How the energy-economics nexus is driving the energy transition

A pure economist by training, Stella Tsani, Associate Professor in the Department of Economics at the National & Kapodistrian University of Athens (NKUA), explains that her interest is not in economics for its own sake but for how it interacts with other systems, in particular environmental systems.

“I started my training from an energy economics perspective but then realising that energy is closely related to many other things such as environmental impact, human impact, health impact, it brought me in terms of research to sustainability transitions and how the transition in the energy sector relates with other system transitions.”

With the energy transition very much about a move away from conventional fossil fuel resources to renewables, the impacts are widespread and Stella says a strand of recent research has been on the labour market, in particular female labour market outcomes.

Female labour market outcomes

For example, in a recent publication in the journal Energy Economics, the team investigates the relationship between the removal of fossil fuel subsidies and female labour force participation. The finding is that this is not gender neutral and rather impacts the ability of women to enter the labour market and to obtain fairer working conditions.

This is due to the social norms that such energy-driven fiscal policies maintain as well as the opportunities they create for the greater energy independence of women, Stella explains.

“In short our research found that when talking about fossil fuel subsidies, we should also consider how they associate with female employment and opportunities for greater engagement in economic activities.

“And second, we need to consider thoroughly where this money from the removal of subsidies should be reallocated, for example on family support or child care or the education of women so they can enter the labour market with greater skills for the green transition.”

She notes that the findings are mainly applicable to hydrocarbon rich countries where there is low female labour force participation but they also are applicable to non-oil exporting countries and regions such as the EU and even a little change can matter for the inclusion of women in the labour market.

Energy governance

A second major strand of research has focussed on regional patterns on how the transition associates with governance and implementation policies at the local level in different parts of the world.

Stella says that in some countries such as Australia and South Africa policies are in place with a high level of trust from stakeholders and the broader public, but in others such as central Asia, more needs to be done to translate the policies into practical recommendations and to mobilise the internal capacity to channel funds into the energy transition.

“We see a lot of debate at the policy level, but not yet the uptake of these directives or these intentions into tangible funded projects at the sector level and at the micro level of the economy. Context is important and policies must be tailored to address the specific challenges and opportunities in different regions”

EU policy

Turning to policy in Europe in particular, Stella says the region has a strong track record in policy going back over several decades and there is a clear long term perspective and path on the energy transition that closely follows the scientific evidence.

“My view is that Europe has been quite successful in developing the technologies, the supply chains, the know-how and the innovation that can drive the sustainability transition and energy transition. But on the other hand there is the speed and timing of actions, with societies feeling the costs, which is of course partly to do with geopolitics, although where costs are lower it is because renewable energy is in the mix.

“Secondly there has been a reliance on strategic partnerships and international supply chains but we are now in a period where this dependence no longer works and there needs to be an iteration of whom Europe is collaborating with, particularly in the context of energy independence.”

There also is the issue of investment in the sector and while she says the EU gained significant benefits as a first mover in innovation on the decarbonisation pathway, other challenges and priorities have since emerged for funding, such as security and cohesion.

“We should not lose focus on the advantage that investments in innovations and in the energy transition can bring for the EU,” says Stella, noting also the need to make a distinction between short term costs and longer term costs.

For example, people living in places where there is closure of a power plant or a halting of the extraction of lignite, as in Greece, are impacted and this is an immediate cost that any policy to do with the energy transition should address, she says.

In the long term, the scientific research shows that the benefits exceed the costs of the energy transition, “so the policies are no longer just energy transition or environmental policies, but are risk management policies.”

And that she says, needs to be clear to a wider audience, as the EU needs to meet its commitments and not lose momentum, while taking into account the varying socio-economic situations and transposition rates of EU policy across the region.

“What we as the scientific community can do is to deliver the message as clearly as possible to policy makers at national level to act and implement the EU directives, or else they will face consequences such as pollution and environmental degradation, and there also is the risk of their country being a technology importer rather than reaping the benefits of innovation.”

EUSEW and beyond

Turning to EUSEW Stella says the main outcome she would like to see is a reaffirmation of the commitments and targets of Europe’s energy transition and a greater willingness to accelerate action to meet these.

A second outcome she mentions is a greater engagement of the private sector so that investors understand not just the financial returns of their investments but also the social and environmental returns that are included within them.

“This isn’t just altruism because if you lose natural resources, you may be losing inputs to what you produce and then missing a significant part of the financial costs and benefits of your activities.”

In closing I ask Stella about her many other activities and memberships with other organisations, to name a few the Cohesion for Transitions Community of Practice platform, IPBES Multidisciplinary Expert Panel member for the Western European and Others Group, the Integrated Research on Disaster Risk programme and the latest UNESCO science report.

“I’m privileged and extremely happy to engage in these different fora and international platforms; also passionate about my work that has led me to contribute at a very high level of the science-policy intersection. This has given me the opportunity to have a clear vision of what the latest scientific research tells us with regard to human-driven changes in our environment and how these changes translate into losses.

“I also understand the aspirations, but also the limitations of policymakers. They understand the scientific findings and the urgency, but they have to confront different stakeholders and interest groups who can win or lose when decisions are taken.

“What I can say from these interactions is that it's not easy to match all these things. It's an extremely challenging task but one we can fulfil if all the parties sit together at the same table with science evidence-based knowledge.”