Climate crisis: how to tackle the public backlash against the costs of a green transition

Workers, businesses and communities facing dislocation are fuelling a backlash against the energy transition, particularly in Europe
If climate action is to stay on track, governments must minimise the economic disruption and shepherd a just transition

Bhavya GuptaandRamkishen S. Rajan

Published: 5:30am, 12 Oct 2023

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In July, UN secretary general Antonio Guterres warned that the “era of global warming has ended; the era of global boiling has arrived”. Last month, on a visit to Hanoi, US President Joe Biden proclaimed that global warming exceeding 1.5 degrees in the coming decades is “the only existential threat humanity faces [that is] even more frightening than a nuclear war”.

Although indulging in such climate “doomerism” can fuel climate anxiety, especially among young people, jarring imagery is sometimes needed to inject a sense of urgency into climate action.

The good news is that the transition to net zero carbon emissions by 2050 has become a global policy priority, as governments embarked, albeit belatedly, on ambitious policies to increase renewable energy use.

The not-so-good news is that even though governments realise the significance of net zero emissions, the process of getting there has become more convoluted and politicised. The higher-for-longer interest rate policy globally needed to rebottle the inflation genie has negatively affected the green transition, which requires massive private capital investment.

Added to this is a wave of backsliding on green initiatives, which have widened fault lines around the world, most notably in Europe, the long-touted leader in climate consciousness and a front runner in rolling out climate policies. There are signs that the politics of climate change is slowing down Europe’s decarbonisation drive.

Across the Atlantic, the historic US autoworkers’ strike highlighted the tensions between committing to a green transition and preserving jobs in sectors most likely to be affected by it. Last year, the International Monetary Fund estimated that around 1 per cent of the labour force in advanced economies and 2.5 per cent in emerging economies will undergo a structural transformation in the net zero transition.

President Joe Biden joins striking members of United Auto Workers on the picket line on September 26 in Van Buren Township, Michigan. Photo: AP

In the face of a growing “green backlash”, some developed countries are softening, if not reneging on, their net zero commitments. Meanwhile, major developing countries such as China, India and Indonesia continue to invest in coal projects, raising questions about their commitment to the decarbonisation of their energy systems.

Two common themes emerge from the rise in the green backlash and signs of a slowdown in the green transition. The first is that it highlights the policy trade-offs faced by governments in navigating the energy “trilemma” of ensuring energy security, energy sustainability and energy affordability, first proposed by the World Energy Council.

Given the competing priorities, the trilemma suggests that countries can at most pursue two of these three energy objectives simultaneously. For most European countries, the tussle is between ensuring a supply of sustainable energy (energy sustainability) and its affordability for households and businesses.

This was evident in Italy’s opposition to European Union climate policies on the grounds of the high costs that would mean for local businesses, in the emergence of a political party in the Netherlands reflecting Dutch farmers’ unhappiness with EU curbs on nitrogen emissions, and in the resistance in Germany to a national plan to replace domestic oil and gas boilers with more expensive heat pumps, and to an EU ban on new polluting vehicles by 2035.

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The second key takeaway from these developments is that the mainstream debate is no longer centred around climate denial and whether climate change necessitates a green transition. Instead, the focus has shifted to the pace and manner of this transition to ensure it is fair, equitable and just, and to minimise the economic disruption.

Some green backlash was inevitable as governments may, initially, have oversold the benefits of moving towards a decarbonised economy without emphasising the costs imposed on some segments of the population in the interim.

Back in 1991, Michael Porter wrote that a low-carbon future will cut costs and improve the welfare of societies over time as it encourages innovation in clean technology and energy efficiency. But the Porter hypothesis, if it does eventuate, is a long-run outcome.

For now, like with any major structural transformation, the green transition will be costly, not just in a fiscal sense but also in terms of the dislocation of workers and communities as resources are reallocated, away from polluting activities and industries towards those lighter on carbon emissions.

China, India worst hit as half a million coal workers face job cuts globally by 2035

As the IMF noted: “Individual workers face tough challenges in moving to greener jobs from more pollution-intensive jobs, complicating labour reallocation.”

Some parallels can be drawn between the growing disquiet over the climate change transition and the resistance against economic globalisation that swept several advanced countries in the early 2000s. In response to a populist surge, many governments preached the virtues of globalisation but failed to adequately manage the transition in terms of compensating those left behind.

Governments would do well not to repeat the same mistake with the green transition, and to ensure appropriate compensatory mechanisms and safety nets are provided for workers and communities who may feel aggrieved by the outcomes of the transition.

In the absence of these, the populist surge that has concentrated mainly in Europe may well spread to other parts of the world. If the green backlash gathers further momentum, it could risk further jeopardising the transition, even as record high global temperatures remind us that climate action has never been more critical.

Bhavya Gupta is a PhD candidate at the Lee Kuan Yew School of Public Policy, National University of Singapore, and a Fox International Fellow 2022-23 at Yale University

Ramkishen S. Rajan is Yong Pung How Professor at the Lee Kuan Yew School of Public Policy, National University of Singapore

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