Just transition? It’s not that simple

We know climate change is a serious problem. We know that tackling climate change requires us to make changes. But not only do we need appropriate policy measures to drive the shift to a carbon-neutral economy, we also need sound policy to ensure no one is left behind – we need to ensure a just transition.

From climate change to climate crisis

The fact is that the green transition will have an uneven impact on jobs, on regions and on certain sections of society – understanding these issues is key to ensuring a just transition.

The increase in extreme weather events and record temperatures in the last year alone have turned what was once a distant threat of climate change into the immediate climate crisis that we see today. Not only do 88% of EU citizens agree that the EU should be climate-neutral by 2050, over half (58%) are now saying that this transition needs to speed up. 

The EU is taking unprecedented steps to tackle the issue with an ambitious commitment to cut greenhouse emissions by at least 55% by 2030. Through the European Green Deal, with legally binding targets set in the European Climate Law, and in line with global climate action under the Paris Agreement, the EU is laying the groundwork to become a climate-neutral economy by 2050. 

Importantly, the EU has also promised that this green transition should be a just transition – that is, it will not leave anybody behind – and has put in place mechanisms to support this objective. Because the fact is that the green transition will have an uneven impact on jobs, on regions and on certain sections of society. Understanding these issues is key to ensuring a just transition.

Employment impact and sectoral shifts  

The fact is that the green transition is more likely to generate jobs than eliminate them.

Most studies estimating the effect on employment of cutting emissions to the 2030 target show an impact ranging from slightly below zero to an increase of 2%. This depends on whether the policies are fragmented and how revenue generated by the Emissions Trading System is recycled; the employment gain is likely to be greater if policy is coordinated and coherent and if carbon revenues are recycled into reducing labour taxes and retraining workers to facilitate their reallocation to less carbon-intensive sectors and occupations.

Whatever the impact, it will not be equal across the economy or the labour market. 

Most likely, jobs in the coal, oil and gas sectors will decrease. At the same time, the electrification of the economy and the switch to renewable sources will lead to an increase in the number of jobs in the electrical goods sector. Added to this, we can expect the construction sector to see an increase the number of jobs arising from the retrofitting of buildings to improve their energy efficiency. 

But the green transition will not only impact these sectors in terms of job destruction and job creation, it will have a much broader impact in terms of job redefinition and associated labour market transitions because consumption and production models will change. The transition to a carbon-neutral economy will create new opportunities in the labour market, and retraining and reskilling of workers and alternative employment opportunities will be essential for a just transition. The green transition will redefine jobs and their makeup, thereby redefining job quality itself.

Regional and socioeconomic disparities

The fact is that the green transition and the effects of climate change itself are likely to impact certain socioeconomic groups more than others.

Eurofound research reveals that decarbonisation will lead to greater job loss in regions with a high share of employment in the mining and extractive sectors, while positive employment impacts will be more dispersed across regions. This supports the rationale for region-focused funding of supportive measures, such as the territorial just transition funds.

Harnessing the opportunities

At the same time, the green transition could offer a real opportunity to improve the lives of people living and working in the EU as we move to renewable energy sources and different ways of production, transportation and consumption. 

The research shows how the recent sharp increase in energy prices have affected different groups of the population, with households at the middle and lower ends of the income scale having more difficulty making ends meet. Making homes more energy efficient will help to reduce households’ energy consumption and spending on heating and cooling.

Furthermore, 84% of EU citizens believe that actions to tackle climate change should be a priority as it improves public health.  Environmental policies to date have driven a decrease in the number of years of life lost due to pollution. This development has gone hand in hand with a reduction in the share of population reporting pollution, grime or other environmental problems, albeit people in cities are more exposed to these hazards. In addition, the share of the EU population living in dwellings with damp, rot or leaks decreased over the past 10 years, although there was an increase in France, Spain and Portugal, and with a higher proportion of lower income families exposed.   

Retrofitting housing and investing in alternative modes of transport could improve the living conditions of all EU citizens by decreasing environmental hazards such as pollution, especially in the cities; decreasing energy dependency and, hence, energy bills; and by improving access to public transport. In essence, there is an opportunity to seek a triple-dividend.

Leaning into the green transition

However, the full potential of these benefits will only emerge if a granular approach is taken to the distributional effects. To name a few:

• A multilevel approach to creating employment opportunities should be sought in order to avoid a downward spiral in certain regions during the transition period.
• Lower income households should be enabled to gain access to retro-fitting – these are the households that will benefit the most in terms of quality of dwellings as well as energy dependency.
• Public transport should be considered essential not only for densely populated areas such as cities but even more so for the rural areas and citizens in vulnerable situations, for example whose who experience mobility difficulties. 
• Meanwhile, as climate change has become a reality and is already having an adverse impact on regions and different groups in the population, steps are needed to ensure that vulnerable groups are supported whether due to direct impacts such as wildfires, floods and drought, or due to the consequences a hotter climate, for example having to work in extreme heat.

The green transition touches upon all aspects of life and demands a multistakeholder approach.  Climate is a global-level phenomenon, and a European approach to mitigate and adapt to climate change is needed. 

However, as the risks and opportunities will impact regions and populations differently, there is a need to engage and empower local citizens and stakeholders to be active actors in the transition. Strong strategic cooperation and social dialogue between public authorities, and social partners together with civil society consultation will be required to keep any unintended consequences, such as job polarisation or inequalities in terms of social welfare, of the transition to a minimum. There is an opportunity to adopt an inclusive approach to transition management so that communities don’t feel abandoned and to strengthen regional resilience by mobilising all stakeholders to engage with both the European and the regional systemic perspective. The just transition is an opportunity not only to manage potential upcoming inequalities as a result of the green transition, but also to address already existing economic and social inequalities. 

Image © Ekaterina Pokrovsky/Adobe Stock