A forthcoming report from Resources for the Future (RFF), the RFF-CMCC European Institute on Economics and the Environment (EIEE), and Environmental Defense Fund synthesizes insights about how the European Union can help facilitate a just transition through economic development, labor support structures, and other policy tools. EIEE’s Elena Verdolini and RFF’s Wesley Look expand on their findings.
The world is reckoning with major environmental changes that call for major solutions. Decarbonizing the global economy is a prominent strategy for addressing climate change—in fact, scientific evidence and modeling show that decarbonization is the only way to avoid the economic, social, and environmental risks associated with climate change.
Decarbonization involves a transition away from fossil fuels and toward clean energy sources. To ensure positive outcomes in this clean energy transition, an important requirement must be met: policymakers must prioritize fairness for workers and communities that historically have relied on fossil fuel production as a primary source of jobs and prosperity. This focus on fairness emphasizes racial, economic, and environmental justice; equity among rural and urban communities; and support for the people involved in the shift from fossil fuels to clean energy. Achieving these ends often is termed a “just transition.”
At Resources for the Future (RFF), scholars have developed a research project that explores the federal policy options available for a just transition and provides relevant resources for decisionmakers in the United States. But because a transition to clean energy will necessitate action across the world, the researchers also have tackled similar questions in an international context. With a forthcoming report, RFF, the RFF-CMCC European Institute on Economics and the Environment, and Environmental Defense Fund have investigated the possibilities for a just transition in the context of the European Union. Two of the report’s coauthors—EIEE’s Elena Verdolini and RFF’s Wesley Look—spoke to Resources magazine to expound on findings from their upcoming report.
Resources magazine: Tell us about the work you’ve been doing on just transitions around the world—particularly your new report about the European Union. First, what do you mean when you talk about a just transition?
Wesley Look: The concept of a “just transition” is central to the global dialogue about addressing climate change. A broad definition of just transition policy includes the very climate policies aimed at reducing greenhouse gas emissions, along with policies designed to assist workers displaced due to decarbonization, local economies undergoing diversification, and low-income minority communities that have experienced racism or other forms of injustice—which includes communities that are most vulnerable to the impacts of climate change.
This focus on fairness emphasizes racial, economic, and environmental justice; equity among rural and urban communities; and support for the people involved in the shift from fossil fuels to clean energy.
As we transition to a clean energy society, we have the chance to get our house in order, in terms of other long-standing issues—not just addressing environmental degradation and instability, but also racial and economic justice. For example, how do we develop policies that focus on lifting up communities that are most vulnerable to climate change impacts, while also tackling the cause of those impacts—namely, greenhouse gas emissions?
Elena Verdolini: The just transition concept was generated by trade unions and born out of industrialized countries. This concept was historically relevant in the context of industrial transitions, and it’s now a core concern in the context of addressing climate change. Importantly, the discussion is not only an issue of policies—it’s also about the definition of what a just transition is and should look like.
The term just transition can mean slightly different things in different countries (both developing and developed), cultures, and societies. It’s important to be aware of this diversity. In Europe, for instance, a just transition is not just about communities that depend heavily on coal, but also more broadly about leaving no one behind.
What are your goals with this work, and what are your top-line findings?
WL: We have been looking at just transition policies in the United States and Europe; the primary focus of the work is to provide information to policymakers on various public policy approaches to facilitating a just transition.
EV: With this research, we’d like to start a conversation about what a just transition really is and can be, and what policy options are available to achieve it. The report contributes to an important dialogue between Europe and the United States. Hopefully in the years to come, this will grow into a bigger conversation that includes other countries—especially developing nations.
But for now, our work focuses on industrialized countries and necessarily reflects the specificities of these countries. This work has been funded in large part by Environmental Defense Fund and has led to greater engagement in the Research Network on Energy Workforce Transitions (ReNEWT), an international consortium of researchers and policy analysts. We are trying to build a community that talks about these issues, so we can develop a lexicon and toolbox that we can share with each other.
WL: Something we kept coming back to in our US work is, “What are the tools in the toolbox?” If we have a senator who wants to create a just transition policy, what are the various mechanisms at their disposal? What should they be aware of to make a real difference on this issue?
One of the goals of this research is to help policymakers understand that this is a hugely complex social policy issue, and if we want to make a meaningful difference in people’s lives, we need to appreciate that complexity. For example, this is about labor policy, economic development, environmental remediation, social safety net programs, shoring up the fiscal solvency of state and local governments, and regulatory mechanisms for large natural resource industries; for instance, coal-producing companies and their liability for the cleanup of mine sites. This is also about respecting communities with a multigenerational tradition of working in a specific industry, like coal mining in Appalachia or the Upper Silesia region of Poland, for example. These deep histories have cultural underpinnings. So, we’re not only talking about the disruption of economic and industrial systems, but also transformations in people’s sense of identity and culture. A policy framework that can adequately address this challenge—and facilitate a truly just transition—must touch on each of these issues, and do so in a coordinated way.
EV: This report illustrates the tools that Europe put into place since its founding to promote cohesion and economic development across its member states. These existing tools can help us get part of the way to a just transition. Having a clear idea of what the tools are is the first important step; our focus should then move on to using these tools to push even further toward our goals.
How prepared is Europe to support its labor force through a transition away from fossil fuels? Can continental Europe facilitate a just transition, given that many of the countries are so different? Has the advent of the European Union made action any easier toward a just transition?
WL: Our recent research shows that the European Union is taking this seriously and has a strong existing framework that’s predisposed to address a just transition. It has mechanisms already in place and in development to support a just transition among EU states. The mechanisms relate to things like economic development, workforce training, investment policy, and infrastructure policy.
