IWA Analysis: The contribution of business to a just energy transition with Wales & West Utilities

The IWA has partnered with Wales & West Utilities (WWU) to host a series of two roundtable events with the aim of convening and engaging with policy makers, community organisations and elected representatives in a discussion on the profound implications of the energy transition in Wales.

As Wales’ manager of the gas grid, WWU play an active part in the strategic thinking as well as the practical implementation of this transition. WWU are currently delivering a long-term transition programme to enable the organisation to keep pace with (and anticipate) the speed and extent of gas decarbonisation required in Wales and the wider UK. 

Decarbonising the gas sector brings with it serious consequences for skills, jobs, fuel poverty, raw materials, and the natural environment. This event explored the future role of WWU in a decarbonised energy system and looked at alternative low carbon technologies such as hydrogen, with WWU having just started a project to develop infrastructure to transport hydrogen from Milford Haven to Port Talbot.

The first in a series of two roundtables included participants from across Wales’ third sector, government, policy professionals, academics and the community energy sector, sharing their views on enabling a just transition, while identifying opportunities for collaboration. The discussion, which will feed into the next iteration of WWU’s sustainability strategy, centred around two provocations, delivered by WWU. The first one focussed on how business can ensure no one is left behind in delivering a “just transition” to zero carbon. The ongoing significant job losses at TATA Steel in Port Talbot put this into even greater context in Wales and highlighted the need to protect and deliver for workers and their communities. 

Wales leading the way: Local Area Energy Plans 

During the discussions, participants explored the role of Local Area Energy Plans (LEAPs) in facilitating the transition to net zero. LEAPs are designed to be driven from the bottom-up and informed to build understanding of the change required at the local level to deliver and shape action to transition to net zero. Some participants claimed that LEAPs show how Wales is taking a lead in understanding energy needs for the present, and mid-to-long-term future by building a future energy network based on the needs of communities. However, it is vital LEAPs consult widely; therefore, the discussion raised questions of how community organisations can influence LEAPs – will LEAPs lead to fairer outcomes for economically disadvantaged and marginalised communities?

There is evidently scope for greater engagement with the community energy sector to understand the role community owned energy generation could play in delivering a local energy supply.

An informed participant highlighted the potential role that LEAPs could play in delivering a just transition through the use of social tariffs to tackle fuel poverty among communities in Wales. However, we heard concerns regarding the ability to influence and engage with LEAPs from the community energy sector. A participant stated that community energy does not currently have a place within LEAPs design and with each of the local authorities in Wales designing their own plans, the ability to effectively influence each LEAP across Wales remains limited. While LEAPs will be a useful tool for understanding local energy needs, there is evidently scope for greater engagement with the community energy sector to understand the role community owned energy generation could play in delivering a local energy supply. 

Embracing the opportunities

While decarbonising Wales’ energy sector could bring ample opportunities for employment in new green and low carbon technologies, we heard of a number of barriers that currently limit such opportunities. One participant expressed concern that skills development and retraining opportunities remain limited and present an urgent constraint preventing communities in Wales from feeling the employment benefits of net zero. Beyond this, another participant explained that without action, women will continue to be left behind in the transition to net zero, feeling little to none of the employment opportunities. Without a gendered approach to net zero skills development and retraining, alongside tackling care provision, women will remain on the periphery of the net zero economy. Therefore it is essential that plans to overcome such barriers are implemented across the energy sector as we go forward.

Building on the IWA’s recent research, Sharing Power, Spreading Wealth, which considers how Wales’ communities can retain greater economic benefit from private renewable energy developments, the conversation drew upon the report’s findings. These included retaining greater net revenues from the private energy sector within a ‘Wales Wealth Fund’ to finance net zero and invest within communities, alongside increased community and shared ownership of energy generation. Participants suggested the Welsh Government’s shared ownership policy within renewable energy developments remains a key way to gain the trust and support of communities as we transition to net zero. 

