Beyond Carbon: Rethinking Registers of Just Transitions
We are living through the meta-narrative of climate change in the words of scholar Kasia Paprocki, who has written a striking book on climate change adaptation in Bangladesh. In a matter of little over a decade, climate change has moved from the periphery to the centre of public imaginaries where everything green has taken centre stage.
Climate Change is a multi-scalar phenomenon which impacts the community at various levels from the planetary to the local. Climate Change is due to greenhouse gases and the heating effect of gases linked to carbon from C02 to CO to CH4 which is potent in multitudes. Carbon has a benefit; it can be measured and thus quantified. Carbon emissions are measured in the ambit of the manufacturing processes of a plant or Scope 1 emissions to the power drawn off the grid that is Scope 2 emissions to Scope 3 which is predominantly the supply chain activities. 95% of emissions are Scope 3. Yet an entity’s Scope 1 emission could be someone else’s Scope 3 emissions.
Scope 1 emissions are direct emissions from company-owned and controlled resources. In other words, emissions are released into the atmosphere as a direct result of a set of activities, at a firm level. It is divided into four categories: stationary combustion (e.g fuels, heating sources). All fuels that produce GHG emissions must be included in scope 1.
Scope 2 emissions are indirect emissions from the generation of purchased energy, from a utility provider. In other words, all GHG emissions released in the atmosphere, from the consumption of purchased electricity, steam, heat and cooling.
Scope 3 emissions are all indirect emissions – not included in scope 2 – that occur in the value chain of the reporting company, including both upstream and downstream emissions. In other words, emissions are linked to the company’s operations.
Then it is an issue of the reporting boundary of an entity, and emissions quantification is only one aspect of the picture. Baseline datafication is crucial as then targets can be set and decarbonization trajectories mapped at the scale of the enterprise, city and national.
The term energy transition is an oxymoron; the accurate characterisation is emission transition. Hydrocarbons lead to emissions and fuel switching from oil to gas reduces the carbon footprint of an organization. Even better are feed-in tariffs from renewables which add resilience to the grid and can be financed from sustainable finance.
Project finance towards climate adaptation ends is entailed as sustainable finance while integrating Environment Social Governance (ESG) factors contingent upon materiality.
Environmental, social, and governance (ESG) investing refers to a set of standards for a company’s behavior used by socially conscious investors to screen potential investments.
Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
Each pillar in the trifecta of the ESG has at least half a dozen sub-threads to consider. ESG is more than carbon, it is the risk rating conversation of the sustainable development paradigm. Notions of scale are important as not every element can be considered a risk driver for the project. Many mutual funds, brokerage firms, and robo advisors now offer investment products that employ ESG principles. The ESG metrics are not commonly part of mandatory financial reporting, though companies are increasingly making disclosures in their annual report or in a standalone sustainability report.
ESG integration makes sense as value capture is considered from the investor perspective considering the long term of the pension fund or the sovereign wealth fund where climate stress tests and physical transition risks for insurance, real estate, power, and hydrocarbons can be considered material. ESG might not cut it with a penny stocks day trader as the understanding of risk itself might vary from context to context.
The acknowledgement of loss and damage at the recently concluded COP in Egypt can be considered a win, in the light of the horrific floods in Pakistan and the vociferous campaigning by Sherry Rahman but it is at best optics as the financing needed for a just transition is simple mind numbing. The just in the Just Transition is from Justice.
A rights-based approach to the transition will account for a community-centric transition as communities with varied reservoirs of social capital will negotiate the transition differently. The role of politics needs to be acknowledged deeply as we think of going beyond carbon in terms of tackling the single biggest existential challenge to humanity. Carbon as a focal point of analysis is convenient to global capital as it cannot voice its opinions unlike communities in submerged pacific islands or Assam that bear the brunt of the floods each year.
The anti-ESG movement is rooted in working-class Republican voting communities of the rust best in the United States that have been manufacturing jobs move to China and is seeing the focus from coal and its thermal-powered plants move away under the shadow of the climate transition. A similar echo could be found in Australia or Jharkhand where closing mines leave communities stranded. The divestment away from existing assets and future investments has hurt hydrocarbon exporting nations.
One needs to acknowledge that many parts of the world have not achieved energy independence or equity yet. The Ukraine war has raised the energy bills of working-class Europeans and has spiked the inflation rates to unprecedented levels. The energy exporting GCC is back in action as energy market vacuums are not tolerated for too long. Geopolitics is not far away from climate change equations as energy is the interdependent variable there.
Transitions need to factor in local variables as politics on the ground can make or break any neatly designed roadmap by a strategy consultancy. Carbon is a designed pollutant as well at a regional air shed level. Carbon is a starting point, and it is interconnected to biodiversity which is nature-based climate solutions such as mangroves and forests that shield from flooding and store carbon in the soil as in Indonesia and Brazil. Some communities live in these forests for thousands of years and no conservation finance project would work without the buy-in of these communities.
Therefore, there is a need to reframe carbon as a socioecological, sociotechnical, and sociobiological dialogue rather than a monochromatic lens of data wherein reporting should lead to resilience.
Manishankar Prasad
Manishankar is a writer and researcher on the Gulf based in Singapore.
