The main sources of greenhouse gas emissions worldwide are heat and electricity production (25%), agriculture, forestry and land use (24%), industry (21%), transport (14%), other energy production (10%) and buildings (6%)2. For these sectors, the most directly affected by the transition, questions with social scope immediately emerge: how to find a job in your region when a polluting industry disappears? How to heat your house if oil taxes increase? How to move around without a thermal car in isolated areas?
Providing answers to these questions is essential to win the broadest support and make local communities allies of the transition, because the difficulties it entails will be mastered and because the benefits will be visible and significant for local communities.
Alongside public policies, job-creating companies and investors who finance businesses and infrastructure have a decisive role to play, developing concrete solutions in the territories concerned.
AGRICULTURE AND LAND USE
Agricultural land is at the front line of climate change consequences, with increasing droughts, floods and extreme events (frost, hail, etc.). As a witness to climate change, the agricultural and forestry sector is central to the transition, since it acts as the emitter and sensor of greenhouse gases. While climate issues related to agriculture and land use are prominent, the transition must not neglect the social challenges specific to the rural world: population decline, disappearance of farms, withdrawal of public services, social malaise, etc.
Industrial agriculture, which consumes fertilizers and pesticides, has led to significant productivity gains, but is highly greenhouse gas-emitting and depletes natural resources. According to the scientific community, the transition to sustainable agriculture could offer the same yield while decreasing the ecological footprint3. The conversion of farms involves significant upfront costs. It is here, precisely, that financial actors can intervene to support farmers towards a form of sustainable agriculture that generates jobs. One good example is the Alter’NA agroecology fund of the Nouvelle Aquitaine Region, set up with Crédit Mutuel, Banque Populaire and Crédit Agricole, which generated €230 million in loans. Farmers who wish to finance agro-environmental projects (diversification of production, construction of an eco-greenhouse, removal of pesticides, etc.) can apply for this fund to benefit from a guarantee on their bank loan.
Beyond this lies the question of land use and natural resources, and the impact of economic activities on landscapes and the living environment. Any new infrastructure (transport, energy, networks, tourism, etc.) is of both general interest and an impact for riparian communities and biodiversity. These impacts must be taken into account by companies and investors.
The need for dialogue with the communities can be illustrated in the example of the installation of wind turbines, the source of many hostilities, especially on the theme of «not in my backyard»4.
The question of the balance between economic development and respect for territories arises in particular for islands, coasts or mountainous regions where natural capital constitutes both a wealth and a risk factor if it is overexploited. Aware of this risk, actors such as Banque des Territoires assess projects’ level of local sustainability before granting financing for infrastructure. It is this knowledge of territories and their issues that allows to make investments adapted to local needs and perceived as useful by the communities.
RECONVERSION OF TERRITORIES
Industry and energy are at the heart of just transition issues. As national plans to reduce the share of fossil fuels multiply, entire communities are under pressure. This is particularly the case in Eastern Europe. In Ida Viru, Estonia, in a region largely devoted to oil shale, 1,000 jobs were cut in 2020, and 16,000 people live in households dependent on the sector.5 This situation is an emblematic case of how global decisions result in a concentrated impact on a limited territory and can jeopardize the future of entire communities.
In our first publication, we outlined ways to integrate workers into the just transition6. Alongside the issue of employment lies the issue of support for communities and the conversion of territories. Companies are beginning to incorporate these aspects into their strategies. This is the case of Iberdrola, which adopted the concept of just transition. While Spain’s Lada and Velilla coal plants closed, Iberdrola initiated green transformation projects in these regions.7 These projects include investments in renewable energy, R&D and purchases from local businesses that helped to save jobs. The company has also launched a citizen platform to support and train former coal employees in new jobs.
While the transition is ecological, it is also digital, and connectivity plays a major role in the territories’ access to employment, services and information. Where easily automated jobs are disappearing, investments in digital training and connectivity must enable as many people as possible to benefit from digital opportunities. For instance, the French recovery plan anticipates an investment of 250 million euros for digital inclusion and the recruitment of 4,000 digital advisors deployed throughout the country. The program8 is led by Banque des Territoires, which runs the network and provides grants to the structures that host advisors. La Banque Postale is also strengthening its actions to support the digitally excluded with the launch of the first digital banking inclusion community in partnership with the social start-up WeTechCare. The objective is to raise awareness and train the community of 7,000 digital caregivers listed on WeTechCare’s «Les Bons Clics» platform.
