Transitional assistance policies for just, equitable and smooth low-carbon transitions: who, what and how?

TLDR

Decarbonization offers global benefits but also creates short‑term disruptions and costs, prompting a surge of interest in ensuring low‑carbon transitions are just, equitable, and politically smooth. This paper seeks to clarify the range of transitional assistance policies, identify who is most at risk, and outline how governments can design and implement effective mitigation strategies. By surveying a broad, multidisciplinary literature, the authors construct a novel typology that classifies policies into four coherent strategies—compensation, exemption, structural adjustment, and comprehensive adaptive support—across five beneficiary categories. The study finds that without transitional assistance, consumers, workers, businesses, affected communities, and emission‑dependent states stand to lose, and that policies can be narrow or broad and conservative or adaptive, with comprehensive adaptive support offering the greatest potential for just, equitable, and smooth outcomes, though it is costlier and requires strong state capacities.

Abstract

While the decarbonization of the global economy will bring immense benefits in the aggregate and to many individuals, it will also be disruptive and costly for some, at least in the short term. As these disruptions and costs have become increasingly salient in recent years, there has been an explosion of interest in the climate policy community about how low-carbon transitions can be implemented justly, equitably, and politically smoothly. A key part of what is needed in responding to this growing interest is a better understanding of the suite of 'transitional assistance policies' and strategies that can be deployed, alongside or as part of climate change mitigation policies and processes. Responding to this need, we survey a wide, multi-disciplinary literature to answer the 'who', 'what' and 'how' of transitional assistance policy: who is likely to be adversely affected by the low-carbon transition, and in what ways? What substantive strategies and policy instruments are available to governments to mitigate the burdens of low-carbon transitions? And how can governments implement such strategies and policies successfully? In the course of answering the first two of these questions, we develop a novel typology of transitional assistance policies, in which multiple policies are parsimoniously classified according to one of four coherent policy strategies, and one of five kinds of beneficiaries. In answering the third question, we emphasize the importance of certain 'state capacities' for shaping transition processes and managing vested interests.Key policy insights Without transitional assistance policies, consumers, workers, businesses, specially-affected communities, and states that are highly dependent on emissions-intensive assets stand to lose from decarbonization.Transitional assistance policies can be narrow (addressing financial losses only) or broad (addressing a wider range of losses), and conservative (backward-looking) or adaptive (forward-looking).Combining these elements yields four coherent transitional assistance strategies: compensation; exemption; structural adjustment assistance; and comprehensive adaptive support.Comprehensive adaptive support strategies have greatest potential for just, equitable and smooth transition outcomes, but are costlier and more complex to implement.State capacities to steer complex, long-term transitions are therefore a crucial variable in transition success.