The emission of Greenhouse Gases (GHG) is one of the main contributors to climate change, which the EU is making an effort to tackle efficiently through the European Green Deal (EGD). Arguably the most ambitious target of the EGD is the goal of achieving carbon neutrality by 2050.

 

Because the combustion of fossil fuels represents a big percentage of GHG emissions in Europe, there needs to be a massive shift in how energy is produced. Whilst this is an important goal for environmental reasons, it raises the question of how it will affect sectors that are thriving in the current system. In particular, citizens working in the extraction of fossil fuels from the environment, and the transformation of those fossil fuels into usable electricity face an uncertain future.

 

The coal industry is a great example: Although it is one of the most polluting fossil fuels in use, the coal industry also employs an estimated 237 000 citizens in the EU. All of these people's jobs are put at risk by the EGD's imposed transformation of the energy production industry, as power plants and mines have to close. To make matters worse these jobs are often concentrated in the same regions, typically around extraction centres and power plants. Communities that rely on the fossil-fuel value chain will face a ripple-effect, with impacts that affect the population more widely than direct industry workers. Besides the socio-economic consequences of losing a region’s core source of work and income, other factors come into play. For example, mining cities often have a cultural connection with the activity.

 

To add to this issue, these regions are heavily concentrated in some countries. In this sense, the Member State most affected by the energy transition will be Poland, with more than 110 000 jobs directly related to coal, and many more indirectly affected.

 

Whilst the EU has set the broad goal of carbon neutrality, it will ultimately be implemented at lower levels, such as national and local governments, or private companies. This raises the question of who should take responsibility for the affected citizens’ livelihood. These smaller actors have little interest in making a decision that directly affects them and their constituents in a negative way.

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To respond to this challenge, the EU put forward the Just Transition Mechanism (JTM) as part of the EGD. This mechanism specifically targets regions most affected by this paradigm shift and is meant to reduce the negative socio-economic impact of the carbon neutrality goal. Of the EGD’s budget of €1 trillion, the JTM represents at least €100 billion, money also set aside as a financial incentive for governments to move towards carbon-neutrality.

 

With quarantine and other COVID-related measures being adopted in the last year, total energy demand lowered, allowing many countries in the EU to not need fossil fuels to meet demand, and thus increase their use of renewable energy sources. Furthermore, the economic recession resulting from the pandemic increased the Member States interest in financial incentives offered through the JTM, motivating governments to comply with the set goals.

 

However, energy demand is expected to go up again in the future and energy investments are changing. The economic disruption caused by the pandemic is expected to have an impact on private investments, with fewer investments in the short term. In regards to EU funding, the European Investment Bank has stated that they intend to stop all funding for fossil fuels before the end of 2021. The path from the fossil-fuel-heavy present to the carbon-neutral future is not clear yet. Exploring alternatives, some turn to nuclear energy, but this has always been controversial.

 

It is important to consider short and long term effects of any measures taken. Some national governments have found success in transforming coal-fired power plants into renewable biomass power plants. Besides that, the EU has put forward the Green Employment Initiative, which focuses on reskilling citizens to meet the demands of growing eco-friendly industries. Ultimately, strategies should ensure social well-being, as well as economic stability for the regions affected.

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