fossil fuel subsidy reform – Just Transition Initiative

Summary

This brief consists of short papers prepared for a breakout session of the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP24) in March 2018. The papers examine various just transitions efforts around the world, including different approaches to green transitions, a case study of distributional impacts in Germany, and a summary of green coalitions and movements in the United States.

Several of the authors emphasize implementing social protections and promoting inclusion to ensure a just transition to a low-carbon economy. The document calls on countries to take urgent action to train workers in the skills needed for a greener economy and to provide them with social protections to facilitate the transition to new jobs. One author argues that a truly just transition cannot focus solely on unionized coal miners but must consider informal workers or service providers as well. Another essay classifies just transitions approaches in terms of their inclusiveness and ambition, offering a useful taxonomy for assessing them. Another author argues in favor of a “systems approach” to just transitions that would use not only sectoral data but also microeconomic, demographic, and social survey data to create a more holistic view of societies in transition.

Summary

This paper explores which regions, sectors, and groups could be adversely affected by a rapid low-carbon energy transition and offers lessons from previous transitions that could minimize the adverse impacts of current and future transitions. The authors discuss the broader distributional impacts of low-carbon transitions. These include the effect of higher energy costs on poor and middle-income households due to carbon pricing or the removal of fossil fuel subsidies, the implications of lost fossil fuel-related revenues for specific countries and regions, the impact on regions and workers heavily dependent on carbon-intensive industries, and the potentially adverse consequences of rapidly deploying low-carbon technologies.

The paper presents a high-level review of existing literature on energy and non-energy transitions. While the authors focus on the distributive consequences of energy transitions, they also explore how equitable transitions are achieved. They provide examples and brief summaries of policy mechanisms incorporated in previous transitions. Based on their review, the authors identify common features of successful transitions: foresight and timing, social dialogue and coordination among stakeholders, short-term protections coupled with active government involvement in reindustrialization, and assistance to those potentially impacted by higher energy prices