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What is "Just Transition"?

The Risk of Fiscal Collapse in Coal-Reliant Communities

This report analyzes the future of coal under various economic scenarios and the bond markets in three coal-dependent counties in the United States (U.S.) and makes recommendations on how these counties can avoid the fiscal collapse that can have an impact on regional economies through the bond market.


This paper looks into the long-term implications of the federal climate policies on the coal-dependent counties’ economy across the U.S. and discusses what it would mean for future coal production. Additionally, it examines a potential spill out to the national economy through the national bonds market and proposes the measures necessary to both reduce the risks associated with bonds issued by coal jurisdictions and ensure the economic resilience of those counties.

The authors argue that coal mining across the U.S. has declined in the last decade, due in part to new environmental regulations imposed by the federal government. Focusing specifically on three counties (Mercer, Boone, and Campbell), they further analyze the regions’ fiscal exposure to coal and various carbon pricing scenarios, and predict a fall in the counties’ revenues under stringent climate policy scenarios.

Additionally, the authors examine the bonds issued by coal jurisdictions, arguing that municipal bonds are becoming volatile due to “budget pressure” and extreme weather conditions. Moreover, they caution investors against the “vague and incomplete” disclosures of risks associated with coal assets, citing the economic defaults of late 1970 and the early 1980s due to their negligence on risk exposure associated with nuclear power bonds. The authors conclude with recommendations for local economic diversification, urging the federal government to invest more in programs that ensure worker retraining and the provision of other social benefits. They further suggest combining climate policies with investment to ensure the financial health of coal-dependent counties.


Transformative Climate Finance: A new approach for climate finance to achieve low-carbon resilient development in developing countries

The report highlights the need for the catalytic deployment of international public finance for climate finance and identifies eight levers for driving climate action, with just transition considerations seen as a necessary crosscutting theme to ensure progress.


The report identifies the mismatch between the amount of funding available and the amount needed for climate finance, thus highlighting the need to deploy international public climate finance more catalytically to increase the flows of private capital and government spending. The report identifies eight sets of financing levers for driving climate action: project-based investments, financial sector reforms, fiscal policies, sectoral policies, trade policies, innovation and technology transfer, carbon markets, and climate intelligence. For each of these levers, the report identifies the main interventions available, barriers to action, as well as the role and relevance of the instruments available. The report also broadly lists the mitigation and adaptation priorities across different sectors, including energy systems, land and ecosystem, the urban and infrastructure, as well as industrial systems.

The need for an equitable consideration of social and political economy issues in the countries and the regions to which they are applied is highlighted as a crosscutting issue across all levers. The report states that the use of climate finance to support this process, even when it does not achieve climate results directly, is essential for successful clean development. The report suggests that more can be done to refine the differentiation of climate finance to match the specific needs and circumstances of countries. This includes applying tiered conditionality for more advanced countries, which is dependent on their own efforts and orientation toward long-term strategies.

The report also acknowledges that a systematic and comprehensive analysis of the societal dimensions of transformative climate action covering all relevant sectors of the economy, along with the major types of transformative climate action, is still lacking. It states that the World Bank intends to contribute to closing this knowledge gap through a forthcoming report on the societal dimensions of transformative climate action.

Cash transfers for pro-poor carbon taxes in Latin America and the Caribbean

The article looks at how cash transfers could be used as an instrument to mitigate the negative consequences of carbon taxes on poverty.


The study highlights how carbon taxes, while a potentially useful tool in reducing emissions, increase the cost for consumers directly, and indirectly, by raising the prices of goods and services. It further highlights how the effects are felt more by poorer households.

Imposing a carbon tax, consistent with the Paris Agreement goals, could generate more than USD100 billion in revenue per year in 16 countries in Latin America and the Caribbean region—enough to close the water, sanitation, or electricity access gap. However, on average, the study finds that food prices tend to make carbon taxes regressive. The indirect impacts of carbon taxes on food, public transportation, and electricity would cost households more than the direct impacts on fossil fuels. Nonetheless, the authors cite evidence that adequately compensating negatively-affected households with complimentary policies can enable the reforms to succeed.

