Counting Megawatts, Missing People

Global climate finance is rising impressively but not fast or fairly enough. The world is getting better at counting megawatts, gigatons, and their respective financial flows, but still struggles to measure a critical component to decouple economic growth from emissions: the social implications of transitions. This “silent” line item in the climate ledger is the cost of helping communities and workers navigate decarbonisation.

What Is a Just Transition and Why It Matters

At its core, a just transition means shifting to a sustainable, low-carbon economy in a way that is fair and inclusive. It ensures that no worker, community, or region is left behind as fossil fuel industries decline and cleaner systems expand. The concept, originating in labor movements and enshrined in the Paris Agreement, now underpins climate justice efforts worldwide.^[1],[2] It addresses the uneven impacts of climate action by combining environmental ambition with protections for livelihoods, equity, and opportunity.^[3]

Generally, just transitions accounts four components:

1. Income and security: wage replacement, unemployment support, pensions bridging, and social protection that keeps households solvent during sectoral decline.
2. Labour-market transition: retraining, job placement, mobility support, and employer incentives that turn displacement into reemployment rather than long-term exit.
3. Place-based redevelopment: local economic diversification, SME support, repurposing of industrial sites, and investments that replace the local tax base and service ecosystem.
4. Governance and participation: credible negotiation structures, worker and community voice, and transparent decision rules that reduce conflict and implementation risk.

These are not “soft” complements to “real” investment. They are what converts a technically feasible pathway into a socially implementable one.

Climate Finance Today: Scale Without Social Balance

Current climate finance flows reached approximately USD 1.3 trillion annually in 2021 and 2022 and rose to around $1.9 trillion in 2023, with an estimated $2.1 trillion in 2024. However, some estimates of the annual investment required to stay within the 1.5–2 °C pathway lie between $5.4 and 11.7 trillion through 2030.^[4],[5]

These figures can all be true at once because they measure different things. The practical takeaway is simpler: even the largest headline totals are dominated by investments with clear asset boundaries and standard deal structures. That is exactly where the accounting bias enters. Megawatts, grid upgrades, and vehicle sales are visible to both markets and trackers. Worker transition, regional redevelopment, and social stabilisation are dispersed across budgets and programmes, often embedded inside broader spending lines, and rarely tagged as transition-critical. This results in a tendency to treat social costs as residual, and not important.

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Adaptation efforts are even more underfunded; developing countries require $194–366 billion annually this decade for adaptation, while only $21 billion was directed toward adaptation in 2021.^[6] These data reveal a second imbalance, the gap between mitigation actions (aimed at reducing greenhouse gas emissions) and adaptation actions (coping with climate change impacts).

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Adaptation is also where the “missing people” problem becomes visible fastest. Adaptation is not just seawalls and drought-resistant infrastructure. It is also health capacity, housing resilience, disaster response, insurance access, and the ability of local institutions to absorb shocks without permanent losses. Those are social systems, not only assets.

Overlaying these two shortfalls -mitigation and adaptation- is a third imbalance: the just transition. It covers income bridges, reskilling, and regional redevelopment. Unlike turbines or seawalls, these costs rarely appear in financial trackers, yet they determine whether decarbonisation holds politically and socially.

What Just Transition Funding Looks Like in Practice

Some regions have started to acknowledge this issue. The European Union’s Just Transition Mechanism is a clear example. Between 2021 and 2027 it aims to mobilise about €55 billion, including €19.7 billion in grants.^[7] However, as seen by the numbers, this might cover only a fraction of Europe’s high-capacity industrial regions, suggesting the order of magnitude required elsewhere will be much higher.

The example of Spain demonstrates why the just transition is difficult to size. The government approved about €7 billion in clean energy investments through the period 2021-2026, of which 27% (€1.9 billion) is earmarked for integrating renewables and relieving technical constraints to maximise renewable output and use of the existing network.^[8] Note that this is system infrastructure for decarbonisation, not just-transition support. On the social side, Spain’s EU Just Transition Fund allocation is about €869 million for 2021–2027, and the Andorra (Teruel) award sets specifically €60 million for employment, training, and community projects within a wider renewables package of €1.5 billion.^[9] Read together, social measures are a small slice of the capital going into replacement technologies: around 4% in Andorra, and closer to 12.4% at the national level when you compare JTF grants with the multi-project investment portfolio.

Outside the EU, countries are testing blended packages through Just Energy Transition Partnerships. In South Africa’s plan, the international partners’ $8.5 billion pledge is steered almost entirely to infrastructure and implementation capacity, with only $50 million ( less than 1%) explicitly tagged for skills, social inclusion, and economic diversification.^[10] Meanwhile, Indonesia’s plan similarly centers on grid expansion, renewables build-out, and early coal retirement; just-transition spending is framed through a Just Transition framework but specific interventions are not yet costed, and adaptation is outside the power-sector scope.^[11]

Extending this logic to a global estimate fails for reasons that do not affect mitigation or adaptation accounting to the same degree. Mitigation needs to follow engineering and power-system math. Adaptation needs to follow hazard, exposure, and asset-level cost curves. Just transition needs depend on social baselines, labor law, informality, unionisation, migration frictions, and existing public services. Spain’s regions have unemployment insurance, active labor-market programs, and municipal capacity. Employers in parts of Australia co-finance benefits and retraining, so the public bill is smaller. In India many affected workers lack formal contracts and contributory benefits, so effective support requires broader cash programs, public works, and community services, often at lower per-capita cost but much higher coverage. Add wide differences in prices and wages, the mix of grants and loans, weak tagging of social line items inside energy tenders, and long lags between commitments and disbursements. The result is a moving target that cannot be read from a single experience.

