COMMISSION STAFF WORKING DOCUMENT Accompanying the Proposal for a Council Recommendation on ensuring a fair transition towards climate neutrality
Date: 2021-12-14
Institutions: Directorate-General for Employment, Social Affairs and Inclusion, European Commission
Subjects: EU environmental policy, adaptation to climate change, carbon neutrality, climate change, environmental protection, green economy, greenhouse gas, sustainable development

EN 

  EN 

   EUROPEAN COMMISSION  Strasbourg, 14.12.2021  SWD(2021) 452 final  COMMISSION STAFF WORKING DOCUMENT   Accompanying the Proposal for a Council Recommendation on ensuring a fair transition towards climate neutrality {COM(2021) 801 final}  
 
 
1  Introduction 

This Staff Working Document accompanies the proposal for a Council Recommendation 
on  ensuring  a  fair  transition  towards  climate  neutrality1.  It  provides  an  overview  and 
discussion  of  the  available  analytical  evidence  underpinning  the  recommended  policy 
interventions,  building  on  the  analyses  presented  in  relevant  impact  assessment  reports 
accompanying  the  2030  Climate  Target  Plan  and  the  various  initiatives  of  the  ‘Fit  for  55’ 
package.  It  further  integrates  new  evidence  from  additional  analyses  carried  out  by  the 
Commission,  including  updates  of  energy  poverty  indicators  by  income  group  for  those 
Member States for which 2020 data are already available in the EU-SILC database. Finally, it 
benefits from the feedback received during targeted consultations in autumn 2021, when the 
European  Commission  reached  out  to,  among  others,  Member  States,  social  partners,  civil 
society,  including  young  people,  and  experts  in  the  area  of  labour  market  analysis,  social 
policy and fair transition. 

The document thereby provides evidence regarding notably the following aspects:  

  Demonstrating how the job creation potential of the transition hinges both on the active 

support to job creation, labour market transitions and reskilling and upskilling. 

  Providing modelling evidence for the ability to shift tax revenues away from labour to 
climate-related  revenue  generation,  as  well  as  the  ability  to  mitigate  adverse 
distributional  effects  through  measures  transferring  back  revenues  from  energy 
taxes and carbon pricing to households, in particular vulnerable ones. 

  Underlining how dedicated investments in energy efficiency, decarbonisation of heating, 
cooling  and  transport,  access  to  essential  services  (including  alternative  sustainable 
mobility  solutions),  as  well  as  temporary  and  targeted  direct  income  support  for 
vulnerable consumers and households ensure a fair and inclusive energy transition. 

2  Background: commitment to a fair transition 

Climate change and environmental degradation are an existential threat to Europe and 
the  world,  and  thus  inaction  is  not  an  option.  Human  suffering  and  economic  losses 
stemming  from  more  frequent  climate-related  extreme  events,  such  as  floods,  heatwaves, 
droughts  and  forest  fires,  are  becoming  more  common. In  the  EU,  these  losses  already 
average over EUR 12 billion per year.2 Estimates show that exposing today’s EU economy to 
global warming of 3°C above pre-industrial levels would result in an additional annual loss of 
up  to  EUR  175  billion  (1.38%  of  EU  GDP),  including  the  devastating  losses  of  livelihoods 
and human lives caused by climate change. 

The  urgency  to  act  has  been  reaffirmed  by  the  Working  Group  I  contribution  to  the 
Sixth  Assessment  Report  of  the  Intergovernmental  Panel  on  Climate  Change  (IPCC)3 
which  documents  the  alarming  state  of  our  climate.  IPCC  has  highlighted  the  disruptive 
impact of events such as damages sustained by the electricity system due to storms as well as 
link  of  vector-borne  diseases4.  Losses  are  distributed  unevenly  and 
the  climate 
disproportionately  harm  certain  groups,  notably  those  already  in  vulnerable  situations,  and 
regions  that  already  face  challenges,  such  as  low  growth,  high  youth  unemployment  or 

1   Proposal for a Council Recommendation on Ensuring a Fair Transition towards Climate neutrality, COM/2021/XXX final. 
2   European  Commission  (2021),  PESETA  IV  study:  climate  change  impacts  and  adaptation  in  Europe,  Joint  Research  Centre,  Sevilla, 

http://ec.europa.eu/jrc/en/peseta-iv. 

3   https://www.ipcc.ch/assessment-report/ar6. 
4   https://www.ipcc.ch/site/assets/uploads/2018/03/SREX_Full_Report-1.pdf. 

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innovation  under-performance.  The  social  cost  of  non-action  in  environment  and  climate 
policy would be immense for citizens. 

The European Green Deal5 (‘the Green Deal‘) sets out the Commission’s commitment to 
fight climate change and environmental degradation and designs the transformation of 
the  European  Union  into  a  sustainable,  fair  and  prosperous  society,  with  a  modern, 
circular and competitive economy, where there are no net  emissions of greenhouse  gases in 
2050.  It  steps  up  efforts  to  tackle  climate  change  and  to  deliver  on  the  objectives  adopted 
under the United Nations Framework Convention on Climate Change (UNFCCC - the ‘Paris 
Agreement’)  to  keep  the  global  temperature  increase  well  below  2°C  and  pursue  efforts  to 
keep it to 1.5°C. 

Moreover, the Green Deal aims to protect the EU’s natural capital and the health and 
well-being of citizens from environment-related risks and impacts. It is an integral part of 
the  Commission’s  strategy  to  implement  the  United  Nations’  2030  Agenda  and  the 
Sustainable Development Goals (SDGs)6, putting sustainability and well-being of citizens at 
the centre of economic policy, and the SDGs at the heart of the EU policymaking. Reducing 
greenhouse gas emissions and other sources of pollution will have important co-benefits such 
as reduced air pollution, healthier soils and better food quality that all contribute to health and 
wellbeing of citizens7.  

As  stressed  by  the  Green  Deal  the  transition  must  be  “just  and  inclusive”.  Particular 
attention has to be payed to the regions, industries, workers, households and consumers who 
will  face  the  greatest  challenges  in  terms  of  employment,  social  and  distributional  impacts 
when  decarbonising  their  economy.  While  the  objectives  are  ambitious,  with  the  right 
instruments at disposal a fair transition towards climate neutrality is feasible. 

To  ensure  effective  action,  the  European  Climate  Law  of  June  2021  enshrines  climate 
neutrality  in  the  Union  by  20508,  and  a  net  domestic  reduction  in  greenhouse  gas 
emissions of at least 55% compared to 1990 levels by 2030 as binding objectives into law. 
The EU Climate Action Progress Report9 shows that in 2020, EU-27 domestic greenhouse gas 
(GHG)  emissions, including international  aviation10, were down by 31%11  from  1990 levels 
and reached their lowest level in 30 years. In addition, in 2020 the Commission put forward a 
proposal for the 8th Environmental Action Programme (EAP)12, which aims to accelerate the 
transition  to  a  climate-neutral,  resource-efficient  and  regenerative  economy.  It  reiterates 
commitments to the 7th EAP’s 2050 vision: to ensure wellbeing for all, while staying within 
the planetary boundaries. While greater efforts are required to reach the 2030 target and 
climate  neutrality  by  2050,  evidence  shows  that  decarbonisation  and  economic  growth 
can  go  hand  in  hand,  as  outlined  in  the  Green  Deal.  Since  1990,  the  EU’s  GDP  grew  by 
more  than  50%  while  the  GHG  emission  intensity  of  the  economy,  defined  as  the  ratio 
between emissions and GDP, fell to 271g CO2 -eq/EUR2015 in 2020, less than half the 1990 
level. 

5   Communication from the Commission ‘The European Green Deal’, COM/2019/640 final. 
6   http://sustainabledevelopment.un.org/post2015/transformingourworld. 
7   European  Commission  (2019),  Sustainable  growth  for  all:  choices  for  the  future  of  Social  Europe,  Employment  and  Social 
Developments  in  Europe  2019,  chapter  5  ‘’Towards  a  greener  future:  employment  and  social  impacts  of  climate  change  policies, 
SWD(2019) 579, 4 July 2019. 
In pursuit of the long term temperature goal set out in point (a) of Article 2(1) of the Paris Agreement. 

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9   COM/2021/960 final. 
10   All departures of flights from EU airports. 
11   Approximated  EU  GHG  inventory  based  on  Member  States’  submissions.  Gap-filling  was  done  for  BG  using  data  from  the  EUTL, 

Eurostat, Eurocontrol, 2021 projections and previous years’ data. 

12  COM/2020/652 final. 

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All  Member  States  agreed  to  contribute  to  the  achievement  of  the  Union wide  targets, 
with  specific  targets  at  Member  State  level  being  set,  taking  into  account  country 
specificities and considerations of fairness and solidarity, while leaving no one behind13. 
To achieve the more ambitious intermediate targets in 2030, Member States will have to step 
up  their  climate,  energy  and  environmental  policies,  with  diverse  implications  for  people, 
businesses, households, incomes, and regions. 

