Just Transition Planning Toolbox

Cooperation between governments, industry representatives, and academic institutions will likely be needed to align the education and research sectors with the needs of a just transition. Tailoring the education system to support the transition may require both supply- and demand-side interventions.

• On the supply side, this may entail improving the alignment of curricula in schools, universities, or professional training with the needs of sectors where jobs are expected to grow. This may include creating partnerships with the business sector.
• On the demand side, it may require raising students’ awareness of the nature of emerging job opportunities.

Universities and other research organizations and institutions of higher learning can play crucial roles in transition planning.

• Act as key partners in the analyses needed for transition planning (see Module 3) and in near-term reskilling and retraining;
• Address questions and knowledge gaps that arise during the transition;
• Tailor curricula and ensure that the emerging workforce has the skills needed in the new economy;
• Ensure that training and education opportunities target the needs of the changing economy.

As noted, research institutions across multiple areas of social, economic, and environmental policy can be key partners in the analyses needed by decision-makers. They can contribute technical expertise (for example, in economic modeling) and help design effective participatory processes. This is especially relevant when working with stakeholders who are typically not represented in public planning processes (see Module 1). Research institutions may also have specialized knowledge of region-specific impacts and opportunities (see Module 3), which is important when designing policy and fiscal reforms to maximize their contribution to improving equity (see Module 4).

With different interventions for a just transition occurring over time, research may also be needed over the medium and longer term. To facilitate this, governments can target public research funding towards policy- or action-oriented research, such as on socioeconomic changes in transition regions over time (this links to the information on monitoring, evaluation, and learning in Module 5.3), or towards the preparation of a regional Innovation Strategy, which might be a part of economic diversification planning (see Module 4.3).

A research and innovation strategy for a transition region may include the following elements:

• The vision, goals, and guiding principles;
• A theory of change for how research and innovation will support sustainable socioeconomic development, thereby helping to implement a just transition;
• Areas or sectors of strategic importance to focus on;
• Gaps that research and technological (or other) innovation should fill;
• A description of how the plan will be implemented, including issues such as resourcing and collaborative partnerships.

A just transition is likely to require substantial resources. It needs major investment to build momentum in the underlying technical and market transitions (for example, to promote the shift to cleaner energy, electrified transport, and more). It also requires finance to address the equity dimensions of the transition through strategies targeting employment, social, economic, and environmental issues.

Finance is needed not only at the national level, but also for municipal governments, small and medium enterprises (SMEs), and local communities.

Funds may be needed for the following activities:

• Provide temporary income support and retraining schemes for displaced workers, particularly if transition planning takes place at the critical moment of industrial closure (as opposed to proactive planning).
• Expand social safety nets, such as retirement support for older workers who would rather retire than retrain for new roles.
• Cover the cost of transition planning itself, including the research, analysis, coordination, stakeholder engagement, and monitoring and evaluation. Stakeholder engagement includes dialogue and other activities, visioning exercises, knowledge sharing products, and processes.
• In some cases, offset potential revenue losses. For example, by governments, small businesses, or workers or the costs of early retirement of economic assets, such as coal-fired power plants or restructuring of state enterprises and their liabilities.
• Address other negative transition impacts for specific stakeholders. For example, to offset higher energy or transport costs for poor households, reduce the costs of new technology uptake by smallholder farmers or local businesses, make available labor market programs, or remediate environmental damage.
• Invest in social and economic infrastructure in regions affected by transition, including the cost of asset repurposing where that is a part of a strategy for economic development.
• Clean up lands or waters that have been degraded by past mining or industrial activities.

Financing Strategy

A just transition financing strategy is a crucial addition to the Just Transition Plan and can serve as a roadmap to support the flow of finance and target its use.

Preparation of a financing strategy should consider the following elements:

• The scale and types of finance needed, based on the strategies identified.

  It might be difficult to cost the various strategies to promote just transition objectives. Estimates will change over time, as new projects and strategies are brought forward.

• How the financial costs of transition are distributed among different stakeholders.

  This should examine the potential costs to governments, which may lose revenue, for example, from taxes, royalties, and fees paid by industries that are phased out. It is an important part of planning even as the government faces increased demand for social support programs and the need to invest in infrastructure to attract new industries. Some governments, particularly at the local level, may be poorly prepared for the financial and economic voids created by the transition. At the community and household level, the strategy should also address how those most affected (or least able to cope) might be properly supported. In some contexts, the transition might increase the cost of meeting basic needs, such as energy or water. Higher costs for basic services tend to fall disproportionately on poor households, who have little or no financial buffer.

• Options for sourcing new (additional) finance and better use of existing finance.

  For example, using fiscal reform to align tax rules and expenditure with the objectives of the transition, or integrating just transition objectives more widely across government policies and plans, so that delivery is through existing mechanisms. Depending on the context, sources of new finance may include domestic public finance, international public finance (including via climate funds and development banks), the private sector (including via public-private partnerships or other blended finance instruments), and in some cases philanthropic organizations. Funding from scientific research councils may be available to support some of the various analyses to inform planning decisions over time.