Some adaptation and mitigation projects already include social components, but due to limited financial classifications and weak mainstreaming, these flows remain untracked. Countries like China are channeling massive sums toward mitigation and adaptation programs. Yet ensuring these investments are durable and socially legitimate requires embedding just transition financing into their design, not as an afterthought.

Why Does This “Silent” Imbalance Matter?

Sectoral transitions are nothing new to policymakers or economists. Throughout history, we have witnessed shifts driven by digitalisation, efficiency improvements, innovation, and regulation. For instance, the creation of the internet revolutionised communication and information flows; the banning of HCFC gases helped protect the ozone layer; and innovations in fracking technology reshaped the energy landscape. These examples highlight how significant sectoral changes can be; but unlike these well-recognised shifts, the social dimension of the climate transition often remains invisible.

In many developed regions, the decline of the coal sector has been driven by factors beyond environmental regulation or activist pressure. Economic realities, such as unprofitability, competition from cheaper coal-producing areas, and the rise of alternative energy sources, have compelled policymakers to focus attention on these industries, especially when they remain heavily subsidised. These transitions have been extensively documented in countries like the United States, Spain, Germany, and Australia, among other former coal-dependent regions. In most cases, the process has spanned decades, marked by negotiations, protests, stand-offs, and intense lobbying.

But If It Is “Economic Selection”, Why Bother?

First, because the scale and pace of investment in renewable energy and the intensity of policy intervention in highly polluting activities have reached unprecedented levels -an unnatural but indispensable transition to safeguard our planet and future economies. Secondly, the planet is under severe physical constraints as pollution and climate impacts have passed critical thresholds. This urgency has driven landmark international commitments to accelerate decarbonisation. These collective efforts are positioning certain industries and technologies at the forefront of a global energy transition.

If the world intends to accelerate mitigation and adaptation, it must confront a central fact: in many regions fossil fuels still provide basic livelihoods. Despite their environmental damage, links to corruption, labour-rights violations, and public-health harms, fossil industries remain a primary source of income. Any credible plan has to finance the social side of the transition where these dependencies are strongest.

What Can Be Done?

The negative effects of climate change are now irreversible and expected to worsen. Moreover, current financing levels and political commitments to address this urgent crisis are disappointing. I firmly believe that acknowledging the economic disparities and pressing needs of communities and workers would foster faster and more constructive negotiations between stakeholders. This is especially important as political movements that downplay or deny climate change often capitalise on concerns about inequality, job security, and social burdens within these very communities.

If we are serious about advancing transitions that have historically unfolded over half a century or more, then it is imperative to bring every possible effort, resource, and stakeholder to the table - leaving no option unexplored and no voice unheard.

To address the just transition financing gap and make climate transitions socially sustainable, focus on two key strategies:

• First, establish inclusive and well-funded policy mechanisms that provide targeted support for workers and communities affected by sectoral shifts. This includes dedicated just transition funds, expanded social protections, reskilling and employment programs, and place-based economic diversification. Engaging stakeholders in co-designing these policies ensures legitimacy, social fairness, and political feasibility.
• Second, developing robust social and economic information systems specifically tailored to assess and support the varied needs of the just transition. This strategy demands collecting harmonised, detailed data on case studies, labor market dynamics, social protection coverage, community economic diversification, public services, wages, financing flows, and broader social outcomes. Elevating the collection, standardisation, and integration of this data within climate finance frameworks is essential to diagnose localised needs accurately, allocate resources equitably, monitor progress transparently, and ultimately ensure the social legitimacy and effectiveness of transition policies.

1. Grantham Research Institute on Climate Change and the Environment. (2024). What is the just transition and what does it mean for climate action? London School of Economics and Political Science. Retrieved from: https://www.lse.ac.uk/granthaminstitute/explainers/what-is-the-just-transition-and-what-does-it-mean-for-climate-action/ ↑

2. “Taking into account the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities”. Paris Agreement (2015). ↑

3. International Labour Organisation. (2024). World Social Protection Report 2024–26: Universal social protection for climate action and just transition. Geneva: ILO. ↑

4. Climate Policy Initiative. (2023). Global Landscape of Climate Finance 2023. San Francisco, CA. ↑

5. BloombergNEF. (2025). Energy Transition Investment Trends 2025. New York, NY: Bloomberg Finance. ↑

6. United Nations Environment Programme. (2023). Adaptation Gap Report 2023. Nairobi, Kenya: UNEP. ↑

7. European Commission. (2021–2027). Just Transition Mechanism and Just Transition Fund. Brussels, Belgium: European Commission. ↑

8. Valencia Plaza. (2022, March 22). El Gobierno invertirá casi 7.000 millones de euros en redes eléctricas hasta 2026. https://valenciaplaza.com/valenciaplaza/el-gobierno-invertira-casi-7000-millones-de-euros-en-redes-electricas-hasta-2026 ↑

9. European Commission. (2022, December 21). EU Cohesion Policy: Almost €869 million for a just climate transition in Spain [Press release]. Retrieved from https://ec.europa.eu/regional_policy/whats-new/newsroom/22-12-2022-eu-cohesion-policy-almost-eur-869-million-for-a-just-climate-transition-in-spain_es#:~:text=Espa%C3%B1a%20recibir%C3%A1%20casi%20869%20millones%20de%20euros,Programa%20de%20Transici%C3%B3n%20Justa%20y%20de%20su ↑

10. The Presidency of the Republic of South Africa. (2022). South Africa’s Just Energy Transition Investment Plan (JET IP) 2023–2027 (Executive summary and financing tables). Pretoria: The Presidency. Retrieved from https://www.presidency.gov.za/just-energy-transition ↑

11. Republic of Indonesia; International Partners Group. (2023). Indonesia Just Energy Transition Partnership: Comprehensive Investment and Policy Plan (CIPP). Jakarta. https://jetp-id.org/ ↑