political feasibility – Just Transition Initiative

Summary

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).

Summary

The decarbonization of the global economy, though likely to enhance aggregate well-being, will create many losers. More numerous, more stringent and longer-term climate policies are needed to achieve climate objectives, requiring governments to develop systematic, principled policy approaches to address transitional losses, i.e. transition policy (perhaps as a pre-condition for deep climate change mitigation). This article provides a framework to structure the design of transition policy for climate mitigation and thereby aims to serve as a first step to address this gap.

This paper provides policymakers a framework for developing systematic, principled policy approaches to address transitional losses in response to climate action. The authors identify the parties adversely affected by structural changes related to climate change mitigation, explore the range of losses (financial and non-financial) caused by these changes, and classify potential policy responses according to varying policy objectives. They then combine all these elements to provide typologies of transition policies. Together, these typologies define the landscape of possible approaches, which the authors recommend policymakers normatively evaluate according to three criteria: fairness, political transformation potential, and expected effectiveness.

Given the general lack of transition policy literature aimed at informing policymakers and civil society actors, the paper offers recommendations for how to build upon this work. It concludes with an appendix, which provides an overview of literature relevant to transition policies for climate mitigation and transition policies more generally.