The necessity to address these implications and ensure a fair transition towards climate 
neutrality is deeply anchored in the European Green Deal14. The Commission put forward 
in January 2020 the Just Transition Mechanism including the Just Transition Fund (pillar 1), a 
“Just transition” scheme under Invest EU (pillar 2) and a public sector loan facility as well as 
a  Just  transition  Platform  to  provide  technical  assistance  and  support  the  implementation  of 
the JTM. In addition, the Commission published a Communication on a Strong Social Europe 
for  Just  Transitions15,  which  launched  the  consultation  process  on  the  European  Pillar  of 
Social Rights Action Plan. 

In addition to the 2030 climate and energy targets, and with a view to ensuring a strong 
social Europe for fair transitions,16 the EU has notably set itself three  headline targets 
for  2030  in  the  areas  of  employment,  skills  and  social  protection:  at  least  78%  of  the 
population aged 20 to 64 employed; at least 60% of adults participating in training every year; 
reducing  the  number  of  people  at  risk  of  poverty  or  social  exclusion  by  at  least  15  million. 
These targets  are presented within the context  of Action Plan for the implementation  of the 
European Pillar of Social Rights, which was presented by the Commission in March 2021 and 
welcomed by the  EU leaders in  May 2021 and by  the European Council in  June 2021. The 
Pillar was proclaimed by the Council of the European Union, the European Parliament and the 
Commission at the Gothenburg Summit in November 2017.  

The need to  ensure a fair transition, including through the involvement of all relevant 
stakeholders  and  enhanced  understanding  of  the  socio-economic  and  distributional 
impacts  of  climate  change  policies,  was  also  highlighted  in  a  series  of  dedicated 
hearings17  and  the  outcomes  of  a  public  consultation18.  Stakeholder  inputs  confirmed  a 
broad  support  to  the  initiative.  More  specifically,  parties  agreed  overall  on  the  need  for 
several  elements:  comprehensive  policy  packages  to  achieve  a  fair  transition,  including 
measures for up-and reskilling; making good use of existing policies and funding instruments, 
avoiding  duplication  and  administrative  burden;  an  improved  understanding  of  employment 
and  social  impacts  of  climate  change  policies,  including  effects  on  the  quality  of  jobs,  and 
related  monitoring  and  reporting  based  on  “real  life  data”  and  relevant  indicators; 

13   See e.g. the European Council conclusions of December 2020: “We will raise our climate ambition in a manner that will spur sustainable 
economic  growth,  create  jobs,  deliver  health  and  environmental  benefits  for  EU  citizens,  and  contribute  to  the  long-term  global 
competitiveness  of  the  EU  economy  by  promoting  innovation  in  green  technologies.  (…)  All  Member  States  will  participate  in  this 
effort, taking into account considerations of fairness and solidarity, while leaving no one behind. (…)” 

14   The  need  for  ensuring  a  socially  fair  transition  and  for  taking  into  account  social  implications  of  the  transition  from  the  outset,  and 
deploy all relevant policies to the fullest to mitigate the employment and social challenges, was highlighted in Communication from the 
Commission ‘A Clean Planet for all: A European strategic long-term vision for a prosperous, modern, competitive and climate neutral 
economy’, COM/2018/773 final. 

15   COM/2020/14 final. 
16   Communication from the Commission ‘A strong Social Europe for Just Transitions’, COM/2020/14 final; and Communication from the 

Commission ‘The European Pillar of Social Rights Action Plan’, COM/2021/102 final. 

17   In October and November 2021, the Commission held targeted consultations and exchanges, with the Employment Committee (EMCO), 
the  Social  Protection  Committee  (SPC),  the  Economic  Policy  Committee  (EPC),  the  European  social  partners,  and  civil  society 
organisations  active  in  the  area  of  disability,  social  and  employment  policies.  For  details  on  the  participants  and  main  outcomes,  see 
Annex 2. 

18   The Commission launched an open Call for Evidence from 29 October 2021 to 19 November 2021. In response, 66 written contributions 
were  received  from  a  broad  spectrum  of  stakeholders:  public  authorities,  European  and  national  social  partners,  civil  society 
organisations in the area of social affairs, but also climate and environmental organisations and academic and research institutions. For 
details on the respondents and main outcomes, see Annex 2. 

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mainstreaming equality,  but  also  requests for more funds and capacity building, notably  for 
SMEs;  integration  into  existing  governance  mechanisms;  and  the  involvement  of  social 
partners  and  civil  society  in  the  design  and  implementation  of  climate  change  and  funding 
strategies for fair transitions.  

More  specifically,  the  potential  impact  on  inequalities,  jobs  and  skills  was  raised  in 
several contributions, with an overall appeal for providing adequate funding, as well as 
technical  assistance,  notably  focusing  on  vulnerable  regions,  sectors  and  groups. 
Contributions  also  highlighted  an  increased  need  to  invest  in  reskilling  and  upskilling 
initiatives,  capacity  building  and  infrastructures.  There  was  broad  support  to  strengthening 
social dialogue and collective bargaining, with some respondents calling for workers’ right to 
information,  consultation  and  co-decision.  Moreover,  the  vast  majority  of  contributions 
stressed  the  need  for  a  granular  mapping  and  analysis.  Other  issues  were  mentioned  in 
numerous  contributions,  notably  direct  income  support  measures  to  vulnerable  workers  and 
households,  access  to  essential  services,  including  transport,  ensuring  health  and  safety  at 
work which is adapted to ‘green jobs’. 

The  Union’s  transition  towards  a  sustainability-centred  economic  and  societal  model 
will  be  a  unique  opportunity  to  implement  the  20  principles  of  the  European  Pillar  of 
Social  Rights,  notably  through  the  creation  of  quality  jobs  and  the  reduction  of  social 
hardships and systemic inequality, as highlighted in the chapeau communication19 of the “Fit 
for 55” package of 14 July 2021. Well-designed accompanying policies, notably in the area of 
employment and social policy, are key in this transition, and will also help to safeguard the 
social acceptance of climate change policies and of social and territorial cohesion overall.  

In line with the Political Guidelines of the Commission 2019-24, the European Pillar of 
Social Rights Action Plan highlights that, as part of a new ‘social rulebook’, social rights 
and the European social dimension need to be strengthened across all Union policies as 
enshrined in the Treaties, in particular Article 3 TEU and Article 9 TFEU, to move towards a 
greener  and  more  digital  decade  in  which  Europeans  can  thrive.  It  aims  to  anticipate  and 
address the impacts of the green transition on people working and living in Europe, so that the 
transition is fair and leaves no one behind. It lays down further guidance to Member States as 
how to best address the social and labour aspects of the green transition. 

international 

At  the 
level,  the  ILO  Guidelines  for  a  just  transition  towards 
environmentally sustainable economies and societies for all provide a framework and a 
practical tool defining a just transition. After the concept of “just transition” was included 
in the final agreement of COP-16 in Cancun, the Parties to the Paris Agreement, including the 
Union  and  its  27  Member  States,  pledged  to  take  into  account  the  imperatives  of  a  just 
transition of the workforce and the creation of decent work and quality jobs in accordance, in 
particular,  by  pursuing  the  long-term  temperature  goals  on  the  basis  of  equity  and  in  the 
context of sustainable development and efforts to eradicate poverty. At COP-24 in Katowice, 
54  signatories  (governments,  industry  and  social  partners)  endorsed  the  Solidarity  and  Just 
Transition  Silesia  Declaration,  including  the  European  Commission  on  behalf  of  the 
European  Union20  and  21  EU  Member  States  individually21  At  COP-26,  14  governments22 
and the European Commission signed a follow-up Declaration on Supporting the Conditions 
for a Just Transition Internationally. 

19   Communication  from  the  Commission  'Fit  for  55':  delivering  the  EU's  2030  Climate  Target  on  the  way  to  climate  neutrality’, 

COM/2021/550 final. 

20   General Secretariat of the Council, 14545/1/18 REV1 of 26 November 2018. 
21   Austria, Belgium, Bulgaria, Czechia, Denmark, Estonia, Finland, France, Greece,  Latvia, Lithuania, Luxembourg, Malta, Netherlands, 

Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden. 

22   Including 10 EU Member States (Belgium, Denmark, France, Germany, Greece, Italy, the Netherlands, Poland, Spain and Sweden). 