The study explores four potential methods using models to study options ranging from the redistribution of carbon revenues to cash transfers, including carbon rebates and different iterations of cash transfer programs. The authors find that in the region studied, 30 percent of the carbon revenues could suffice to compensate poor and vulnerable households on average, leaving 70 percent to fund other priorities. According to the study, international experience, beyond normative views, suggests that any government project to implement carbon taxes without a plan to compensate affected households, at least partially, is unsustainable.

Advancing Equity in California Climate Policy: A New Social Contract for Low-Carbon Transition

This report offers a Climate Policy Equity Framework for California’s low-carbon transition based on three principles: environmental justice, economic equity, and public accountability.


This report presents a Climate Policy Equity Framework meant to help California policymakers develop and evaluate climate policy. The framework includes specific criteria for tracking progress in meeting three main goals of environmental justice, economic equity, and public accountability. The authors use these criteria to analyze how close a particular climate policy or program has come to meeting these equity goals. They highlight indicators and corresponding data sources that can better track the impact of climate policy on equity.

The authors look at the framework through evidence available from carbon-reduction legislations in California, including the 2006 Global Warming Solutions Act (Assembly Bill 32), Senate Bill 350 (2015), and Senate Bill 32 (2016). Evidence and examples from the state’s past interventions in energy efficiency and renewable energy guide their recommendations. While the low-carbon transition has not (yet) resulted in a net loss in jobs, the authors highlight the policies’ distributional impacts, the potential for increasingly ambitious greenhouse gas–reduction targets to worsen job losses, and the lower wages and career prospects associated with some of the created jobs. They recommend tangible public policy steps, including requiring labor standards for public projects, equitably distributing public incentive funds, and monitoring the equity performance of California’s climate policies.

Green Fiscal Reform for a Just Energy Transition in Latin America

This paper identifies four enabling factors for successful implementations of green fiscal reforms in Central and South America, examining why recent reform efforts have either succeeded or failed.


The authors of this paper identify and discuss important factors for successful implementations of green fiscal reforms in Chile, Mexico, Colombia, Belize, Venezuela, and Ecuador. When taken into consideration, these factors can help increase the technical and political feasibility of green fiscal reforms.

The authors draw on academic literature and expert knowledge to provide insights into the possibilities for—and limitations of—green fiscal reforms. Based on their analysis, they identify key factors for the successful introduction of green fiscal reforms, emphasizing the importance of favorable political conditions, comprehensive reform planning, and the gradual sequencing of reforms. They also emphasize the need to address distributional impacts on low-income households through social protection schemes based on stakeholder consultations with all relevant social groups. Their inclusion in the decisionmaking process should alleviate concerns about disproportionate adverse impacts on any single group.

The authors conclude by highlighting the international community’s important role in supporting green fiscal reforms through knowledge sharing and financing the macro-economic costs of reforms (such as by tying results-based payments to the introduction of a price on emissions or the de-risking of investments in clean energy and energy efficiency).

Accelerating Climate Action: Refocusing Policies Through a Well-being Lens

This report recommends increasing climate ambition by refocusing policy priorities through a well-being lens to facilitate “two-way alignment” between climate policy and other objectives.


To date, climate ambition has been largely hindered by potential trade-offs between climate policy and other goals, such as affordability, competitiveness, job creation, natural resource management, and public health and safety. In response, these authors recommend refocusing policy priorities through a well-being lens to facilitate “two-way alignment” between climate policy and these other objectives. The authors argue that systematically placing people’s well-being—not just their economic welfare, but also their political and social rights, health, education, security, and environment—at the center of decisionmaking will increase political and social support for more ambitious climate action and help overcome barriers to change.

The authors examine five economic sectors in depth: electricity, heavy industry, residential, surface transport, and agriculture. They explain how refocusing policy priorities and adopting indicators to track progress and inform decisions will make trade-offs and areas of potential collaboration more visible and manageable. They also highlight the importance of reconsidering traditional economic indicators—such as wealth, income, or GDP—when evaluating people’s well-being to acknowledge that pursuing purely economic goals can have negative impacts on other aspects of well-being. They point out the potential benefits of establishing priorities across sectors to deliver multiple well-being and sustainability outcomes, which they argue also helps identify opportunities for cooperation and coordination to meet ambitious climate mitigation targets.

