Keywords

1 Diffusing Energy Justice into a Social Contract with Society

Energy justice as a concept had been around for near a decade now in research and policy literature.Footnote 1 It can through its key forms of justice—distributive, procedural, restorative, recognition and cosmopolitanism—bring change through ensuring that citizens’ rights and well-being are protected in today’s modern economy. Hence, a new social contract with energy justice at its core provides a transformative solution to society’s challenge with the energy transition today. This chapter analyses in brief how we can diffuse energy justice into the new social contract for society today.Footnote 2

2 Allocating Accountability Through Future-Proofing

There is a significant reason why a new social contract is needed for all stakeholders within the energy sector and this is because today, future-proofing is becoming a necessity. The basic premise of ‘future-proofing’ is resolving the risk around the increasingly disastrous effects of the energy sector in the areas of climate, environmental impacts, economic and governance issues. The risk on these issues needs to be shared more fairly between stakeholders and this can be achieved with this new social contract.

However, future-proofing also has an individual motivation. Management teams in energy companies can protect themselves on an individual level and ensure they are not held accountable for their actions. They would in effect be ensuring that they are not responsible should their organisation succumb to a Minksy moment—i.e. whereby an asset class crashes in value.Footnote 3

In simplistic terms, future-proofing means that in the future, a stakeholder (a company executive or politician and even head of an NGO) can state at ‘that point in time in the past’ when they made a key strategic decision, they relied on existing best-practice (including scientific data, risk management strategy, environmental impact data, consideration of alternatives, etc.) to inform their decision-making.Footnote 4 Therefore, they cannot be held accountable for subsequent problems and the associated costs.

In the past ExxonMobil Corp executives have been targeted for their incompetence towards society in ignoring the scientific data their own company was producing on climate change.Footnote 5 While that legal action has slowed, more can be expected to arise in a similar way. Already it is happening, in new legal action Shell executives have been targeted for their similar misguided strategies towards climate change.Footnote 6 In effect, had these executives future-proofed themselves they would not be in such a position.

3 The Next Step for Energy Justice: The Social Contract

As stated earlier, the energy sector remains a problematic sector in society with key issues in terms of climate change, environmental impacts, economics and governance. The rise in energy justice as a concept and as theory and also in practice over the last decade is an expression that the energy sector is seriously flawed. The five elements of energy justice can be implemented by the social contract. These five forms of justice should be the key terms of a ‘social contract’ whereby a: a social contract can be defined as: the ‘just’ agreement between stakeholders in the energy sector and society where citizens’ rights and well-being are protected in today’s modern economy at local, national and international levels.

The focus on the energy transition which is a move to clean energy from massively polluting energy provides the impetus for change. What has been evolving too is the role for justice in that transition and how it will be achieved. Further, with greater justice, there will be a clear reduction in commercial risk, and this is where new risk management behaviour is coming in and A ‘social contract’ that implements justice behaviour can be transformative and can provide new pathways for risk management behaviour in the energy transition. Now there are 12 clear risksFootnote 7 that can be identified and a new social contract can ensure these risks are negotiated and managed effectively. These risks have their roots with the five aforementioned forms of justice and this is demonstrated in Fig. 33.1. Ensuring that these justice risks are managed within a social contract can ensure that a company and/or Government future-proofs themselves in terms of energy decision-making today. Indeed, the UN Secretary General states that companies should not be in business if they are not responding to them.Footnote 8

Fig. 33.1
A world map lists 12 major justice risks globally in the energy sector. The map is encircled into a circular chart with labels, Distributive, Restorative, Cosmopolitan, Recognition, and Procedure.

(Source Created by Heffron [2020])

Global justice risks in the energy sector

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4 An Effective Social Contract Is a Vital Justice Strategy for Future-Proofing Corporations and Politicians

To manage the risk, the central idea within future-proofing is to change the strategy of an organisation. It will ensure the organisation in effect avoids a Minksy moment—i.e. whereby an asset class crashes in value.Footnote 9 In addition, and very importantly, on an individual level, executives, managers and policy-makers will be ensuring they are not held accountable and personally financially liable for their actions. Therefore, they are also future-proofing themselves. In many cases, politicians would be doing so too, as no longer in future will they be able to utilise the ‘Political Office’ or the ‘Corporate Office’ to avoid responsibility for their decision-making on energy and climate change.Footnote 10 In the future they will be in-part responsible for damage (contributory negligent).

It is advanced here that, ‘future-proofing’ in simplistic terms means that: in the future, they can state at that a particular point in time in the past, they relied on existing best-practice (including scientific data, risk management strategy, environmental impact data, consideration of alternatives etc.) to inform their decision-making. Therefore, they cannot be held accountable. Today and given current knowledge on climate change and environmental impacts, management personnel at companies, etc. are unlikely to avoid responsibility given the option now of future-proofing their decision-making.

A failure to future-proof is likely to end in responsibility and accountability issues been explored in an investigation. In some countries, this will be through national court action and in others it will be treated like a forensic accounting investigations and even criminal investigations. In multiple disciplines and institutions leaders will also have to question themselves. For example, with lawyers, scientists, consultants and project management teams, how did they miss so many warnings around climate change, environmental impacts and skewed subsidy regimes towards fossil fuels? Was fee-income and profiteering the major motivation of these groups? In many ways, these groups represent the modern ‘Robber Barons’ of the nineteenth and early twentieth centuries in the United States; in addition, these industry Robber Barons from the United States were said to be morally bankrupt.Footnote 11

Universities too, bastions of so-called knowledge continue to churn out more students with skills to operate in the fossil fuel industry than the low-carbon energy sector. An overall educational transformation is needed.Footnote 12 There remain too many programmes at universities that are Masters in Oil & Gas Business/Engineering/Economics worldwide. Students of these courses have reason to expect a job post-university—legitimate expectation—however, they too have some level of culpability today for not foreseeing the climate, environmental and economic issues from the energy sector, and therefore future-proofing themselves (and therefore choosing another course). The courses should be renamed, and students taught about the full range of low-carbon energy sources, options, strategies and innovations.

Finally, a new social contract will deliver citizens’ rights and well-being from the energy sector and therefore can deliver energy justice. The chapters of this book detail in different ways how influential energy justice can be to provide a platform for action—or in essence a new social contract for achieving change on a particular issue. There are 33 to read and we hope you enjoyed everyone and are inspired to be innovative, transformative and ambitious in contributing to achieving energy justice so as to achieve a just transition to a low-carbon economy.

A key related further issue that will be a future research direction is the study of the unbalanced social contract issues. While litigation and various court proceedings against climate polluters are welcomeFootnote 13 this has to be a last resort. These legal battles unfortunately take too long in the legal system, and given the climate emergency, can society afford to wait continuously for the courts to decide? What is needed is research that pinpoints the areas where ‘new social contracts’ can be envisioned and created to resolve the imbalances. In addition, the policies that support these imbalanced relationships need to be revised, reformed or replaced. Given the climate emergency, the next social contracts between society and the energy sector are likely to prove crucial to the health and livelihoods of nature and all citizens.