Some US Communities May Be Hurt By Clean Energy Transition, Suggest Indiana University Researchers
Researchers at Indiana University have published new research showcasing new methods that can identify communities likely to be negatively impacted by clean energy policies — specifically, those communities which heavily rely on fossil fuels for their economy or low-income communities unable to afford increased energy costs.
It has always been my intention as a journalist to do my best to remove myself from the picture (which I am obviously now disobeying, temporarily) and to present the facts. Thankfully, for the most part, I can wholeheartedly support the transition to a low-carbon economy without being concerned I am fiddling with the news to present the best possible case. Renewable energy is now cost-competitive in markets around the world, technology costs continue to fall, and even decreasing support from governments is being offset by the marked successes of the industry.
But there are still real-world issues that we cannot ignore.
One example from earlier this year was the response to the decision made by London-based financial services giant HSBC to cease financing all new coal-fired power plants around the world with three exceptions — Bangladesh, Indonesia, and Vietnam. HSBC is the biggest bank in Europe, and its continued efforts to align its policies with tough climate action has been long in the making. The most recent announcement is simply an extension of a 2011 commitment to restrict support for new coal-fired power plants.
“Our updated energy policy reflects HSBC’s ambition to help our customers make the transition to a low-carbon economy in a responsible and sustainable way,” said Daniel Klier, Group Head of Strategy and Global Head of Sustainable Finance at HSBC, at the time. “We recognise the need to reduce emissions rapidly to achieve the target set in the 2015 Paris Agreement to limit global temperature rises to well below 2 degrees Celsius and our responsibility to support the communities in which we operate.”
However, HSBC’s actions weren’t enough for some clean energy proponents, who took the bank to task for keeping “the coal chute ajar.”
Responding to HSBC’s announcement, Christian Aid’s Senior Private Sector Advisor, Keval Bharadia said “it’s a shame HSBC decided to keep the coal chute ajar by refusing to rule out money for new coal projects in Indonesia, Bangladesh and Vietnam and supply credit to not only coal companies but to other coal lending banks over the next five years.”
Similarly, Johan Frijns, director of the commercial bank watchdog organization BankTrack, said of HSBC’s decision, “the measures announced today on coal power financing should have seen HSBC going further to respond to the urgency of climate change” adding that “it’s disappointing that HSBC has chosen not to fully disengage from financing coal power plants in Indonesia, Vietnam and Bangladesh for the next five years.
“Any investment in coal power which the bank makes in the next five years in these countries will be condemning the citizens of these countries to huge health risks, and also undermining global efforts to stem climate change. HSBC could and should have chosen to get out of the financing of coal power plant projects fully, as 13 of its European banking peers have already done.”
Image Credit: Lighting Global, via CleanTechnica
If we were to evaluate these comments and HSBC’s decisions in a vacuum, then there is no doubt that continuing to finance coal development in any number of countries is a poor idea. However, we do not live in a vacuum, and as such decisions must be made in the real world, taking into consideration the impacts of one’s decisions.
According to The World Bank, nearly 25% of the population of Bangladesh does not have access to electricity, although both Vietnam and Indonesia have nearly universal access. Simply cutting the cord on financing new electricity generating capacity in a country like this, and for rural areas of Indonesia and Vietnam, will only do more immediate harm than good. It would be great if every country had the resources and funds available to simply double down on renewable energy in such situations, but this is also not as simple as we might wish. Renewable energy costs are falling around the world, but there is still significant regional differences.
Another thing to take into account with HSBC’s decision is that it is not simply allowing Bangladesh, Indonesia, and Vietnam free access to financing for just any coal-fired generating capacity they like. HSBC was very clear in its press release and in the attendant Energy Policy notice (PDF) that any coal financing for these three countries will be taken on a case-by-case basis “in order to appropriately balance local humanitarian needs with the need to transition to a low-carbon economy … and only where a carbon-intensity target is met and independent analysis finds that no reasonable alternative is available to meet the country’s energy needs.”
Stepping away from HSBC, new research published in May by researchers at Indian University published findings detailing a new method to identify US communities that may be at risk from clean energy policies designed to support the transition to a low-carbon economy. Specifically, the researchers used an adapted version of the Vulnerability Scoping Diagram — which has previously been used to determine the vulnerability of communities to natural hazards, disaster management, and climate change. The Indiana University researchers adapted it to identify geographic areas and individuals that are deemed “vulnerable” and assessed the negative consequences from environmental policies.
“The energy transition will bring many benefits to society,” said Sanya Carley, an associate professor in the School of Public and Environmental Affairs at IU Bloomington. “But the benefits, as well as the costs, will not be dispersed proportionately across society. My co-authors and I embarked on this study because we believe that it is important to study the distribution of benefits and burdens and to help the policy- and decision-maker community identify those populations that are most vulnerable.”
The research shows that the low-carbon economy transition will not affect all communities and individuals equally, and will particularly impact those communities which have hitherto been heavily reliant upon fossil fuel generation for their local economy, or those low-income communities and individuals which will struggle with (temporarily) increased energy costs.
“It is important to document adverse effects of policies, not in an attempt to undermine their credibility or efficacy, but to better understand their limitations and unintended consequences,” added David Konisky, also an author of the paper and an associate professor in the IU School of Public and Environmental Affairs.
The specifics of the report are hidden behind paid access to the journal Nature Energy, in which the article — ‘A framework for evaluating geographic disparities in energy transition vulnerability‘ — was published, but it raises an important consideration.
A consideration, mind you, and not a reason to halt transitioning to low-carbon energy generation sources.
In much the same way that robotics is replacing human jobs, leaving behind many skilled unemployed workers — an unintended consequence of the vaunted “progress” of humanity — the transition to clean energy will naturally result in the loss of jobs for skilled workers — miners and gas workers, for example. This is not reason to halt the transition to clean energy, but it highlights the need for comprehensive state and national policies that both support the transition and help those left behind. Government support would, for example, almost singlehandedly eliminate any potential increases in energy costs simply by minimising issues for energy providers, helping to realise the low-cost generation of renewable energy for consumers.
Similarly, retraining and job support networks are necessary for those whose industries are being phased out, so that they can continue to work fulfilling lives and pay the bills. Take someone’s job and leave them alone and they will invariably hate the reason they lost their job. Help that same person find a new job — even transition their skills from one place to another — and they will benefit financially and socially.
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