Since the phrase "just transition" garnered attention during COP 27, we could see that the practice of just transition has become a top concern for achieving net-zero emissions internationally. The purpose of just transition is to assist and compensate those who suffer losses or vulnerable groups during the low-carbon transition through national interventions, while also actively allowing transition dividends to be shared fairly by the public as much as possible. Taiwan's lagging energy transformation over the last 10 years has posed significant challenges due to the global demand for net-zero emissions by 2050. Hence, the just transition crisis concerning the social, environmental, and economic injustices of net-zero emissions initiatives would be the most urgent and significant developmental proposition for Taiwan over the next two decades.
In response to this key issue, the Risk Society and Policy Research Center (RSPRC), National Taiwan University, conducted the "Survey on Awareness of Just Transition of High-carbon and High-power-consuming Industries in Taiwan" in November and published the first empirical research-based policy recommendations on just transition in Taiwan in December 2022. The survey was commissioned by China Credit Information Service, with the impacted high-carbon emission industries as survey targets; 533 telephone interviews were conducted. The survey was aimed at internal respondents at different job levels to further understand the respondents' views on just transition and the current implementation status of the surveyed companies, including supervisors, employees, and persons in charge.
The targets of this survey were based on data released by the Bureau of Energy and Taipower. The samples were screened using the five indicators calculated by the center, including carbon emission intensity, electricity intensity, total carbon emission, total electricity consumption, and the proportion of electricity costs to operating costs. We selected companies from specific industries with a capital of NT$1 million or more as the population. The investigation period was from November 1, 2022 (Tuesday) to November 15, 2022 (Tuesday). The survey results released this time were weighted by the number of employees in the industry according to governmental statistics, and unweighted data were retained.
Main Research Findings:
1.Net-zero governance:
- Policy Communication: as many as 81.2% were completely unaware or barely aware of the government's 2050 carbon reduction plan.
- Participation in decision-making: A relatively high proportion of respondents believed that the public should be involved before the policy was launched (83.3%), the government should cooperate with industry and employees to find solutions (75%), and fairness can be achieved only through joint discussion and compensation should be legislated (66.8%).
2.The governments' carbon reduction policy, possible fluctuations in prices of oil and electricity, and the impact of adjusting electricity prices on personal household expenditures:
- Of the total respondents, 63.2% believed that household expenditure was significantly affected by electricity prices, while 74.9% believed that carbon reduction policies would impact oil and electricity prices.
3.Respondents' concerns about job impact under the 2050 carbon reduction target; only a very small amount of oil, coal, and fuel oil could be used:
- Thirty-six percent of respondents worried that their jobs will be affected within 10 years.
- The proportion of respondents who worried deeply about the impact on their jobs in different industries: land transportation (36.2%), petrochemicals (30.6%), iron and steel (25.6%), electricity (20.8%), and fishery (16.7%).The concerns of grassroots employees were particularly significant, reaching a statistically significant difference.
- The concerns of grassroots employees were particularly significant, reaching a statistically significant difference.
- Middle-income earners and grassroots managers were particularly concerned about the impact of electricity prices on their livelihoods and the impact of policies on oil and electricity prices. Policymakers should consider the impact of oil and electricity price fluctuations on the middle-income class, which is the primary tax base.
4.With the aim of reducing carbon emissions by more than 90% by 2050, respondents' perceptions of the impact of high carbon emissions and high-power consumption work:
- Respondents in the iron and steel, petrochemical, land transportation, and fishery industries perceived a greater impact. Among them, 50% of fishery respondents reported that the net zero policy greatly impacts their work, which is much higher than that in other industries.
- According to the survey, the prohibition of fossil fuels in 2050 and fluctuations in oil and electricity prices are not the main reasons for fisheries' concerns. Their concerns may stem from the personal experiences of offshore wind power, fishery, electricity symbiosis cases in recent years, and their personal experiences as fishery workers. In addition, conflicts of interest in coastal fisheries and electricity symbiosis have recently been discussed in the media. The exact reasons for these must be analyzed further.
5.Responsibility for carbon reduction:
- 57.7% of respondents worry that the responsibility for carbon reduction will be passed on to employees.
- Middle- and high-level managers and responsible shareholders (63.1%) are more worried about transferring responsibility to them than grassroots employees. This means that the management has considered the possible transfer of carbon reduction pressure from business practices.