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Employment  and  social  policies  –  including  for  support  to  reskilling  and  upskilling, 
adequate social protection and income support facilitating labour market transitions  – 
play  a  key  role  for  ensuring  a  fair  transition.  More  specifically,  the  transition  to  climate 
neutrality  could,  ‘with the right accompanying  policies in  place’  23, create around 1 million 
jobs in the EU by 2030 according to the 2030 Climate Target Plan24, and possibly a multiple 
of it by 205025, particularly middle-skilled, middle-paying jobs26, with varying impacts across 
countries and sectors. This could not only provide the livelihoods and raise incomes for many 
people  but  also  contribute  to  mitigating  labour  market  polarisation  stemming  from  other 
megatrends, notably digitisation, and reducing poverty overall27. In particular, this could help 
contain  and  prevent  energy  and  transport  poverty28,  tackle  socio-economic  inequalities  and 
social exclusion, ensure affordable access to energy and mobility for all, improve health and 
well-being, and promote gender equality. However, in a more pessimistic scenario the impacts 
of  the  green  transition  towards  climate  neutrality  combined  with  an  inadequate  policy  mix 
could imply GDP and employment losses29. 

Member States have outlined and are preparing a multitude of actions to promote a fair 
transition  towards  climate  neutrality,  which  is  a  basis  for  implementing  adequate  fair 
transition policies, ensuring coherence  at EU and national level. Against this background, 
the  Commission  announced  as  part  of  the  ‘Fit  for  55’  package  a  proposal  for  a  Council 
Recommendation on ensuring a fair transition towards climate neutrality. 

3  Context: energy union and climate action  

The  Energy  Union  Strategy30  of  February  2015  aimed  to  provide  EU  consumers  – 
households  and  businesses  –  with  secure,  sustainable,  competitive  and  affordable 
energy31.  With  an  ambitious  climate  policy  at  its  core,  it  presented  initiatives  on  five 
dimensions:  energy security;  the internal  energy  market; energy  efficiency; decarbonisation; 
research, innovation and competitiveness. 

The Energy Union and Climate Action Governance Regulation32 provides a governance 
framework  encouraging  Member  States  to  define  ambitious  national  plans  and  set 
incentives  reducing greenhouse gas emissions  through decarbonisation of their economies 
and societies and promoting behavioural change of producers and consumers towards carbon-
neutral technologies, products and services, while ensuring the protection of energy poor and 
vulnerable households33. 

23   Communication  from  the  Commission  ‘‘Fit  for  55':  delivering  the  EU's  2030  Climate  Target  on  the  way  to  climate  neutrality’, 

COM/2021/550 final. 

24   Communication from the Commission ‘Stepping up Europe’s 2030 climate ambition Investing in a climate-neutral future for the benefit 
of our people, COM/2020/562 final, and the underlying Impact Assessment accompanying the Communication, SWD(2020)176 final. 

25   Based on the 2018 Clean Planet for all impact assessment, the ESDE 2019 reports a potential gain of about 2 million jobs by 2050. 
26   Eurofound (2019), Future of manufacturing in Europe: Energy scenario: Employment implications of the Paris Climate Agreement, 12 

February 2019. 

27   European  Commission  (2019),  Sustainable  growth  for  all:  choices  for  the  future  of  Social  Europe,  Employment  and  Social 
Developments in Europe 2019, chapter 5 ‘Towards a greener future: employment and social impacts of climate change policies, 4 July 
2019. 

28   The concept of ‘transport poverty’ while recognized is not formally defined yet at EU Level but relates to the inability to attain a socially 

and materially necessitated level of transport services. 

29   SWD(2020)176 final. 
30   Communication from the Commission ‘A Framework Strategy for a Resilient Energy Union with a Forward-Looking Climate Change 

Policy’, COM/2015/080 final. 

31   In parallel to taking long-term actions, short-term developments such as the 2021 energy price hikes (primarily driven by global market 

developments) and volatility, are closely monitored and addressed, cf. COM(2021) 660 final. 

32   Regulation  (EU)  2018/1999  of  the  European  Parliament  and  of  the  Council  of  11  December  2018  on  the  Governance  of  the  Energy 

Union and Climate Action (OJ L 328, 21.12.2018, p. 1). 

33   Article 5 of Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal 
market  for  electricity  and  amending  Directive  2012/27/EU  (Text  with  EEA  relevance.)  (OJ  L  158,  14.6.2019,  p.  125);  Article  3  of 

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There  are  many  instruments  in  place  in  the  EU  and  its  Member  States  to  reduce 
greenhouse gas (GHG) emissions, including target setting at EU and national levels, target 
and  standard  setting  for  energy  efficiency,  energy  performance  of  buildings  and  CO2 
emissions  of  vehicles,  as  well  as  instruments  setting  price  signals  and  financial  incentives 
such  as  the  EU  ETS,  the  Energy  Taxation  Directive  (ETD)  and  national  carbon  taxes. 
Whereas  the  EU  ETS  is  an  EU-wide  system  with  a  cap  on  emissions  at  European  level, 
carbon taxes are applied at the national level34. The ETD leaves some flexibility for Member 
States  to  design  their  energy  taxation  systems.  In  addition,  there  are  dedicated  funding 
instruments to promote investments in energy efficiency and carbon-neutral technologies and 
to  support  sectors  or  regions  most  affected  by  the  green  transition,  including  through  the 
Recovery and Resilience Facility, the Innovation and Modernisation Funds under the ETS, the 
Just Transition Fund (JTF)35 and the remaining two pillars of the Just Transition Mechanism. 
Also  the  share  of  environmental  taxes  varies  strongly  between  Member  States36.  National 
energy taxes are the largest part of environmental taxes and therefore are key instruments for 
achieving  the  environmental  targets  set  by  the  European  Union,  moving  towards  a 
decarbonised  economy,  incentivising  consumers  to  use  energy  sources  alternative  to  fossil 
fuels and raising revenue. 

As regards decarbonisation, to date nine Member States have phased out coal, 13 have 
made national commitments to do so by a certain date, four are considering possible dates 
and only one has not yet started national discussions on a phase-out37. Moreover, a number of 
Member States38 have indicated their intention to work on setting up plans to phase out fossil 
fuel  subsidies,  although  not  all  of  them  have  fully  developed  their  plans  and  data  is 
incomplete. 

Energy  subsidies,  including fossil  fuel  subsidies  and  their  phase-out,  also  affect  energy 
prices and impact the incomes of energy consumers and the supply of energy products39. 
In  2019  and  2020,  almost  60%  of  energy  subsidies  could  directly  be  linked  to  the  energy 
sector.  The  share  of  industry  and  transport  was  both  above  10%,  while  the  shares  of  the 
household sector and agriculture were respectively lower, 8% and 4%. In 2020, subsidies in 
the  energy  sector  rose  further,  whereas  in  the  transport  sector  they  decreased  (-20%) 
compared to 2019, principally in the aviation sector (EUR -3.3 billion), owing to lower fuel 
consumption  amid  the  pandemic-related  restrictions  of  travel.  Also,  energy  efficiency 
subsidies  continued  showing  an  increasing  trend,  and  in  2020  they  were  estimated  reaching 
EUR 17 billion, up by almost 50% compared to 2015. 

Price regulation both on the consumer and producer sides plays an important role in the 
EU  energy  markets,  although  subsidies  for  these  measures  showed  a  decreasing  trend 
over  the  last  few  years40.  Consumer  price  guarantees,  e.g.  in  the  form  of  social  tariffs, 

Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market 
in natural gas and repealing Directive 2003/55/EC (Text with EEA relevance) (OJ L 211, 14.8.2009, p. 94). 

34   Carbon taxes generally cover different emission sources and their scope differs across Member States. Taxes can be levied on  different 
types of GHG, such as carbon dioxide, methane, nitrous oxide, and fluorinated gases, which results in varying shares of greenhouse gas 
emissions  covered  by  the  tax.  In  the  EU,  carbon  taxes  are  levied  in  Denmark,  Estonia,  Ireland,  France,  Latvia,  Luxembourg,  the 
Netherlands, Poland, Portugal, Slovenia, Finland and Sweden, and can range from less than €1 per metric ton of carbon emissions in 
Poland to more than EUR 100 in Sweden. See e.g. Tax Foundation (2021), European Countries with a Carbon Tax, 2021. 

35   For an overview of funding instruments and their inter-linkages, and their contributions to promoting a just transition, see Annex 3. 
36   The largest share of GDP for environmental taxes is observed in Denmark, Greece, Croatia, Italy, Latvia, the Netherlands and Slovenia. 
As  regards  energy  taxes  specifically,  Bulgaria,  Latvia  and  Slovenia  show  the  highest  shares,  while  the  lowest  energy  tax  shares  are 
observed in Austria and Sweden. 

37   Report  from  the Commission  ‘State of  the  Energy  Union  2021  – Contributing to the  European  Green  Deal  and the  Union’s  recovery 

(pursuant to Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action), COM/2021/950 final. 
38   Namely Belgium, Bulgaria, Denmark, Germany, Greece, Spain, France, Italy, Lithuania, Latvia, Austria, Portugal and Finland. 
39   Report  from  the Commission  ‘State of  the  Energy  Union  2021  – Contributing to the  European  Green  Deal  and the  Union’s  recovery 

(pursuant to Regulation (EU) 2018/1999 on the Governance of the Energy Union and Climate Action), COM/2021/950 final. 

