“A just transition” and not “just a transition.” The energy transition is a great opportunity for Europe, but in order to create wealth and jobs it must be fair and for all, not simply a transition.
The above play on words offers the best summary of the report “Just E-volution 2030,” which was presented at The European House – Ambrosetti (TEHA) Forum. This is the international meeting that each year since 1975 has brought together, in Cernobbio in Italy, heads of state and governments, political representatives and figures from the world of business and finance to discuss the future economic scenarios. The report was the result of the collaboration between TEHA and Enel, with the support of the Enel Foundation as scientific partner. It was presented on 6 September by our Group’s CEO Francesco Starace and by the managing partner and CEO of The European House - Ambrosetti Valerio De Molli.
Industry and employment: the benefits of the energy transition
The study uses an innovative econometric model in order to estimate the impacts of the energy transition on industrial production, employment and air quality in the European Union and in particular in Italy, Spain and Romania, between now and 2030. Thanks to the progressive replacement of fossil fuels with renewables, the electrification of end uses and the development of new digital services, industrial production of technologies associated with the electricity sector is set to grow by between 113 and 145 billion euros in the European Union (14-23 billion euros in Italy, 7-8 in Spain and 2-3 in Romania). At the same time, between 997 thousand and 1.4 million jobs (up to 173 thousand in Italy, 97 thousand in Spain and 52 thousand in Romania) will be created.
“What lies before us is a real opportunity,” Francesco Starace explains in the introduction to the report, “but it is fundamental that the energy transition is understood by everyone as a benefit and not a change that will be beneficial to some and detrimental for others. To achieve this, we need farsighted policies: it is increasingly obvious that only very wide-ranging measures that combine advantages for climate, energy, industry and society can achieve this result."
The seven advantages of electrification
The report identifies seven reasons why electricity can drive the energy transition, offering a significant contribution to achieving the EU’s decarbonisation targets, which have been reiterated also by the new EU Commission President Ursula von der Leyen in her address to the European Parliament. First of all, the use of electricity will facilitate a reduction in CO2 emissions when generation incorporates a substantial contribution from renewables as well as improving air quality. It is estimated that this will reduce the costs linked to pollution by between 1 billion and 2.9 billion euros, and it will potentially save around 5 thousand lives between now and 2030 in the European Union. Electrification also reduces noise pollution, benefitting those who suffer from sleep disorders and stress, thereby reducing the risks of hypertension and cardiovascular disease. Thanks to its flexibility, electricity offers the possibility to improve both the resilience and the security of the entire energy system, while digitalisation enables electric technologies to achieve even higher levels of performance in terms of energy efficiency. This in turn will boost innovation and the sustainability of both lifestyles and industrial processes, in addition to fostering the growth of the circular economy.
Progressive electrification will also facilitate the creation of new digital services for consumers, who will become increasingly central to the energy system: energy storage technologies, Smart Network Management, Demand Response, Sharing Platforms, Home to Grid, Vehicle-Grid Integration, home automation and sensor systems. According to the study, the production value for these new services should reach around 65 billion euros in the EU (6 billion in Italy alone).
The policy for a transition to renewables that is “just for all”
In addition to the quantitative evaluation of the impact of the energy transition, “Just E-volution 2030” also makes suggestions for the policy-makers in Brussels and the member states, providing a road map of actions to ensure a transition that is “just for all.” In particular, the study pinpoints four policy areas. First of all, it is necessary to foster the spread of electric technologies, for example through the project “Investment bonds for the Energy Transition,” financial programmes and awareness raising campaigns. It is necessary then to manage the resulting job losses, increasing new employment opportunities and implementing re-skilling and up-skilling programmes. And then it is necessary to tackle the issue of energy poverty in order to make sure that no one is left behind by ensuring the fair distribution of the costs associated with the transition.
The main message of the study is that Europe must “safeguard industrial competitiveness,” while “avoiding the effects of a negative distribution on various socio-economic spheres by preventing an unfair distribution of the costs as well as ensuring equal access to the benefits of the energy transition in various zones (for example, in cities and rural areas) and among the diverse segments of the population.” An approach in line with the “Just Transition Declaration” proposed by the Polish presidency of the COP24 in Katowice in 2018.
The challenge is to emulate the ambition that the continent has shown towards environmental policy to enable the shift to a carbon free system that is sustainable and inclusive. In other words, “a just transition” and not “just a transition.”