Policy Implications and Recommendations:
1.Priority should be given to assisting the transformation of high-carbon emission and power-consuming enterprises
The RSPRC argues that Taiwan has long been driven by the brown economic model to drive GDP growth; the growth model of low oil, electricity, and water prices, and sacrificing the environment and health of its people made an indelible historical contribution to Taiwan's economic take-off in the 1980s. However, from the brown economic model to the global low-carbon transition after 2000, Taiwan missed numerous opportunities for industrial, economic, and social transformation. Kuei-Tien Chou, director of the National Taiwan University Risk Center, stated that the global pressure to transition to net zero is becoming increasingly apparent. In particular, Taiwan's current high-carbon emissions and high-power-consuming enterprises are facing the requirements of global net-zero transformation (ESG, RE100, 2050 net-zero carbon emissions, etc.). Moreover, in terms of geo-economic competition, lagging countries face a loss of transfer orders in the global supply chain. Taiwan's low-carbon transition started too slowly. At this stage, the world has entered an era of net zero transformation from low-carbon transformation. Taiwan must not only catch up quickly but also address the impact of transformation, especially high-carbon emission and high-power consumption enterprises at the frontline of impact. Therefore, when faced with impending shocks, various simulations and preparations are required. Currently, the government has taken the correct first step by asking large companies to help small companies in the supply chain. The government gives priority to assisting the transformation of high-carbon emissions and power-consuming enterprises, especially the transformation of the high-carbon emission manufacturing industry of 150,000 small- and medium-sized enterprises, which are Scope 3 of larger enterprises.
2.Disadvantaged, middle-income, and vulnerable groups should be identified, and rigorous impact assessment should be carried out
Energy transition is one of the key considerations in the 2050 net-zero path to renewable energy, new smart grids, energy storage systems, and the development of new energy technologies, all of which require significant construction and R&D costs. These costs may lead to increases in the costs of electricity and oil, taxes, or commodity prices, making life more difficult for disadvantaged groups. The foresight scenarios implemented by the RSPRC show that the future for vulnerable groups differs significantly from the present. The increase in the dependency ratio due to the declining birthrate, the increase in the demand for indoor air conditioning and air purification due to abnormal climate conditions, the electrification of transportation, and the digital learning scenarios all require reassessment of the baseline for the basic needs of disadvantaged groups.
In addition, vulnerable groups are not limited to disadvantaged groups and must be identified more carefully. For example, the respondents, middle-income earners and grassroots managers are particularly concerned about electricity prices affecting their livelihoods and policies affecting oil and electricity prices. This phenomenon was also observed in the yellow vest movement in France and diesel car protests in Taiwan. In industries with high carbon emissions and high-power consumption, the government should pay more attention to groups whose income is stable but not sufficiently high and those who cannot be included in social assistance. Policy evaluation and implementation should be extended to the real impact and subjective feelings of middle-income earners to accurately identify and plan the policy of transition.
3.Communication is necessary to explain what the benefits are, and participation is necessary to provide ways to obtain those benefits
RSPRC Director Chou highlighted that from the general statement of the 2050 net-zero carbon emission framework to the current 2030 net-zero path planning, the administration has worked hard to conduct various communication meetings on policy and strategy, but many scholars, NGOs, and others concerned over net-zero initiatives strongly expressed the lack of communication and substantive policy participation in discussions. Chou suggested that the administration should establish inter-ministerial special units (such as climate reports, climate change committees, and public participation collaboration platforms) to establish a smooth, effective, and regular communication and participation mechanism.
This survey and recent research have shown that one-way communication methods, such as briefings and public hearings organized by the government, can no longer meet the expectations of the industry and the public. Dr. Wang believes that the most effective communication is to clearly inform stakeholders what the benefits of transformation are, and that participation provides ways of obtaining those benefits so that the industry and the public will be more enthusiastic about communicating with and participating in transformation initiatives. In the future, renewable energy, the circular economy, and carbon storage and reuse will create new profits. How to design a fair profit-sharing mechanism so that more people can actually benefit from it has become a major issue that the government should address prudently. On the contrary, if the mechanism is not designed properly, the transformation dividend will be monopolized by big capital and power holders, and it will be difficult for the industry and the public to support the transformation. certainly, the benefits of transformation include environmental, health, and social benefits; however, the principles are the same. Enterprises and the public are eager to know what the benefits are and how to obtain them. Hence, a fair distribution of transformation dividends is also an important just transition issue.
4.The government should proactively assist the corporate governance transformation
Industries with high carbon emissions and high-power consumption will face higher pressure for carbon reduction. It is worth noting that middle- and high-level managers and principals/shareholders (63.1%) are more worried about transferring responsibility to them than grassroots employees. This means that, at the level of corporate governance, management has felt or thought of the possible transfer of carbon reduction pressure from business practices, but employees have not yet felt pressure at this stage. The RSPRC argues that in addition to meeting normalizing requirements such as CBAM, ESG, SASB, and TCFD, traditional corporate governance also needs to be transformed. Many companies expect the government to provide greater transformation assistance. Therefore, in addition to continuing the current active planning and implementation of carbon inventory, climate financial disclosure, power saving, high-value products, labor rights, and other policies, we suggest the administration (economy, finance, labor, transportation, environment, construction, agriculture, etc.) could combine universities, non-profit organizations, and local groups to construct multi-network and multi-level industrial and social transformation mechanisms that create a new society, circular economy, and production models, in short, a new ecosystem, to solve various issues and challenges with pursuing net-zero initiatives.
For more information, please refer to the website and event page of RSPRC