40   COM/2021/950 final, section 2.1, pages 6-7. 

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amounted to EUR 2.1 billion in 2019, benefitting mainly the household sector. Producer price 
guarantees,  e.g.  in  the  form  of  purchase  agreements  and  fuel  costs  guarantees,  were  mainly 
characteristic in the energy sector, and amounted to EUR 3.6 billion in 2019. 

The ‘Fit for 55’ package includes a series of proposals for updating relevant legislation 
in line with the higher climate ambition. Proposals cover the EU Emissions Trading System 
(ETS), energy taxation, energy efficiency, renewable energy, CO2 emission standards for cars 
and vans and alternative fuels infrastructure, as well as effort sharing between Member States 
via  national  reduction  targets  in  sectors  outside  the  current  ETS.  The  package  also  includes 
new  legislative  proposals    notably  to  support  the  use  of  cleaner  fuels  in  the  aviation  and 
maritime  transport  sectors,  as  well  as  the  introduction  of  a  Carbon  Border  Adjustment 
Mechanism and the establishment of a Social Climate Fund, the latter directly related to the 
proposed  new  emissions  trading  system  for  fuels  used  in  buildings  and  road  transport.  The 
‘Fit for 55’ package, combined with measures taken at EU level to support and incentivise the 
necessary public and private investments41 will help to support and accelerate the growth of 
new markets, for instance for clean fuels and low-emission vehicles, thereby driving down the 
costs of the sustainable transition for businesses and citizens alike. 

Moreover,  the  package  included  fairness  elements  in  its  legislative  proposals  where 
relevant.  In  particular,  the  legislative  proposals  are  designed  to  mitigate  the  impact  on 
households, and transport users, and foresee additional funding to support those most affected 
(see Box 1). 

Box 1. Social fairness elements built into the design of the “Fit for 55” package 

On  an  aggregate  level,  the  transition  to  climate  neutrality  embedded  in  the  package  is 
expected  to  improve  employment  and  welfare,  compared  to  the  outcome  of  climate 
inaction, and also  compared to  climate action without  a fairness  component. However, as 
any transition it will also imply impacts that notably  affect certain parts of the population 
and economy42.  

Therefore, social fairness is built into the design of the legislative proposals in the ‘Fit for 
55’ package. For instance, the proposal for revision of the Energy Taxation Directive offers 
possibilities  for  temporarily  exempting  vulnerable  households  from  higher  energy  taxes. 
The proposed recasts of the Energy Efficiency Directive and of the Energy Performance of 
Buildings  Directive,  and  the  proposed  revision  of  the  Renewable  Energy  Directive 
stimulate  energy  savings  thereby  alleviating  energy  poverty.  The  proposed  recast  of  the 
Energy  Efficiency  Directive  includes  a  specific  obligation  for  Member  States  to  support 
energy-poor and vulnerable households to achieve energy savings. Likewise, the revision of 
the  Energy  Performance  of  Buildings  Directive  foresees  a  prioritisation  of  financial 
incentives for vulnerable customers, people affected by energy poverty and social housing; 
moreover, it tackles the main non-economic barriers to renovation such as split incentives, 
including owner-tenant settings, and co-ownership structures.  

Instruments  such  as  the  Effort  Sharing  Regulation,  aim  at  a  fair  distribution  of  efforts 
between  Member  States,  to  ensure  solidarity  and  burden  sharing  between  Member  States 
and regions43. Moreover, the proposed Alternative Fuels Infrastructure Regulation aims to 
ensure that charging and refuelling infrastructures for zero emission vehicles will reach all 

41 

Including  support  to  research  and  development,  industrial  alliances  and  innovation  partnerships,  relevant  funding  instruments,  a 
taxonomy on sustainable investments, and the review of the state aid framework, among others. 

42   In  particular  from  the  perspective  of  household  disposable  incomes,  energy  and  climate  policies  may  affect  low-income  and  lower 

middle-income households disproportionately. 

43   Cohesion policy will complement these efforts by promoting ‘overall harmonious development’ of its Member States and regions. 

7 

 
 
                                                           
parts of Europe and be accessible to all. While every Member State will have to contribute 
to the increased emissions reduction target, different starting points and different capacities 
are taken into account. 

As regards emissions trading, in the proposal  to  revise the existing EU Emission Trading 
System,  fairness  and  solidarity  remain  key  elements  of  the  carbon  pricing  architecture. 
Lower-income Member States will continue to benefit from redistribution of allowances for 
the purposes of solidarity, growth and interconnections within the Union. The Commission 
has  also  proposed  to  increase  resources  under  the  Modernisation  Fund,  by  auctioning  an 
additional 2.5% of the revised ETS cap (in addition to the current 2%). 

The proposed Social Climate Fund will help mitigate the impact on vulnerable households, 
transport users and micro-enterprises that are significantly affected by the price increases in 
fossil fuel prices as a result of the introduction of emissions trading. It will promote fairness 
and solidarity between and within Member States while mitigating the risk of energy and 
transport  poverty,  complementing  existing  solidarity  mechanisms.  The  proposed  Social 
Climate Fund will provide EUR 72.2 billion in current prices from the EU budget for the 
period 2025-2032 to enable Member States to address the impacts on the most vulnerable 
households, micro enterprises and transport users.  The amount corresponds to 25% of the 
expected revenues from the new emissions trading. 

4  Employment, social and distributional impacts of the green transition 

4.1  Current situation and trends 

While the urgency to fight climate change is uncontested, the necessary policy measures 
bring not only new opportunities but also challenges on the labour market as well as for 
individual  and  household  welfare.  Such  opportunities  and  challenges  include  job  creation 
and destruction, new job profiles and labour reallocation both in traditional industries, such as 
the car or building sectors, and to new emerging sectors of the green and circular economy, as 
well as to other growing sectors such as the healthcare and education. They may imply also 
higher costs for energy and transport and distributional impacts from shifts in taxation. 

Employment  challenges  notably  arise  as  declining  industries  will  see  job  losses  and 
others  need  to  transform  substantially.  For  instance,  the  former  comprise  fossil  fuel 
extraction  and  fossil  fuel-based  electricity  generation  and  the  latter  manufacturing  sectors 
including the automotive industry and high-emission  industries such as chemicals,  steel  and 
cement. Helping workers to readjust and find jobs in emerging or established sectors hinges 
on effective policy measures, primarily in the area of skills.  

Distributional  impacts  will  be  most  prominent  among  households  who  are  already 
(financially  or  otherwise)  vulnerable.  This  may  include,  among  others,  households  and 
persons in the lower income deciles, individuals with long-term careers in activities requiring 
skills  which  are  non-transferrable  to  other  sectors,  individuals  in  precarious  employment  or 
(solo-)  self-employed,  young  and  old  persons,  women,  or  various  combinations  of 
aforementioned  characteristics.  Attributing  parts  of  new  revenues  to  vulnerable  households 
can thus help overcome regressive impacts, address regional disparities, and further spur job 
creation. 

8 

 
 
Employment 

The transition to climate neutrality could, ‘with the right accompanying policies in place’, 
create around 1 million jobs in the EU by 203044, compared to a baseline without such 
climate action, and possibly a multiple of it by 205045, particularly middle-skilled, middle-
paying jobs46, with varying impacts across countries and sectors. These positive employment 
projections, reflect both, job creation potential in growing and emerging sectors of the green 
economy,  including  the  circular  economy,  as  well  as  an  increased  demand  for  new  green 
technologies and services, including in construction, electro mobility and sustainable finance. 

Employment projections present a range of possible outcomes, which tend to be positive. 
According to the available projections, the net aggregate number of jobs in the EU is expected 
to  increase  by  up  to  +0.46%,  as  a  consequence  of  the  green  transition,  relative  to  a 
counterfactual  ‘business  as  usual’  baseline47.  These  projections  assume  in  particular  well-
functioning  labour  markets,  with  smooth  labour  market  transitions  and  absence  of  skill 
shortages. The aggregate effects observed will depend on the policies implemented, and may 
also be smaller, in particular in the absence of targeted active labour market policies and shifts 
from  labour  taxes  towards  energy  taxation.  While  in  most  scenarios  the  net  employment 
effects  are  expected  to  be  positive,  in  the  worst  case  scenario,  there  could  be  also  negative 
impacts (of at most -0.26%)48. 

