Discussion Paper

Just transitions: a review of how to decarbonise energy systems while addressing poverty and inequality reduction

Malerba, Daniele
Discussion Paper (6/2022)

Bonn: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

ISBN: 978-3-96021-184-6
DOI: https://doi.org/10.23661/dp6.2022
Price: 6 €

Germany promotes “just transition” as a guiding principle for the global transition to a socially and environmentally sustainable economy that incorporates the necessary climate, environmental and energy policy measures. This includes the urgent transformation of economies to become emission neutral while ensuring a process whereby poverty and inequality are reduced, and no one is left behind.
The German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE), the World Bank and the German Federal Ministry for Economic Cooperation and Development (BMZ) worked together to explore ways to implement the concept of just transition in German development cooperation. The two papers that have resulted from this process outline approaches to a “just transition for all” and highlight its potential to reduce poverty and inequality (SDG 1 and SDG 10).
In recent decades, the interdependencies between social and ecological development have become clear: negative effects of climate change particularly affect vulnerable and marginalised groups living in poverty. At the same time, social inequalities contribute to an exacerbation of climate change. A just transition must effectively address the consequences at the international, national, regional and local levels.
Both papers provide an overview of existing approaches and challenges to foster a “just transition for all”. They offer different but complementary perspectives on an increasingly important complex of topics.
This first paper, by DIE, takes a broad perspective by considering the decarbonisation of the energy sector as a whole, outlining the connections between just transition, poverty and inequality, and exploring how to ensure a just transition (for both workers and consumers) through the use of different social protection mechanisms. It argues that it is possible to make energy transitions just, but that properly designed combinations of socio-economic and climate policies are needed.
A second paper, by the World Bank, zooms in on the transition away from coal. It lays out key social and community impacts resulting from the decommissioning of coal assets, based on experience gained from World Bank operations and from industrialised countries, and articulates an enhanced approach to supporting the coal transition. Both provide practical recommendations for international development cooperation in general, and for German development cooperation in particular.