Mobilizing Finance

Actions to mobilize finance include the following:

• Align just transition planning with other policy agendas.

  This helps ensure that existing finance (like sectoral budgets) works towards broader just transition objectives.

• Allocate more finance from national budgets.

  It is important for governments to allocate more finance for strategic infrastructure investment in affected regions and to ensure that municipalities can continue delivering basic services to their communities.

• Implement fiscal reform (changes in taxation or government expenditure).

  These reforms help poorer households or vulnerable businesses to cope with cost increases related to the transition, for instance. Fiscal reform can also redirect financial resources away from unproductive or harmful activities (like fossil fuel subsidies) and towards productive investment in the new economy, or in social safety nets. Reform opportunities depend on a government’s access to new finance at a reasonable cost and/or its ability to change existing expenditures. Fiscal reform itself can create risks for different social groups, so its design should ensure that the financial burden is not carried by poor and vulnerable people.

• Implement debt restructuring for national governments and/or local municipalities.

  This helps to lower the cost of existing debt burdens and offset any revenue loss that may occur because of transition.

• Strengthen public financial management (PFM) systems, where needed.

  This helps improve the government’s capacity to manage public resources. To cover the cost of transition programs and reforms, some governments may feel pressure to take on more debt. This could be problematic if, for instance, public debt levels are already high. Strong PFM systems provide a foundation for properly assessing the costs and benefits of taking on more debt.

• Undertake a public institutional and expenditure review through the lens of just transition objectives.

  Different countries have used the methodology of Climate Public Institutional and Expenditure Reviews (CPIERs) to look at climate spending generally. These reviews use qualitative and quantitative analysis to look at the following:

  • The way climate objectives are integrated across the policy landscape (at the national and subnational level)
  • The institutional architecture supporting the delivery of climate objectives, including cross-government coordination and forms of decentralization
  • The scale and distribution of public expenditure relevant to climate objectives

  A similar methodology for just transition objectives could reveal the main financing challenges and illuminate how public resources are already being spent in support of just transition objectives.

• Strengthen mechanisms to ensure that environmental damage is not left unaddressed.

  This is particularly important when industries such as mining or manufacturing close. It also helps ensure that environmental remediation costs are not transferred from the private sector to the public purse (that is, enforcing the polluter pays principle, where possible). For instance, this might require mining companies to provide bonds to governments to cover future remediation costs and to enforce clean-up regulations.

• Consider the role of different mechanisms to mobilize private finance.

  Mechanisms such as public-private partnerships (PPPs), or risk-sharing mechanisms such as guarantees, may incentivize private finance in some contexts and some sectors. The World Bank’s Private Participation in Infrastructure (PPI) Database indicates that PPPs have been mobilized in the energy and transport sectors, though there seems to be growing interest in information and communications technology.

It is important that finance is mobilized not only to support efforts at a national level, but also to enable local governments and local communities to prepare and implement local transition plans, while also continuing to provide basic services.

Monitoring is the periodic, systematic collection of information. Monitoring helps track outputs, outcomes, and impacts from programs and/or projects.

Evaluation is the systematic and rigorous assessment of programs and/or projects. Evaluation is required for learning, accountability, and/or decision-making.

Learning is the acquisition of knowledge or skills through experience, studies, or teaching. We consider that learning works when new knowledge is used to shape behaviors, as manifested in decisions or actions.

A monitoring, evaluation, and learning (MEL) strategy should help guide and strengthen just transitions through results management, accountability, and learning across programs and projects. When MEL approaches are implemented in complementary ways, they can build on one another. This supports continuous improvement and innovation and enables activities to “shift gears” if they are not achieving the desired outcomes, or if conditions change.

There are unique challenges in developing a MEL strategy for a just transition. This is because the objectives here are much broader than, for instance, ensuring a job for any displaced worker. If the transition strategy takes a transformational approach, it will seek to tackle systemic problems. This means that the MEL strategy will need to look beyond specific project boundaries. Looking at wider justice implications requires integrated, whole-system perspectives and longer time horizons.

The following tools support the development of a MEL strategy for a just transition:

• Develop a just transition program and/or project theory of change and/or log frame to think through the various pathways of change.

  A theory of change explains how an intervention is expected to create results producing the intended impacts. In developing a just transition theory of change, it is important to consider external factors or impacts beyond specific projects that may have an impact on social, economic, and environmental justice.

• Various approaches to monitoring and evaluation can help track and assess whether or not the developed theory is occurring in practice.

  These approaches are relevant in the design, implementation, and review phases of a program and/or project. Developing contextually relevant indicators or signals of change as part of these approaches will offer a way to define and describe the expected change and set goals that can then be tracked.

• Emergent learning principles and practices can help learn and adapt to address complex just transition challenges through practical tools (such as after and before action reviews and learning logs).