The green transition is expected to have diverging effects on employment developments 
across  sectors  and  occupations.  This  is  evident  from  the  current  structure  of  the  EU 
economy  and  workforce.  In  the  EU  in  2017,  the  sectors  ‘Electricity,  gas,  air  conditioning’, 
‘Manufacturing’,  and  ‘Transportation  and  storage’  were  responsible  for  over  80%  of  the 
cumulative CO2 emissions. However, more than 70% of jobs49 were in relatively carbon-non-
intensive  sectors  that  also  emit  less  and  were  also  growing  faster50.  These  developments 
contribute to an already ongoing transformation of the carbon-intensive sectors which will be 
accelerated by more stringent climate change and environmental policies. 

Notably employment in the coal sector is projected to decrease by an additional 46-49% 
by 2030, compared to the baseline51. Moreover, in line with their projected drop in output, 
also  employment  of  other  energy  intensive  sectors  may  decline  in  absolute  numbers  in 
comparison to the baseline. At the same time, employment in those sectors will benefit from 
restructuring  and  adjustment  to  new,  carbon-neutral  production  technologies  and  business 
models. 

An  example  for  the  transformation  of  the  whole  value  chain  is  the  automotive  sector, 
with its structural shift from conventional petrol and diesel engines towards battery cell 
powered  ones52.  Europe  is  on  a  transition  path  towards  increased  electro  mobility.  This 

44   According to the Communication from the Commission ‘2030 Climate Target Plan’, COM/2020/562 final, and SWD(2020)176 final: 
projections  based  on  E-QUEST  using  a  ‘lower  taxation  low-skilled  labour’  scenario,  i.e.  assuming  a  ‘targeted  reduction  in  labour 
taxation  which  stimulates  low-skilled  labour  supply  via  higher  net  wages  while  simultaneously  lowering  low-skilled  labour  costs  for 
firms, thereby leading to higher overall employment’. 

45    Based on the 2018 Clean Planet for all impact assessment, the ESDE 2019 reports a potential gain of about 2 million jobs by 2050. 
46   Eurofound (2019), Future of manufacturing in Europe: Energy scenario: Employment implications of the Paris Climate Agreement, 12 

February 2019. 

47   SWD(2020)176 final. The most optimistic scenario expects a net job gain by 2030 of about 1 million jobs (+0.45%). On the other hand, 
without the right accompanying policies, there could also be potential losses (up to 494 000 jobs (-0.26%) at the aggregate level by 2030, 
and up to 1.7 million jobs (-1.4%) in market services, in the worst scenario). 

48   SWD(2020)176 final. 
49   The sectors ‘Electricity, gas, air conditioning’, ‘Manufacturing’, and ‘Transportation and storage’  accounted for 27% of all jobs, while 

the remaining other sectors accounted for 73%. 

50   Cf. ESDE 2019, chart 5.2. 
51   SWD(2020)176 final. See also Alves Dias et al. (2018), EU coal regions: opportunities and challenges ahead. 
52   Another  sector  heavily  impacted  will  be  electronics  and  electrical  equipment,  which  will  need  to  focus  more  on  a  longer  lifetime  of 

products to move towards a circular economy. 

9 

 
 
                                                           
evolution  could  lead  to  significant  workforce  reductions  notably  in  the  narrowly  defined 
automotive sector, locally and also across the EU53. Suppliers of intermediate goods as well as 
up-stream  service  providers  throughout  the  EU  would  also  need  to  adjust  to  remain  in 
business, with implications for their workforces. The overall job impact of the shift to electro 
mobility, however, could overall be slightly positive, with new jobs in electricity generation, 
the  operation  of  the  charging  infrastructure,  and  the  development  and  production  of  battery 
technology  which  is  crucial  for  the  electrification  of  mobility.  The  ‘European  Battery 
Alliance’54 underscores this employment potential55. 

More generally, certain sectors may flourish and new occupations will occur, providing 
new  employment  opportunities.  For  example,  parts  of  the  construction  sector  can  be 
expected  to  benefit  from  the  renovation  wave.  Also  the  renewable  energy  and  electricity 
supply and distribution sectors may expand56, as well as the water supply, sewerage and waste 
sectors57  and  other  circular  value  retention  activities.  Other  existing  jobs  may  expand, 
benefitting  from  the  focus  on  sustainability,  e.g.  sustainable  finance  specialists,  waste 
managers,  urban  planners  and  urban  architects,  taking  into  account  evolving  green  and 
sustainability  aspects.  Several  new  jobs  are  likely  to  emerge,  including  in  the  sharing 
economy, alternative forms of sustainable transport and urban micro farmers and employment 
opportunities related to tidal energy production58.  

Many  occupations  also  have  a  significant  green  component,  making  them  relatively 
more future-proof. Existing jobs/occupations are expected to undergo significant changes in 
task content due to the greening of the economy, or new occupations in the green economy59 
contributing  to  reducing  fossil  fuel  usage  and  addressing  environmental  degradation  and 
greenhouse  gas  emissions,  recycling  materials,  increasing  energy  efficiency  and  developing 
renewable  energy  sources.  Job  creation  in  such  new  occupations,  notably  within  existing 
industries,  can  compensate  job  losses  in  traditional  jobs/occupations  in  the  energy-intensive 
industries.  Overall,  it  is  expected  that  most  sectors  will  rather  experience  shifting  task  sets 
within the sector rather than an overall increase or decrease of employment60.  

The  impacts  of  the  green  transition  will  also  differ  geographically.  Regional  disparities 
emerge  when looking at dedicated indicators of  geographical  industrial  structures and when 
assessing  the  regional  potential  for  expanding  various  forms  of  energy  generation.  In  turn, 
also some opportunities may have a regional focus, for example with regards to the potential 
of  renewable  energies  (see  Figure  1).  For  instance,  many  parts  of  Europe  have  substantial 
potential to generate renewable energy from various sources, including in regions which may 
experience a relatively stronger adjustment process. 

53   European Semester Country Report Germany 2019, SWD(2019)1004 final. 
54   https://ec.europa.eu/growth/industry/strategy/industrial-alliances/european-battery-alliance_en. 
55   See  also  European  Commission  (2021),  Impact  Assessment  accompanying  the  Proposal  for  a  Regulation  amending  Regulation  (EU) 
2019/631 as regards strengthening CO2 emission performance standards for new passenger cars and new light commercial vehicles in 
line with the Union’s increased climate ambition, SWD(2020)613 final, 14 July 2021, in particular section 6.2.1.1.8. 

56   SWD(2020)613 final, section 6.2.2. 
57   Cedefop (forthcoming, 2021), Skills Forecast 2030: the way to the future. 
58   European Commission (2021), The Future of Jobs is Green, Science for Policy Report, Joint Research Centre. 
59   Cf. F. Vona (2021), Labour Markets and the Green Transition: a practitioner’s guide to the task-based approach, Joint Research Centre. 
60   Cedefop (2021), Digital, greener and more resilient, Insights from Cedefop’s European skills forecast. 

10 

 
 
                                                           
Figure  1.  Onshore  solar  and  wind  energy  potential  and  jobs  at  risk  in  2020-2030  in  coal 
mines and power plants (JRC, 2021). 

As a consequence, the labour market challenges implied by the green transition are not 
uniform across or within countries. Indeed, transforming and declining industries tend to be 
concentrated in specific regions. Employment in energy intensive manufacturing, including in 
the automotive industry, and in extractive industries for instance tends to be concentrated to a 
large  extent  in  regions  in  the  South,  Central  and  Eastern  Europe.  On  the  other  hand,  many 
regions  in  Europe, including in  coastal areas and remote territories which may face specific 
adjustment  challenges,  have  substantial  potential  to  generate  renewable  energy.  As  for 
industrial sectors, this highlights the importance of existing and future initiatives for targeted 
re-  and  up-skilling  to  support  intra-  and  cross-sector  labour  market  transitions  within  the 
regions  and  communities  most  affected.  In  border  regions,  there  can  be  a  significant  added 
value  of  a  cross-border  approach,  allowing  to  better  address  many  challenges  linked  to 
ensuring a fair transition and to jointly benefit from new opportunities. For instance, creating 
genuine  cross-border  labour  markets  presents  many  advantages  to  mitigate  negative 
repercussions  on  employment  of  the  transition:  employers  have  access  to  a  larger  pool  of 
skills and competences, job seekers have access to more vacancies, and SMEs wishing to test 
the neighbouring markets have direct access to job seekers with potentially different language 
skills. As another example, energy system integration across borders at the regional or local 
level will allow to make full use of complementary renewable energy and storage potentials in 
border regions, also providing new employment opportunities in related sectors. Cross-border 

11 

 
 
 
energy communities can play a significant role here.61 The differential state of preparedness 
of  EU  Member  States  and  regions  and  their  capacity  to  address  the  challenges  ahead  also 
shows in the countries’ actual state of progress towards fair and prosperous sustainability, as 
measured by the Transitions Performance Index (TPI)62. 