Thus, companies and investors can contribute to the just transition by targeting their investments in regions historically dependent on fossil fuels or carbon-intensive industries. This geographical targeting must be accompanied by extra-financial objectives to ensure that investments benefit local communities. Research on just transition highlights the importance of long-term investment and training to diversify activity into more promising and sustainable sectors.9 Therefore, financial actors have an interest in designing their financing with companies, local elected officials and public authorities to integrate the issues of training, professional mobility and territorial dynamism.
The mobility of people is a key factor in individual freedom, access to employment, link between territories and attractiveness. While the EU plans to ban the sale of thermal vehicles by 2035, mobility is undergoing a rapid transition that crystallizes social demands as shown in particular by the yellow vest protests. Accordingly, the transition to clean mobility raises issues of purchasing power for the consumer10 but also of planning and territorial equality. Indeed, research shows that physical mobility is closely linked to social mobility and that transport plays a vital role for the quality of life of communities and the attractiveness of territories.
The car is now the majority and structuring means of transport outside metropolitan areas, with 74% of working people using it daily to get to work11. The lack of public transport in rural territories creates a real dependence on cars. In order to be just and accepted, the transition must allow people, especially rural people, to move with the same ease and at no additional cost. Finding a low-carbon alternative to thermal cars is a major challenge that requires anticipation and investment in infrastructure (public transport, electric charging stations, etc.) and in innovative industries such as that of batteries. Whilst public authorities are responsible for public transport, the private sector has a role to play in disseminating innovations. Examples include car manufacturers like Renault, which with Envision is setting up a battery factory in Douai with 2,500 new jobs created by 2030. The private sector invests as well on infrastructure: Ionity, the Joint Venture between BMW, Mercedes, Ford and Volkswagen, has already installed 358 charging stations on major European roads.
Faced with the risks of deindustrialization and job losses due to the abandonment of thermal engines, electromobility brings many opportunities. According to the Nicolas Hulot Foundation12, up to 15,000 jobs in battery production, 9,000 in recycling, 5,700 in retrofit (conversion of a thermal vehicle to electric) could be created within the decade in France. The just transition scenario proposed by the Foundation is based, in particular, on the restructuring of the productive apparatus of the sector around electromobility to maintain industrial activity in France. Territories such as the Hauts de France, weakened by deindustrialization and the exit from fossil fuels, could become the new major poles of electromobility. ADEME13, the French Transition Agency, believes that the jobs created in collective passenger transport and charging stations will largely offset the job losses linked to the abandonment of thermal vehicles (freight, maintenance, etc.) at the regional level. On that account, the just transition in the transport sector faces three challenges: reducing the carbon footprint while preserving jobs in the sector and leaving no territory without a mobility solution.
ENERGY RENOVATION OF BUILDINGS
The construction sector accounts for a significant share of global emissions: 38% of total global energy-related CO2 emissions14. Decarbonization of the sector is then essential to achieving carbon neutrality by 2050. UNEP estimates that CO2 emissions from buildings must be halved by 2030 to meet this target. Although renovation solutions exist, in France nearly 5 million homes are poorly insulated («thermal strainers») and 3.8 million households have difficulty paying their heating bill. 15These figures illustrate both the ecological and social dimension of energy renovation of buildings. Investing in energy efficiency means cutting emissions and spending for households.
Current stimulus programs are an opportunity to boost new dynamics that can create jobs, encourage economic activity and activate local value chains. As part of its sustainable recovery plan, the International Energy Agency (IEA) estimates that up to 30 manufacturing and construction jobs would be created for every million dollars invested in modernization or efficiency measures in new constructions. The French Recovery plan, for example, makes the energy renovation of private housing and public buildings one of the priority sectors and devotes 6.2 billion euros over two years.
The private sector already plays a major part in investment and the topic of energy efficiency is emerging in the form of green standards and ratings for the construction and operation of buildings. The labels HQE, LEED or BREEAM are all guarantees that allow investors to direct their investments towards projects combining quality of life and energy sobriety. Building projects contribute to the development and attractiveness of the territories. This is the case with «smart city» projects such as the one concluded between Toulouse Métropole and Électricité de France (EDF). The territory benefits from technical innovations such as an adaptive public lighting system while a second chance school allows to train the long-term unemployed around digital technologies.
Innovative projects like the ones mentioned drastically reduce the emissions of a district or territory by making the most of its energy characteristics. However, it is important to note that while most investments are focused on new constructions, relatively little is destined to the renovation of individual dwellings, which constitutes the main issue.