As we transition to a clean energy society, we have the chance to get our house in order, in terms of other long-standing issues—not just addressing environmental degradation and instability, but also racial and economic justice.
EV: What we think of as a unified Europe is relatively new. The first versions of Europe were the European Coal and Steel Community, established after World War II, and the European Economic Community in 1957. This actually wasn’t that long ago.
Social cohesion is a principle held by the European Union—the idea that Europe, in order to develop, has to ensure that the gap between different countries does not become too big. The reasons for this cohesion principle are plain and historical: building a common market, along with an economy that can draw these countries together, would drastically reduce the likelihood of yet another bloody war among neighbors. Throughout European history, a lot of policies address exactly the same topics that we cover in our recent report—social safety nets, rural policy, and economic development—and the seeds for those policies were planted in the 1960s. Our report shows that Europe has been addressing the issues of cohesion and fairness for many decades. These instruments can be reshuffled and employed to support a just transition.
And we noticed, when we started working on this report, that an important change was happening at the European level—the new president of the European Commission, Ursula von der Leyen, was elected. She ran on a platform that advocates a sustainable transition, specifically related to climate. She and others working on this issue examined the policies already in place in Europe, which are summarized in our report. They restructured the policies to fit under the umbrella of the just transition concept and to support the transition of Europe toward climate neutrality.
As we discuss in the report, the EU budget historically has been used to fund and strengthen economic growth in the European Union, with an eye toward promoting the balanced growth of member states, supporting the regions that lag behind, and assisting more vulnerable communities.
Take, for instance, the EU long-term budget that’s negotiated every seven years—its Multiannual Financial Framework. In the period 2014–2020, a third of the budget supported cohesion policy (also known as regional policy), which provides access to money and programs, so different regions can improve their economic development. In the same period, another third of expenses went toward a policy that has supported EU farmers for decades—the common agricultural policy.
The European Union provides a legal and financial framework within which each country has considerable freedom in how to operationalize programs, apply funding, and prioritize projects. Many rules are established at the European level by member states using a consensus-based method; for instance, this is the case for labor rights.
But an important finding in our report is that, despite strong action at the EU level to support social and economic cohesion, European member states are heterogeneous in the actions they take at the local level: some do the bare minimum, and others go above and beyond. Wealthier countries, such as Germany, may be better positioned to address the needs of coal miners; others, like the newest member states of eastern or southern Europe, may have more difficulties. Ultimately, the effectiveness of a program depends on the implementation of EU-level programs at the local scale of individual countries.
Can you describe some examples of unique constraints in Europe that will make a just transition less feasible? Where do we need to focus special attention, to help ensure that a just transition will be successful?
EV: The political aspect of these issues lags behind the economic development in many of these countries. For instance, miners traditionally have seen themselves as doing a service to their community and country by mining coal. But now, people are telling miners that not only is their job useless, it’s also bad. And these miners are fighting back. This phenomenon goes beyond borders—it’s cultural. Building a new mindset takes time.
One way to change the mindset faster is to act at a level that people may not necessarily think matters for a just transition. For instance, educational programs for younger kids are an excellent way to reform the state of mind in one generation. But people don’t often think about that, because they think the problem is with the miners.
Another challenge is that it’s often difficult to understand the costs of a fossil fuel–based society. We often talk about how much it’s going to cost to “go green,” but we never talk about how much it will cost to remain “black.” There’s less conversation about that, because it’s very hard to quantify and hard to go against established business models. But fossil fuels are heavily subsidized, and furthermore, health costs are associated with local and global pollution. This is a challenge that Europe is trying to overcome by promoting engagement with stakeholders in the decisionmaking process and developing a vision for a climate-neutral society and economy.
The European Union provides a legal and financial framework within which each country has considerable freedom in how to operationalize programs, apply funding, and prioritize projects.
Costs and financing are another big challenge, particularly in eastern and southern Europe. Money is tight for all countries; a transition requires moving money or finding new funds. One good thing that has come out of the terrible COVID pandemic is that Europe has tried to build recovery funds in a way that addresses some of these issues; for example, by earmarking funds for green projects.
Another related challenge is administrative burden. Italy, for example, is a country that is known for having a million rules. Some of the rules go against one another, and it’s not always easy to understand what you have to do to get rebates, access subsidies, and other things. The European Union provides some guidelines, but it cannot force countries to do anything. Streamlining administrative procedures is an important component of promoting a just transition.
Given these challenges, are any unique policy levers available in Europe which can effectively—or more effectively than elsewhere—support a just transition?
EV: I wouldn’t say that any levers are unique to Europe, but rather that in Europe they perhaps play a unique role. In the European Union, all member states agree on the Multiannual Financial Framework, which sets the budget every seven years. The funding gets redistributed to member states based on established priorities. It’s very unique that the EU budget redistributes funds from rich European regions and countries to poor European regions and countries. Perhaps this redistribution is one of the reasons why Europe has been able to push a bit more toward decarbonization.
Importantly, the EU budget renegotiation every seven years represents a longer cycle than is typical, providing arguably more stability and a more long-term perspective. This cycle is coupled with long-term climate commitments that now extend to the year 2050.
We’ve been coming at these topics from a Western perspective. If we think about the rest of the world, a lot of different policy tools are available. Is it possible to think about a unified global approach? Can our observations in the Western world inform global efforts?
WL: This is a global topic, and we have a lot to learn from each other as a global community.
We can draw at least two key takeaways from our recent work. First, the more we can help each other understand what kinds of creative solutions are available to meet the specific problems of a just transition, the better off we are. That said, we also need to recognize that what works in one country—or in one community—may not be appropriate nor effective in another. We highlighted this idea in our synthesis report on just transition in the United States, that there’s no one-size-fits-all policy. Just transition solutions should be tailored for and co-designed by each community.