Skills 

Existing trends and new challenges in the labour market and in certain sectors require 
significant up- and re-skilling of the current workforce, mostly through (re-)training at the 
workplace,  to  enable  workers  to  keep  up  with  the  changes  ahead.  As  the  greening  of  the 
economy is a long-term, systemic transformation rather than a short-term transition, workers 
in  occupations  without  substantial  changes  in  tasks  will  also  benefit  from  training  for  new 
skill  sets  in  support  of  sustainable  development  and  changing  production  and  consumption 
patterns overall. To realise the opportunities of the green transition, companies, social partners 
and policy-makers at all levels have a key role in anticipating the necessary skill needs of the 
future and in supporting training and skill development of the labour force. 

Skills  forecasts  point  to  a  shift  in  the  labour  market  profiles  and  skill  requirements, 
including due to the green and digital transitions and related technological change. This 
underlines  the  importance  of  the  EU’s  new  headline  target  on  adult  learning,  aiming  to 
achieve an annual participation rate of 60% by 2030, compared to the current (2016) rate of 
37.4%.  Reskilling  and  upskilling  are  key  to  strengthen  both  specific  skills  needed  in  the 
labour market, including through vocational education and training, and transferable skills for 
participation in economy and society more generally, including through general education for 
sustainability.  

Yet, there is no commonly agreed definition or assessment of what exactly the required 
skills for the green transition are. The European Centre for the Development of Vocational 
Training  (Cedefop)  defined  green  skills  as  ‘the  knowledge,  abilities,  values  and  attitudes 
needed to live in, develop and support a society which reduces the impact of human activity 
on  the  environment’.  From  a  labour  market  perspective,  both  occupation-specific  technical 
skills  (e.g.  to  monitor  waste  treatment  equipment),  and  more  transversal  skills  (e.g.  digital 
skills), that enable workers to design, develop,  and implement new processes, products,  and 
services to support a sustainable and circular economy, are needed. These are mostly not new 
skills but to a large extent skills that already exist in traditional occupations (e.g. STEM skills, 
problem  solving  skills,  communication,  social  and  soft  skills).  Vocational  Education  and 
Training (VET) systems need to equip initial learners with these skills and support companies 
to  ensure  that  workers  who  are  already  qualified  in  an  occupation  get  additional  training 
throughout  their  career  to  acquire  new  occupation-specific  and  transversal  skills  that  they 
need to master the green transition. 

Adding to the geographic disparity of labour market challenges, adult training remains 
far from standard practice throughout the EU, with wide cross-country and regional63 
differences. This raises concerns as to Member States’ readiness to ensure a fair transition. In 
2020, only 9.2% of adults (and only 3.4 % of low qualified adults) in the EU participated in 
learning  (over  the  previous  4  weeks).  Moreover,  adult  participation  rates  in  education  and 
training  are  consistently  below  the  average  in  regions  in  which  the  employment  shares  of 
energy-intensive industries are comparatively high64. Yet, adequate skills formation is key for 

61   Report from the Commission “EU Border Regions: Living labs of European integration”, COM/2021/393 final. 
62   https://ec.europa.eu/info/research-and-innovation/strategy/support-policy-making/support-national-research-and-innovation-policy-

making/transitions-performance-index-tpi_en. 

63   SWD(2019)579 final, chapter 5, section 3.2. 
64   SWD(2019)579 final, figure 5.1. 

12 

 
 
                                                           
supporting labour market transitions of workers most affected by the transition, in particular 
those  with  low  or  obsolete  skills,  as  well  as  for  facilitating  restructuring  within  industrial 
sectors and ecosystems. 

Welfare 

Changes  in  welfare  can  be  driven  by  several  factors,  including  changes  in  prices  for 
some essential goods and services, and the emergence of low-carbon substitutes. Higher 
prices for some goods and services, notably due to the internalisation of the costs of emissions 
in  price  formation,  can  have  both  direct  and  indirect  welfare  effects,  given  in  particular  the 
costs of adaptation (for example, the costs of improving the energy efficiency of a building or 
switching  to  a  decarbonised  heating  system  or  vehicle).  Low-  or  lower-middle  income 
households  have  relatively  high  expenditure  shares  for  essential  services  such  as  energy, 
transport  and  housing,  and  encounter  more  difficulties  in  funding  the  switch  to  alternative 
decarbonised technologies or adjusting consumption patterns. Price changes could also have 
indirect effects, such as negative impacts on health or on the ability to access professional and 
social activities.65 

Such  welfare  impacts  are  expected  to  be  stronger  for  households  in  the  lowest 
expenditure deciles which would experience a decrease in welfare by about 2%66. In turn, 
the highest deciles would experience a decrease by about 1%, i.e. the relatively less affluent 
households carry a relatively higher burden. This observation is driven in part by the fact that 
households in the lowest income/expenditure deciles have a relatively higher share of energy-
related expenditure. An EU harmonised indicator for energy poverty, measured as the share of 
households  which  are  unable  to  keep  their  homes  adequately  warm,  also  is  negatively 
correlated  with  income,  implying  adverse  welfare  effects  of  raising  energy  prices  and  poor 
energy  efficiency,  especially  as  regards  the  performance  of  buildings,  in  particular  for 
(financially)  vulnerable  households  but  also  those  in  the  middle  of  the  income  distribution. 
Moreover,  this  financial  vulnerability  tends  to  be  correlated  with  certain  socio-demographic 
factors  such  as  age,  gender,  location,  educational  background,  or  labour  market  attachment, 
among other factors. Modelling results show that whether environmental taxes are progressive 
or regressive will largely depend on instrument design, including, for example, the extent to 
which  income  tax  cuts  or  other  revenue  recycling  options  are  targeted  at  lower  income 
earners.67 

It  is  important  to  address  indirect  negative  effects  on  access  to  essential  services  to 
ensure  an  inclusive  transition,  thereby  also  promoting  public  support  for  the  policy 
measures, investments and reforms needed to ensure a just green transition, notably in view 
of concerns regarding the fair burden-sharing of effective contributions to emission reductions 
so  far.68  Policies  to  implement  the  Green  Deal  take  full  account  of  their  potential  impacts 
regarding  household  welfare,  including  energy-related  consumption,  such  as  fuel,  heating, 
electricity, and other related goods and services69, as well as expected positive effects such as 

65   For  instance, in the absence  of  access  to alternative  forms  of  sustainable  transport, notably  public transport, too  high  fuel  prices  may 

prevent persons from commuting to work, essentially excluding them from access to (quality) employment. 

66   SWD(2020)176 final. 
67  2021,  IEEP,  Green  taxation  and  other  economic  instruments:  internalising  environmental  costs  to  make  the  polluter  pay 
https://ec.europa.eu/environment/publications/green-taxation-and-other-economic-instruments-internalising-environmental-costs-make-
polluter-pay_en. 

68   According to a recent report by Oxfam International and the Institute for European Environmental Policy (2021), prepared for COP-26, 
efforts  of  emission  reductions  have  not  been  shared  equally  so  far,  neither  across  countries  nor  across  income  groups  within  some 
countries. In particular, in many developed countries, per capita emissions of the poorest half of the population actually have declined 
since  1990  and  are  close  to  2030  climate  targets,  contrary  to  that  of  wealthier  groups  who  will  have  to  significantly  increase  their 
contribution to emission reductions efforts. 

69   Such  effects  can  be  expected  notably  from  the  proposed  introduction  of  a  new  Emission  Trading  System  for  buildings  and  road 
transport,  the  strengthening  of  the  existing  ETS  and  its  extension  to  fuels  used  in  aviation  and  international  maritime  transport,  the 

13 

 
 
                                                           
 
improved  health,  cleaner  air  and  reduction  in  local  noise  pollution.  Using  the  fiscal  space 
made available by additional revenues, for example from energy taxation, ETS auctioning or 
extending  the  Polluter  Pays  Principle70,  to  redistribute  revenues  to  the  most  affected  and 
vulnerable  households,  for  instance  in  the  form  of  lump  sum  transfers,  labour  tax  cuts  or  
support to reskilling and upskilling, can maximise the employment impact and raise incomes. 
It  would  address  potential  impacts  by  upholding  the  purchasing  power  of  lower  income 
households  during  the  time  needed  for  achieving  the  necessary  investments  in  energy 
efficiency  and  alternative  forms  of  sustainable  mobility.  By  making  the  households  in  the 
lowest  income  brackets  better  off  compared  to  a  baseline  situation  without  energy  taxation, 
such measures could also decrease pre-existing inequality and poverty. 

4.2  Realising opportunities 

Policy  makers  have  a  rich  set  of  tools  to  anticipate  and  address  employment 
opportunities and social impacts related to the green transition. This includes identifying 
the groups most affected and designing policy answers to maximise job creation and mitigate 
regressive  effects,  thereby  transforming  them  into  opportunities  for  the  economy  and  for 
society overall. 

