Abstract
This paper focuses on just transition policies targeted at supporting
workers now employed in the fossil fuel industries and ancillary
sectors within high-income economies. As a general normative principle, I
argue that the overarching aim of such policies should be to protect
workers against major losses in their living standards resulting through
the fossil fuel industry phase-out. The impacted workers should be
provided with three critical guarantees to accomplish this, in the area
of jobs, compensation and pensions. Just transition policies should also
support workers in the areas of job search, retraining and relocation,
but these forms of support should be understood as supplementary. Within
the framework of these broad principles, the paper first reviews
experiences with transitional policies in Germany, the UK, the EU and,
more briefly, Japan and Canada. A critical point that emerges is that
these just transition policies do not provide the needed guarantees for
assuring workers that they will not experience major living standard
declines. The paper then describe an illustrative just transition
program for workers that includes reemployment, income and pension
guarantees, focusing on a case study for the U.S. state of West
Virginia. The results show that the costs of the just transition program
for West Virginia’s fossil fuel industry dependent workers will amount
to an annual average of about $42,000 per worker, equal to about 0.2
percent of West Virginia’s GDP. I briefly summarize results from the
seven other studies of U.S. states and for the overall U.S. economy. For
the U.S. economy overall, the just transition program’s costs would
total to about 0.015 percent of GDP. These findings demonstrate that
providing a generous just transition program does not entail
unaffordable levels of public spending. Robust just transition policies
should therefore be understood as an entirely realistic prospect for all
high-income economies.