The EBRD’s Just Transition Initiative (JTI) was launched in 2020, with an aim to ensure that the benefits of the green economy transition are shared, while protecting vulnerable countries, people and regions from falling behind.
READ THE Initiative
The Initiative combines EBRD’s ‘green’ and ‘inclusive’ strategic priorities. It is guided by its Green Economy Transition approach and Economic Inclusion Strategy, the Bank helps its countries of operations to achieve a just transition by harnessing the power of the private sector to accelerate the transition towards sustainable and inclusive market economies.
JTI is critical to ensuring societal buy-in for accelerated decarbonisation via a stakeholder engagement process and targeted support across three pillars:
Green economy transition: The EBRD supports clients with high-carbon assets transitioning to a low-carbon economy. This includes targeting the reconversion of high-carbon assets, remediation and rehabilitation of land, transition planning, and a range of other green investments that create access to local employment.
Human capital development: The Bank promotes access to alternative livelihoods for those whose livelihoods are affected by the transition process through reskilling and enhancing entrepreneurship within the context of addressing underlying drivers of inequality.
Regional economic diversification: Emphasising activities that provide access to quality employment, including tailored support for competitive SMEs and larger firms as well as the financing of projects in sustainable infrastructure.
The EBRD’s experience of supporting economic inclusion through private sector investments and associated policy engagement to achieve structural change provides the basis for its approach to supporting vulnerable communities and workers as part of a just transition.
Further insights have emerged from a wide review of literature on the transition away from carbon-intensive sectors in other geographies. These are centred on the role of strategic planning, strong institutions and the need for a range of different interventions.
READ THE INSIGHTS
Since the launch of the Initiative, the EBRD has embraced the agenda via both policy and investments. On the policy side, we are supporting Governments in integrating just transition considerations into key climate documents and regional development strategies, as well as the development of critical skills and labour market reforms.
The EBRD has also launched its flagship product – Just Transition Diagnostics and Action Plans to analyse the effects of accelerated decarbonisation scenarios on the carbon-intensive regions, labour markets and people, and identify new opportunities, including in relation to economic diversification. This has led to the development of action plans across governance, policy and investment dimensions to support a just transition. We have three active assignments – in North Macedonia with European Union Delegation, as well as in Serbia and Ukraine (on hold) with support from Climate Investment Funds in the context of green C-19 recovery.
On the investment side, we are delivering on just transition projects and investment mobilisation. A recent example includes a loan to JSC Elektrani na Severna Makedonija ("ESM") in North Macedonia for the deployment of solar PV on the site of a former coal mine. This is accompanied by support for targeted labour market initiatives at the regional and national levels to safeguard livelihoods for the local workforce. Another example is the EBRD’s participation in a bond issued by Tauron Polska Energia S.A, the largest electricity distributor in Poland, for distribution grid and renewable energy investments. As part of this project, we support the company’s decarbonisation strategy and, importantly, the re-skilling of workers in the heavily coal-reliant region of Silesia.
The EBRD has been active in international just transition fora. In 2021, as a chair of MDB Working Group on just transition, we helped to launch Principles for MDB Support for a Just Transition at COP26. The EBRD is also an active participant in the Coal Regions in the Western Balkans and Ukraine Platform, an initiative led by the European Union, as well as a member of the ILO’s Climate Action for Jobs Working Group on and just transition. We are also working closely with the European Training Foundation.
So what lies ahead for EBRD on just transition? Apart from continuing our work in the aforementioned areas, we are scaling-up our involvement in three dimensions:
Supporting corporate and financial clients in integrating just transition considerations across transition plans, managing direct (e.g. labour shortage) and reputational risks, and leveraging opportunities. For this purpose, we are launching several pilots with energy utilities to integrate a strategic workforce management dimension into transition planning, to ensure the retention, upskilling or re-skilling of the workforce and to manage associated risks.
Scaling up innovative just transition products. In particular, building on our experience with Tauron, we see a growth potential in integrating a just transition dimension into established Transition Bonds, Sustainability Bonds, as well as Sustainability-linked bonds and loans, as a means to scale up financing for accelerated decarbonisation, while integrating a focus on a just transition for affected workers and communities.
Supporting comprehensive just transition packages, to accelerate decarbonisation in a comprehensive and just way that opens up opportunities for all, and avoids people, communities and regions falling behind. One example is our flagship energy pillar of NWFE initiative for Egypt, which aims to retire 5 GW of inefficient fossil fuel power capacity by 2025 and deploy 10 GW of solar and wind energy by 2028. Just transition considerations are at the heart of the initiative, supporting affected workforce by analysing decarbonisation impacts, mapping skillsets, and providing training and skills programmes via relevant partnerships. We hope to draw on this experience in other countries, bringing together public and private sectors, donors and IFIs.
We stand ready to continue supporting our clients in accelerating inclusive green economy transition, as well as working with partners to mobilise financing and technical support for these objectives.