Policy action in the following areas is of particular importance: 

1.  Active labour market policies: e.g. facilitating and supporting labour market transitions, 
facilitating restructuring and retraining, and promoting up- and reskilling, including across 
borders; 

2.  Vocational Education and Training (VET) and adult learning can act as an enabler of 

this transition71; 

3.  Revenue  recycling:  i.e.  making  use  of  revenues  stemming  from  measures  related  to 
policies  with  a  climate  and  environmental  objective,  notably  environmental  taxation 
(including  energy  taxation  and  carbon  pricing)  and  phasing  out  of  the  environmentally 
harmful  subsidies,  to  support  households,  energy  customers  and  transport  users  most 
affected during the transition; 

4.  Access  to essential  services is  a right  enshrined  in  the European Pillar of Social Rights 
(principle  20)  and  a  precondition  for  enabling  households,  notably  those  in  vulnerable 
situations,  to  participate  actively  in  the  green  transition  including  by  changing  their 
consumption  and  mobility  behaviours  (e.g.  use  of  renewable  energy,  increased  energy 
efficiency, alternative forms of sustainable transport and consumption of locally produced 
goods and services). 

Based  on  economic  modelling  tools72,  the  impacts  of  different  ways  to  address  labour 
market and welfare73 challenges through revenue recycling have been assessed, notably 
the  potential  of  policy  interventions  that  redistribute  part  or  all  of  the  additional 
revenues74.  These  potential  interventions  mix  various  forms  of  lump-sum  redistribution 

revision of the Energy Taxation Directive, the set-up of a Carbon Border Adjustment Mechanism and the strengthening of CO2 emission 
standards for cars and vans. 

70   Special Report 12/2021: The Polluter Pays Principle: Inconsistent application across EU environmental policies and actions (europa.eu). 
71   Cedefop  and  ETF  (2020):  The  importance  of being  vocational:  challenges  and  opportunities  for  VET in  the  next  decade, available  at 

https://www.cedefop.europa.eu/files/4186_en.pdf. 

72   Using the General Equilibrium Model for Economy-Energy-Environment (JRC-GEM-E3) and its distributional module that combines 
economy-wide  modelling  with data  from  the  EU  Household Budget  Survey;  cf.  SWD(2020)176  final  and  Temursho,  U.,  Weitzel,  M. 
and  Vandyck,  T.,  Distributional  impacts  of  reaching  ambitious  near-term  climate  targets  across  households  with  heterogeneous 
consumption patterns. 

73   Welfare impacts are measured via the price-induced changes in the consumption of individuals or households, following the introduction 
of the measures. The welfare analysis does not consider substitution effects, i.e. the measured effects are solely induced by price changes 
and the households do not switch to consume other goods. 

74   Including revenues from an ETS extension, and from auctioning emission certificates. The amount of the new revenues which may be 

available to be redistributed depend, among other factors, on the different emission trading approaches. 

14 

 
 
                                                                                                                                                                                     
measures  (LS)75,  labour  tax  recycling  (TR)76  and  modalities  regarding  the  auctioning  of 
emission certificates under emission trading (FA, AU)77. 

The  analysis  allows  distinguishing  the  welfare  effects  of  redistributing  revenues  to  all 
households or of targeted measures to vulnerable households in given income deciles78. 
The modelling results are based on a series of technical assumptions which may imply that the 
outcomes  are  too  optimistic  (e.g.  assumption  of  perfect  labour  markets  ensuring  smooth 
labour  market  transitions  and  without  skill  shortages)  or  too  pessimistic  (as  potentially 
underestimating the potential of accelerating innovation and external demand). Moreover, the 
results also reflect assumptions regarding the state of the economy and its potential to expand 
and the climate actions undertaken in the rest of the world. This is relevant e.g. in light of the 
more ambitions approaches by other countries announced at COP-26. If they materialise this 
may  imply  a  higher  global  demand  for  European  technology  and  green  goods  and  services, 
thus with additional positive impacts on GDP and labour market outcomes. 

Without  presenting  full  detail,  the  main  modelling  results  regarding  the  impacts  of 
potential  policy interventions  show  that  redistribute  revenues  to  the  most  affected  and 
vulnerable households can be summarised as follows: 

1.  As  regards  labour  market  outcomes  overall,  subject  to  policy  choices,  the  analysis 
suggests  that  it  is  possible  to  achieve  a  ‘double  dividend’;  i.e.  to  reduce  GHG 
emissions  in  line  with  the  2030  targets  while  also  achieving  a  net  increase  in  total 
employment. This implies that new jobs will be created, compensating for losses in some 
sectors but even going beyond to foster an overall labour market expansion. At the same 
time,  negative  employment  effects  overall  may  materialise  in  case  of  insufficient  policy 
action, or inadequate policy choices, highlighting the key role of fair transition policies. 
2.  As regards sectoral employment effects, more ambitious climate policies imply expected 
negative employment effects in energy intensive/fossil fuel sectors and potential room for 
expanded  employment  opportunities  in  sectors  such  as  renewable  energy,  the  bio-
economy,  and  sectors  (e.g.  construction)  that  are  central  in  shaping  modern  and  low-
carbon infrastructure. For other sectors, notably including market services and agriculture, 
the  results  are  mixed  and  depend  crucially  on  the  policy  mix  chosen.  The  disparities  in 
expected  employment  effects  across  sectors  and  skill  levels  imply  significant  labour 
reallocation  across  and  within  sectors,  highlighting  the  need  for  the  transition  to  be 
managed  carefully  and  in  way  that  is  socially  fair.  Low-skilled  workers  are  shown  to 
benefit  under  the  considered  policy  interventions,  provided  that  accompanying  support 
measures  for  reskilling  and  upskilling  and  for  supporting  labour  market  transitions, 
including  income  security  during  the  transitions  and  access  to  essential  services,  are  in 
place.79 

3.  As regards welfare effects, a careful design of policies, including for revenue use, can 
ensure  that  vulnerable  and/or  low  income  and  lower  middle-income  households  do 
not  bear  a  disproportionate  burden  and  actually  do  realise  concrete  benefits  from 
climate change policies. Figure 2 illustrates how expected regressive impacts (the black 

75   A  lump  sum  transfer  means  that  recipients,  for  example  (vulnerable)  households,  receive  an  equal  (equivalent  for  household  size) 
amount of money, through a one-time or regular bank transfer, cheque via mail, or other means of distribution. A static model was used 
for the underlying projections, which does not (need to) specify the temporary or permanent nature of the financial support measures. 

76   Through a tax cut decreasing the income tax paid by workers (and companies, where relevant). 
77   Which determine the amount of revenues available for redistribution under the potential policy interventions. 
78   Further refinements are possible, e.g. to assess the impact of lump sum transfers towards individuals (at risk of) energy poverty, but not 
presented  here  as  the  section  serves  for  illustration  purposes  only.  For  details  of  the  analysis  and  the  underlying  assumptions,  cf. 
SWD(2020)176 final, part 2/2. 

79   More  targeted, tax based interventions  may  yield  more  effective  results  in  supporting  the  transition  of  low-skilled  workers  and, since 

skill and income distributions correlate, also help overcome regressive welfare effects. 

15 

 
 
                                                           
line  in  the  chart)  across  households  can  be  mitigated  and  avoided  by  revenue  recycling 
transfer schemes representing various amounts of revenue recycling. As regards targeting, 
the  analysis  distinguishes  between  allocating  the  revenues  across  different  groups  of 
income deciles. When targeting the revenues to specific groups, the analysis considers the 
following  two  groups  of  recipients:  households  with  below  median  income80  or  with  an 
income below the national poverty threshold, i.e. below 60% of median income81. 

Figure  2.  Distributional  impacts  across  household  income  groups  in  the  EU.  Source:  JRC-
GEM-E3  analysis.  Assumptions:  MIX;  Fragmented  action;  Perfect  labour  market;  Profit 
Maximisation;  Shadow  value  in  non-ETS;  Free  allowances  in  ETS  (except  electricity 
generation).  

