opportunities, the establishment of coal mines also provide incentives for the improvement of local infrastructure. Mining activities bring basic infrastructure facilities such as schools, hospitals and the construction of improved transportation and communication facilities to remote villages that enable local communities to expand and diversify their livelihood options.

Next Steps

As India’s need for energy transition is on its way and important, a true coal phase-out is being looked for. However, this transition should be embarked on few points:

  • Skill development in the renewable sector will be a major push to the just transition. Since renewables have great potential for job creation, this transition will create employment opportunities. They will also boost self-employment however this would require skilled manpower.
  • The role of local government and communities is important and the correct synergy between the central and regional level governments is very important. Because the whole genesis of a just transition starts from the local level it is important that the state/local governments and even the unions of the coal dependent regions agree with the policies proposed at the national level that may lead to the transition.
  • The rehabilitation of the people losing their jobs during the transition is a key aspect that needs to be addressed. During the closure of any coal mine or power plant, the formal employees are relocated to other sites but the informal employees or the contract workers are affected the most. In such cases it is important to support them with appropriate skills so that they can take alternate jobs.
  • The role of the private sector is imperative in the promotion of renewables which will not only lead to direct impacts in the form of job creation, skill training and infrastructure development, but also will lead to indirect impacts on the local communities. The programmes contested by the private sector create a multiplier effect benefitting the society and the advantages can be realised for many years. These lead to an overall development of the local communities and empowerment of the local people.

Therefore, any transition away from coal, if not planned properly and well in advance, could lead to adverse impacts on the local communities and the regions as a whole and could ultimately lead to the conversion of well-settled towns today to ‘ghost towns’ in the future.

About the author

Ms Mani Juneja is currently working as a Research Associate under the Centre for Resource Efficiency and Governance division of TERI. She did her Masters in Economics from Jamia Millia Islamia, New Delhi and graduated in economics from the University of Delhi. In TERI she has been working on health economics, impact assessments, cost-benefit assessments, SDGs and blue economy. In the past, she was engaged as a researcher in research organisations like Research and Information Systems for Developing Countries (RIS) and Institute for Economic Growth, New Delhi. She has also worked as a statistical intern at the Election Commission of India, Government of India and has been engaged as a Research Assistant in Jamia Millia Islamia.