Fossil fuels have no place in a just transition to climate neutrality

By Katie Treadwell, Energy Policy Officer, WWF European Policy Office
Winter 2020

When Franciszek Zastawnik was a young boy, the beating heart of his village in Rozbark, near Bytom in Poland, was the coal mine. The children’s lives centred on the mine, their fathers working there as had their fathers before them. Miners were well paid and their families could live well, so there was no question in Mr Zastawnik’s mind about his own career: he too went down the mine, and worked in that role for thirty years.

Today, however, the writing is on the wall for fossil fuels. The devastating climate impacts of coal, oil and gas are well known. Investors and banks are pulling out of traditional energy assets. The EU has pledged to get climate neutral by 2050 – NGOs like WWF say this should be reached even earlier, by 2040, to stand a chance of fighting climate change.

Coal mines and coal-fired power plants across Europe – including those in Bytom – are closing down. For Mr Zastawnik, this presents an opportunity.

“Underground mining has no future. But there is an army of people here [...] 30,000 people with technical knowledge. [...] When there is money from the European Union for green energy, it is necessary to use it.”

This opportunity is at the heart of a debate currently preoccupying decision makers. The EU institutions – the European Commission, Council and Parliament – are negotiating the rules for the EU 'Just Transition Fund', whose aim is to support high carbon regions in Europe as they move to a diversified, climate-neutral and sustainable economy.

The amount of money proposed, €17.5 billion, is not enormous: the new EU recovery and resilience facility, for example, is €672 billion. Yet how the Just Transition Fund is used, and what it is allowed to finance, is hugely important.

One reason is because of what it sets a 'just transition' out to be. If the EU allows fossil gas projects to be supported through the Fund – which is the most contentious issue being fought over – it would imply that the EU considers fossil fuels compatible with a socially fair transition to net zero greenhouse gas emissions. For WWF, this would be a falsehood: no fossil fuel can be part of a climate neutral Europe so it makes no sense to invest in them when viable alternatives abound.

What's more, decisions on what will be excluded from – and eligible for – the Just Transition Fund will have a wider impact. They are likely to be applied to the other tools the EU will use to support just transition: the 'InvestEU' guarantee and a public loan arm, together expected to leverage up to €65 billion. So including fossil fuels in one would risk their being included in all three branches.

Finally, the Just Transition Fund will impact future investment choices in Europe's regions. It will contain a rulebook for the just transition plans that local authorities across Europe will need to draw up to obtain funding. So establishing a rule-book that ensures plans are compatible with EU climate targets is crucial. In WWF's view they should also adhere to the principle to 'Do No Signifi cant Harm', which EU Council President Charles Michel wants to see applied to the whole EU budget and recovery package – a position supported by WWF.

For WWF, the best way to implement the 'do no harm' principle is through the EU's forthcoming system for classifying which sectors are sustainable, the taxonomy.

While excluding fossil fuels from the Just Transition Fund may seem obvious, the gas lobby has been hard at work to get its hands on a piece of the pie, and some of its efforts have paid off. While the EU Council – made up of Member State governments – excluded gas from the Fund, the Parliament – made up of directly elected MEPs – failed to do so.

Undermining their official declaration of a 'climate emergency' earlier this year, MEPs adopted a position which would allow the Just Transition Fund to support new fossil gas projects, despite the fact that these would both undermine a just transition and effective climate action.

A group of MEPs is actively supporting the gas industry’s claims that gas is a 'bridge' fuel to climate neutrality. A group of 51 MEPs recently wrote a letter calling for gas to be included as 'sustainable' in the EU Taxonomy itself.

Their arguments are fallacious. Gas is clearly a polluting fuel which makes no contribution to achieving climate neutrality but rather undermines it. No new gas is needed to meet EU energy demand. Not only do the EU Council, Commission and Committee of the Regions officially oppose fossil fuels in the Just Transition Fund, but also groups of organisationsrepresenting civil society and the electrification sector have all expressed the need to exclude coal, oil and gas and increase renewables and energy efficiency instead in recent letters.

What’s more, if the point of the Just Transition Fund is to ensure a socially fair transition, why use it to finance a sector which does not really provide many jobs? Compared to gas, renewable energy investments are highly job intensive, and what’s more those jobs are in a sustainable sector with a bright future.

Currently, 50% of the money in the Just Transition Fund proposal will only be granted if that Member State commits to an EU target of climate neutrality by 2050 – all countries except Poland have already said they’ll implement it. This is good, but far from enough. Funding should be far more strongly conditional on higher ambition, so that countries planning to do more to 2030 are supported to make the transition. But so far the opposite is true: a recent report found that nearlytwo-thirds of the Fund will go to the five EU countries which do not plan to phase-out coal – the most heavily polluting fossil fuel – and to two others who have set phase out dates long after 2030! This must be corrected.

Getting the Just Transition Fund right means excluding fossil fuels, and rewarding climate ambition. It also means ensuring that communities have a clear role – together with civil society, local governments and trade unions – in deciding how money is spent, as supported by a statement signed by over 60 mayors from European coal regions.

Getting the Just Transition Fund right will send a clear signal about the EU's stated commitments to leave noone behind in the transition and to address the climate emergency. It will set up clean, green investments at local and national levels for the years to come. It will set a precedent for other, bigger pots of EU money.

Getting it right will show former mining communities like that of Mr Zastawnik that they are not alone. That the skills honed over generations will be put to good use for future decent jobs in sustainable sectors. It will enable the EU to move as whole to climate neutrality, leaving no-one behind.