Ensuring shared ownership on commercial renewable energy projects alongside the community energy sector would ensure greater economic and social benefits were retained in communities, allowing for a more just transition in Wales. In their efforts to decarbonise, WWU could explore how they can engage with such models and participants from the community energy sector encouraged WWU to consider, where possible, delivering shared projects, working alongside the community energy sector, particularly around alternative low carbon heating systems such as ground source heat pumps.

Delivering Wellbeing

The second provocation considered whether business is taking sufficient account of the goals of the Wellbeing of Future Generations (Wales) Act. There was an honest discussion about businesses in Wales needing to go beyond signalled commitments to Corporate Social Responsibility (CSR) and Environmental, Social and Governance (ESG), and truly deliver wellbeing benefits for communities and future generations. This means businesses making difficult decisions and doing things differently to deliver a just transition for future generations, even if it comes at a greater financial cost to business. Within energy generation, this may mean businesses retaining less revenues and reinvesting an element of them back into communities to support carbon reduction initiatives locally. Such initiatives are already taking place within the community energy sector and act as an example of how the private sector can operate and deliver wellbeing for future generations. WWU has established future generations thinking into their current sustainability strategy, which links directly to the goals of the Act.

There is a need for caution when advancing towards alternative low carbon technologies such as hydrogen with much debate over how ‘clean’ hydrogen truly is.

Furthermore, participants were encouraged to consider the future of WWU in a decarbonised energy sector. Indeed, there is a need for caution when advancing towards alternative low carbon technologies such as hydrogen with much debate over how ‘clean’ hydrogen truly is. One participant also reminded attendees to consider global supply chains and the sourcing of materials required for low carbon technologies given the recorded human rights abuses within the manufacture of solar PV panels. In this way, achieving a just transition will not be easy and will require dedication and business decision making not purely based on cost, but on fairness.

Financing net zero

Finally, participants agreed that there was a key role for the private sector to facilitate and finance the transition to net zero and take a lead on delivering new technologies. As many participants reflected, while there appears to be an agreement on the need to act, delivery to facilitate net zero remains stalled. Therefore, there is a role for organisations like WWU to be bold and undertake ambitious projects which deliver wellbeing benefits even if the wider policy landscape and business in Wales are not there yet. There are significant opportunities for ambitious businesses to take the lead on delivery of the energy transition whilst delivering wider societal benefits.

The conversation also addressed the need to incentivise the private sector to act. Indeed, financing the transition to net zero should not solely be the burden of the Welsh Government, especially given the wider, ongoing fiscal constraints. Therefore, there is a need for policy reforms to incentivise and reward businesses that do act differently, and focus on delivering wellbeing and wider social benefits alongside maximised social value. Businesses working in this way can facilitate the transition to net zero by working more closely with community organisations, and delivering greater local benefit. Roundtable events like these facilitate important conversations and stimulate honest debate and discussion between key stakeholders across Wales. The second roundtable with WWU will take place this summer and will take these discussions to politicians, policy and decision makers, and business.

Recommendations 

1. When engaging to inform their LAEPs, local authorities in Wales must understand the role of the community energy sector and engage widely with community organisations to understand current local provision and energy generation and shape the design of a community-led future energy system.
2. Across government, policy, the public and private sector, we must see intersectional approaches that go beyond messaging and tackle barriers, such as care provision and workplace cultures, to ensure women and marginalised groups can benefit from net zero employment opportunities, achieving a more just transition.
3. Within low carbon and green energy generation, the private sector should embrace the opportunities of shared ownership working together with the community energy sector to deliver jointly increased economic and social benefit to communities in Wales with greater ownership held at the local level.
4. For Welsh businesses to take just transition seriously, they must go beyond messaging and deliver more tangible benefit for communities, making difficult and bold decisions while understanding their global social responsibility ensuring ethical supply chains when sourcing materials required for low carbon technologies.
5. There is a need for policy reforms from the Welsh Government to incentivise, reward and encourage businesses that do act differently and focus on delivering wellbeing and wider social benefits alongside maximised social value.