Invest in Climate, Invest in Growth – Chapter 6: Towards an Inclusive Transition

This chapter examines the social and economic factors that affect governments’ climate policy decisions and advocates considering political economy dimensions when preparing long-term climate strategies.


This chapter examines the socioeconomic factors that influence governments’ abilities to envision and implement an effective climate response. Drawing on lessons from former industrial transitions, the authors emphasize the significance of local political economy dimensions. They advocate being proactive about engaging stakeholders and formulating exit strategies and offer recommendations on how to incorporate these dimensions into the development of robust, long-term, low-emission strategies.

In addition, the authors examine the potential impact of carbon pricing on households and offer lessons from past experiences with fossil-fuel subsidy reforms. They then examine the impact of climate mitigation on workers, highlighting specific aspects of former transitions from around the world.

Energy Transition in Mexico: The Social Dimension of Energy and the Politics of Climate Change

This report addresses the challenges and opportunities associated with Mexico’s climate change mitigation targets and offers recommendations to incorporate social and environmental dimensions into the policymaking process.


This report examines Mexico’s energy transition and its associated challenges and opportunities. The energy transition is largely driven by efforts to achieve the climate change mitigation targets outlined in Mexico’s nationally determined contributions under the Paris Agreement, reduce electricity-generation costs, and address the social and environmental inequalities of the current energy system. The authors seek to broaden the scope of the discourse on energy transitions and incorporate social and environmental dimensions in the decision-making process.

The paper urges policymakers to incorporate mechanisms for participation, consultation, and co-design of the policies. The authors criticize the lack of social inclusion in policy reforms so far and provide recommendations for future social inclusion through engagement with local governments. While acknowledging that the energy transition will inevitably result in winners and losers, the authors make a series of policy recommendations to help the Mexican government reach its climate change mitigation goals in a fair way, including by creating socially inclusive spaces to allow participation in the energy sector, especially at the local level.

Coal Transition in the United Kingdom

This report highlights the main elements of the coal transition in the United Kingdom and discusses the government’s policies in response to the unintended consequences of the coal transition.


This case study examines the United Kingdom’s coal transition, which began in the early 1980s amid unfavorable market conditions and the privatization of coal mines and power plants. A 2013 carbon tax, as well as the 2015 government decision to close unabated coal-fired power plants, accelerated the transition process, leading to a near complete phase-out of coal use.

The report analyses the socioeconomic impacts of the transition, focusing on unemployment, high electricity bills for the poor, and low wages for alternative jobs. The author also discusses the policy measures implemented to ease the transition and describes various financial streams, such as the European Union Structural funds, that helped finance the revitalization of coal regions.

The report evaluates those policy measures against their intended outcomes. The measures were considered economically successful (as they provided 180,000 alternative jobs) but failed to meet other social needs. Although they were never designed to be aligned with climate change policies, they have evolved through time in response to political pressures. Some of the measures, such as the welfare benefits for redundant workers, are well embedded in the United Kingdom’s economic model. The report, however, calls for enhanced planning and early warnings of closures in future transitions.

Implementing Coal Transitions: Insights from Case Studies of Major Coal-consuming Economies

This report summarizes insights from the various workstreams of IDDRI’s Coal Transitions project, which seeks to develop feasible trajectories and policy guidance for deep transitions in major coal-producing countries.


This report summarizes key findings from the Institute for Sustainable Development and International Relations’ (IDDRI) Coal Transitions project, which seeks to support fact-based dialogue on the future of coal through analysis of past coal and industrial transitions. It reviews transition scenarios for six major coal-consuming economies (China, India, South Africa, Poland, Germany, and Australia) to analyze the global coal trade.

The author argues that coal transitions are already underway due to both climate and non-climate policy factors, that coal transitions are technically feasible and affordable, that past successes indicate just transitions for coal workers and communities are possible, and that coal transitions could strengthen global climate action and deliver other social and economic objectives.
The report concludes with recommendations for further research in order to better understand options related to local contexts and how an industry can limit its use of thermal and metallurgical coal. It emphasizes the importance of social dialogue as a condition for appropriately supporting workers and communities to manage the transition in a way that does not exacerbate existing fragilities.