Current efforts to reduce greenhouse gas emissions are not producing the desired results. Every year, the world breaks records for investments in renewable energy, sales of electric vehicles, and the number of ambitious statements about the imminent achievement of carbon neutrality. Meanwhile, emissions continue to grow. In 2023, they once again reached a historical maximum, and there is no possibility to reduce them by 2030. The prospects to fulfil the temperature goals of the Paris Agreement are becoming increasingly illusory.
This is due to the growing demand for energy in developing countries. This is where the future of the climate will be determined, and the key question is whether these countries are able to ensure their growth in prosperity and the transition from poverty to middle income through the use of modern technologies and via new consumption patterns. Properly, this balance between green and economic development lies in the concept of a "just transition", which has become a cornerstone of the climate discourse in recent years. The final document of the 28th United Nations Framework Convention on Climate Change (UNFCCC) in Dubai is full of the words "just" and "equitable". The concept of "just transition" is repeatedly mentioned in the Kazan Declaration of the BRICS summit and in the documents of the G20.
The term "just transition" has undergone a great evolution. It first came into wide circulation in 2018. At the time, against the backdrop of the yellow vests movement in France, it became obvious (particularly in the European Union) that active climate policy measures were hitting the poor, and compensation mechanisms were needed to mitigate this negative impact.
Then it became clear that problems could affect not only certain segments of the population, but also entire regions - for example, those who depend on coal mining. A just transition should not leave these regions alone with their problems, but offer full-fledged measures for them to develop while pursuing a low-carbon transition. This is how, for example, this process is understood in the strategy of a just transition in South Africa.
But in recent years, the topic of a just transition has increasingly been addressed in relation to entire countries. It is in this context that it is considered within the frameworks of BRICS. What should those countries do whose dependence on the export of fossil fuels or carbon-intensive products is extremely high, where there are no obvious short-term options for diversifying the economy? What should be done by those who bear the main transition risks from moving towards low-carbon development? The climate discussion should focus on a dialogue between those who benefit from low-carbon development and those who, at least in the short term, may lose from it. Such a dialogue is still in its infancy.
Some of the difficulties are also related to the fact that a just low-carbon transition has so many close ties with other aspects of the global economy that it would not be an exaggeration to say that it is only possible in a just international order.
For example, modern trade policy provides us with the clearest illustration of an unfair energy transition. The European Union and the United Kingdom are introducing border carbon barriers, and the United States is introducing unprecedented WTO-infringing green industrial policies, justified by the primacy of combating climate change. At the same time, these same countries are introducing prohibitive tariffs against green technologies from China, and in this case the value of their global dissemination is hypocritically sacrificed to the goal of containing a competitor.
The second key topic, central to the latest UNFCCC Conferences, is climate financing. The question is not how many more climate funds will be created and whether developed countries have managed to collect $100 billion for developing countries that were promised 15 years ago. A just transition can only be achieved when private financial flows, measured not in hundreds of billions, but in tens of trillions of dollars and concentrated in developed countries, are redirected to developing countries to combat climate change and implement sustainable development goals. This requires not only reforming international development institutions, but also transforming the entire international monetary and financial system, within which one country derives virtually unlimited rent from the international status of its currency.
The third aspect is carbon markets. Emissions must be reduced where it is cheaper. Doing this in China, India or Russia is five to six times cheaper than in Europe. The creation of a global carbon market that links financial resources in developed countries with low-cost emission reduction projects in developing countries could dramatically strengthen the fight against climate change, but at present countries cannot agree even on the very limited market mechanisms of Article 6 of the Paris Agreement.
Finally, the fourth most important aspect of a just energy transition concerns the way emissions are calculated. Currently, the world is dominated by production-based emissions accounting: emissions are calculated based on the territory in which they occur. But emissions can also be calculated based on consumption: based on where the goods, in whose production these emissions were created, are consumed. Production-based emissions accounting shifts responsibility to the leading developing countries – favourably affecting the five BRICS countries, where production-based emissions far exceed consumption-based emissions.
To a large extent, this is a consequence of the international division of labour: these countries produce carbon-intensive products that are happily consumed in the developed world. In the latter, as a result, consumption-based emissions are significantly higher than production-based emissions. The way in which accounting is done here is not simply a question of responsibility redistribution. Consumption-based accounting would provide a different perspective on the nature of global emissions, the close interrelations between countries, the futility of setting carbon neutrality targets within national borders, and the harmfulness of the “simple” one-size-fits-all solutions that, alas, still dominate the debate on this topic. It is precisely this perspective that, although insufficient, is a necessary condition for ensuring a just transition.
