Five lessons for managing a just transition from environmentally destructive industries

by Tamara Krawchenko, Megan Gordon. Originally published on Policy Options
August 25, 2021

When we talk about transitioning away from polluting and environmentally destructive industries, we need to talk about justice. Enter the concept of a “just transition” – an agenda for socio-technical transformation; a call for social, economic and environmental justice; and a political imperative to manage the decarbonization of economies. From its labour union origins, just transition has captured the zeitgeist as societies struggle to balance the urgent need to phase out environmentally destructive industries with addressing the impact on workers and communities.

In Canada, around 40 per cent of greenhouse gases are emitted by the industrial sector and the vast majority of these emissions are from oil and gas activities. Transition away from fossil fuels is central to meeting Canada’s climate commitments, yet progress has been slow in the face of entrenched industries, infrastructure and interests. Without effective transition solutions, countries risk a discontent that undermines climate action.

Now more than ever, industrial economies need a better plan. Recognizing this, Natural Resources Canada has just launched an engagement process, asking Canadians to weigh in on how to “build a clean energy future that leaves no one behind.” This is an opportune time to learn about how such industrial transitions have been managed in other places. To do this, we examined member states of the Organization for Economic Co-operation and Development that had experienced significant industrial transitions in the past decade to understand the “pearls and pitfalls” of transition management. We analyzed national and regional just transition policies spanning 74 regions across 25 countries.

Here we share five essential lessons to undergoing a just transition.

Lesson 1: Leverage community assets

To start, achieving a just transition requires understanding the places where those transitions are occurring. Determining what direction to take requires intimate knowledge of the demographics, geography, history, economy and assets that a community has to offer.

Involving people in conversations about transition is the next step. Good place-based policy-making demands community engagement to inform critical choices. Should a traditional industrial sector remain intact but be reinvented and repurposed? Or should it be replaced by a new industry? If so, what? The answers lie in understanding community strengths and the opportunities that accompany them.

Places facing transition need space to have meaningful conversations about their futures. These conversations do not always happen on their own, and upper-level governments can play a key role in enabling them. We point to Spain as a success story where government worked alongside communities, social partners, trade unions and industry to develop just transition agreements to facilitate transition and support workers in the process.

Lesson 2: Establish smarter industrial policy

Governments are quick to introduce flashy plans and policies offering overly simplistic transition solutions. The risk is that replacing traditional industries in ways that do not fundamentally diversify and strengthen local economies creates more problems in the future. Time and again, we have seen communities shift from one emissions-intensive form of development or extraction to another, perpetuating dependency on large corporations with weak ties to the communities in which they operate.

Additionally, subsidies and bailouts artificially prop up industries with structural vulnerabilities at the expense of taxpayers. Retrofitting a coal-fired generating facility to a natural gas facility may save some jobs in the short term, but will this still be a viable source of energy in the coming decades? Communities that rely on single industries are growing tired of booms and busts. Efforts to reinvent industries must build in resiliency and consider longevity and sustainability in every sense of the word.

Green industrial policies promote investments in sustainable businesses. Yet, governments have not always been good at picking the technological winners and losers. Custom-designed programs tend to work best. For example, the Climaxion program in France was established to support transition through investments in green buildings, renewables and the circular economy.

Lesson 3: Look at the big picture

What makes just transitions different from any other transitions is that they mean to address not only economic shifts but social and environmental ones, too. Policy levers across multiple portfolios need to pull in the same direction. This means strategically and purposefully co-ordinating to improve digital and physical infrastructure, social welfare, workforce development and economic growth in communities experiencing drastic shifts. While economic development strategies often acknowledge the need for low-carbon industries, they tend to ignore the necessary training requirements to equip communities with the skills to support these industries.

Policies and programs are often designed with urban communities in mind. But people and firms in small-town and rural Canada may have unique assets, opportunities and needs. This urban bias is evident in technology and innovation programs, for example. Gaps across these areas mean that key aspects of transition planning are absent. First Nations also operate in a unique regulatory and legislative context, so transitions policies need to address these specificities.

There are opportunities for policies to link industrial transition strategies and clean growth opportunities. The Korean New Deal includes both a climate plan, a digitization plan and foundational measures to strengthen the employment and social safety net, addressing several integrated policy issues under a single strategy. The European Union’s new Just Transition Mechanism is another example. EU countries will produce territorial just transition plans to 2030 that will describe the nature of the social, economic and environmental challenges stemming from fossil fuel-related phaseouts and/or GHG decarbonizing initiatives. These will outline the transition process to 2030, including development, reskilling and environmental rehabilitation. The plans will detail timelines, operations and governance mechanisms to meet prescribed targets. This is a quickly changing area of government planning in Europe, and the framework is expansive.

Lesson 4: Start transition planning yesterday

Too often, governments make worker supports available only once an industry has begun to decline. This has been a common criticism of policies designed to help coal communities because the policies were implemented after the transition was well under way. One exception is proactive workforce development measures that anticipate the skills needed in the future and that rely heavily on labour market analysis (take for example Future Skills Centre, Canada; National Skills Strategy, Germany). Related programs such as the Canada-Alberta Job Grant can help workers (with the support of employers) transition to new industries. However, these initiatives do not reflect the scale of the transition needed.

A leading example of proactive measures is the Welsh government’s Well-Being of Future Generations Act and the establishment of the “future generations commissioner,” who evaluates government decisions against persistent problems such as poverty, inequality and climate change. The Future Generations Act sets sustainable development as the central organizing principle of the devolved public service in Wales. Stronger proactive planning like this is a key element of intergenerational justice.

This incentivizes actions that emphasize long-term gains rather than short-term political wins that don’t last beyond a four-year mandate. New Zealand’s Just Transition Unit is also noteworthy because it provides research and advice to inform decisions around anticipated transitions. More proactive and anticipatory planning is needed.

Lesson 5: Put justice first

Justice should be at the forefront of policy interventions. Decision-makers should answer these questions: Who is involved in decision-making? Who gains and who loses from this process? Who is most vulnerable? The answers define parameters for success.

Accountability mechanisms can help. For example, just transitions commissioners in Scotland and Ireland track, measure and report on these elements of justice. The commissioners act in a co-ordinating role within and between governments and report annually. Also of note is the Hapū/Iwi Resource Management plan in the Bay of Plenty, New Zealand. The plan established legislative requirements to ensure resource management issues that are important to local Indigenous peoples are taken into account. Justice isn’t possible without the inclusion of Indigenous people in the decision-making process.

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The scale of the transition in our midst demands urgent action and there is political support for this. The majority of Canadians want their governments to act now to address climate change and the majority of fossil-fuel industry workers support climate solutions that will lead to net-zero carbon jobs. It is time to learn from the policy mistakes of the past and adopt co-ordinated, proactive and place-based policies for a just transition that doesn’t leave workers and communities behind.

This article first appeared on Policy Options and is republished here under a Creative Commons license.