Fergus Green – Just Transition Initiative

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

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.