Via lump sum transfers to
households with expenditure below:

Share of additional revenue recycled

100%

50%

0%

Maximum (all)

Median

60% of the median

e
r
u
t
i
d
n
e
p
x
e

l

a
t
o
t

f
o
%

,
t
c
a
p
m

i

e
r
a
f
l
e
W

6

4

2

0

-2

1

2

3

4

5

6

7

8

9

10

Expenditure deciles

4.  With  proper  targeting  and  moderate  revenue  recycling,  the  analysis  suggests  that 
time  inconsistency  problems  can  be  partly  addressed  and  households  in  the  lowest 
expenditure  decile  can  be  made  better  off  relative  to  the  situation  before  the 
introduction  of  the  policy  measure.  One  way  to  do  so  would  be  by  using  50%  of  the 
new  revenues  and  target  the  lump  sum  transfers  to  the  households  with  equivalised 
income below 60% of the median. Then welfare of the three lowest deciles are shown to 
improve  in  absolute  terms  vis-à-vis  the  baseline82,  with  a  relative  improvement  for  the 
fourth  decile, as well. The choice of transfer modalities and the scope for compensation 
will  depend  mostly  on  the  revenues  raised  as  well  as  on  the  range  and  nature  of  the 
households that policy makers aim to support. Options include targeting only low-income 
households,  also  lower  middle  income  households,  or  providing  transfers  to  all 
households. The latter, untargeted, modality has the least favourable welfare implications. 
Figure  4  compares  the  impact  exclusively  for  the  lowest  and  the  highest  expenditure 
deciles,  i.e. the difference between the welfare changes.  Table 1  provides  the values for 
selected  expenditure  deciles.  The  graph  showcases  that,  even  when  recycling  less  than 
10% of the revenue, the regressive impact between the lowest and highest income deciles 
can  be  reversed  when  applying  narrower  targeting.  While  the  policy  interventions  and 

80   Households with equivalised expenditure less than the corresponding median. 
81   Households with equivalised expenditure less than 60% of the median. 
82   For further detail, see Figure 2. 

16 

 
 
 
 
                                                           
 
 
 
 
 
considerations  must  look  beyond  the  comparison  of  the  lowest  and  the  highest  income 
deciles,  the  comparison  exemplifies  that  targeted  redistributive  policies  may  still  leave 
ample  funds  to  support  (solo-)  self-employed,  small  and  medium  enterprises,  and  other 
vulnerable actors in the transition process. 

5.  The analysis hence suggests that targeted measures allow to maintain at least existing 
levels of consumption, or even foster equity and overcome regressive impacts of the 
green transition and the related policy measures. The results also suggest that targeted 
transfers  can  be  combined  with  other  ways  of  revenue  recycling  that  may  stimulate 
employment, achieving multiple goals simultaneously. Fostering a more careful targeting 
may  allow  for  a  more  efficient  use  of  the  funds  and  hence  further  improved  welfare 
outcomes, for specific (vulnerable) individuals as well as society as a whole.83 

Similar  results  were  achieved  when  modelling  impacts  of  the  introduction  of  pricing 
instruments  in  other  areas  than  carbon.  In  conclusion,  depending  on  the  accompanying 
policies,  the  green  transition  can  achieve  a  reduction  in  GHG  emissions,  positive 
employment  effects  and  non-regressive  welfare  effects,  making  at  least  the  most 
vulnerable better off.  This amounts to a ‘triple dividend’. The chosen policy mix may still 
entail  cost  increases  and  welfare  reductions,  such  as  for  households  in  the  lower  middle-
income  group  (3rd  to  5th  decile  of  the  disposable  income  distribution)84.  However,  inaction 
would  lead  to  undesirable  outcomes,  leading  to  job  losses,  increasing  inequality  and, 
eventually,  welfare  reduction  for  all.  Progressive  welfare  effects  based  on  targeted  transfers 
could also help reduce income inequality in the EU, which is expected to increase under the 
baseline scenario. 

Further,  the  analyses  highlight  that  outcomes  and  challenges,  and  hence  also  optimal 
policy  responses,  are  a  function  of  local,  regional  and  national  circumstances.  These 
include in particular, the local structure of the economy, the skill distribution in the workforce 
and  society,  the  potential  to  implement  active  labour  market  policies  e.g.  to  facilitate 
matching and re-matching on the labour markets or restructuring within firms and sectors, to 
mention but a few factors. In turn, this calls for locally, regionally and nationally ‘optimised’ 
yet  coordinated responses within the Union, making use of (a mix of) the various tools and 
measures. 

5  State of play: policy action for a fair green transition 

Against the backdrop of the political commitment to ensuring a fair transition and the 
evident need to do so via a range of policy tools, Member States have put in place and 
are preparing a  multitude of measures, reforms, and investments relating to the social 
and  labour  aspects  of  the  green  transition.  This  section  presents  an  overview  of  relevant 
existing  EU  governance  processes  in  which  several  national  plans  are  embedded  with 
different scopes in terms of their time horizon, geographical focus and thematic emphasis. 

5.1  National plans contributing to a fair transition 

The  European  Semester,  the  reference  economic  and  employment  policy  coordination 
framework,  put  environmental  sustainability  at  the  centre  of  its  narrative  already  in 
201985,  including  in  relation  to  economically  and  socially  relevant  aspects  of  the  green 

83   Aggregate  welfare may benefit from more targeted approaches since the marginal effect of transfers may be higher subject to refined 
targeting. Further, a more efficient use of the funds allows broader applications which may generate welfare from other directions, e.g. 
funds used for infrastructure investment, up- /re-skilling, etc. 

84   Note that the figures shows averages per decile, and there may still be losers within the group of 10% poorest households despite the 

average being better off. 

85   Communication from the Commission ‘Annual Sustainable Growth Strategy 2020’, COM/2019/650 final. 

17 

 
 
                                                           
and  digital  transitions86.  The  strategy  integrates  the  objectives  of  the  Sustainable 
Development  Goals  (SDGs),  and  reflects  the  principles  of  the  European  Pillar  of  Social 
Rights.  In  this  context,  the  latest  (2020)  country  reports  featured  a  reinforced  analysis  and 
monitoring of the Sustainable Development Goals (SDGs), included a new dedicated section 
on  environmental  sustainability,  and  identified  possible  synergies  between  environmental, 
social and economic policies at national level. Furthermore, they also included an analysis of 
transition challenges and identified priorities for steering support by the Just Transition Fund 
(JTF). Under the JTF, territorial just transition plans (TJTPs)87 set out the transition process 
for selected regions most affected by the green transition88, in line with  a description of the 
national-level  transition89,  and  outline  a  set  of  specific  investments  and  policies  for  those 
regions90. 

Mitigating  the  impact  of  the  crisis  and  rebuilding  the  economy,  while  integrating  the 
green  transition  and  the  digital  transformation,  were  key  focus  areas  in  the  European 
Semester  cycle  in  2020.  Based  on  the  2020  country-specific  recommendations  (CSRs),  the 
Communication accompanying the 2020 CSRs91 points to the need of promoting investments 
in  several  areas,  including  for  example  energy  efficiency  and  renewable  energy  production 
and  networks,  as  well  as  ‘high  social  impact’  infrastructure  actions,  such  as  renovation  in 
social  housing  and  dwellings  of  low-income  households,  and  investments  tackling  air 
pollution.  In  the  context  of  the  COVID-19  pandemic  hitting  Europe  in  2020,  the  Recovery 
and  Resilience  Facility  (RRF),  the  centrepiece  of  the  temporary  recovery  instrument 
NextGenerationEU, provides large-scale financial support to Member States based on national 
recovery  and  resilience  plans  (RRPs),  which  are  assessed  by  the  Commission  against  the 
targets  of 37% of  expenditure for  climate investments and 20% of expenditure to  foster the 
digital transition. At the same time, each Member State is requested to explain in its Recovery 
and Resilience plan how the investments and reforms put forward will strengthen job creation, 
growth  and  economic  and  social  resilience  in  the  long  term,  including  how  the  plan 
contributes  to  the  implementation  of  the  European  Pillar  of  Social  Rights.  The  aim  is  to 
mitigate  the  economic  and  social  impact  of  the  coronavirus  pandemic  and  make  European 
economies and societies more sustainable, resilient and better prepared for the challenges and 
opportunities  of  the  green  and  digital  transitions,  in  line  with  the  CSRs  adopted  by  the 
Council in the context of the European Semester.  

Furthermore,  Member  States  pursue  policies  based  on  tailored  strategies  and  action 
plans, often relating to specific policy areas and tools.  For instance, in the context of the 
European  Skills  Agenda,  the  Commission  supports  all  Member  States  to  prepare  national 
skills  strategies,  building  on  previous  work  with  the  OECD  in  several  Member  States  and 
other existing skills strategies. Member States also establish specific national plans following 
the  Council  Recommendations  on  establishing  a  Youth  Guarantee92  in  2013,  on  access  to 
social protection for workers and the self-employed93, and on establishing a European Child 

86   Next  to  the  environmental  sustainability  dimension,  the  process  is underpinned by  three  other  dimensions:  productivity,  fairness,  and 

macro-economic stability. 

87   TJTPs  are  prepared  by  the  Member  States,  in  social  dialogue  and  cooperation  with  the  relevant  stakeholders  and  supported  by  the 

Commission. 

88   Actions  under  the  JTF  may  designed  under  separate  programmes  or  as  part  of  one  or  more  dedicated  priorities  within  programmes 

supported by the ERDF, the ESF+ or the Cohesion Fund. 

89   SWD(2021)275 final, Commission Staff Working Document on the territorial just transition plans. 
90   See Article 8 of Regulation (EU) 2021/1056 of 24 June 2021 establishing the Just Transition Fund (OJ L 231, 30.6.2021, p. 1). 
91   COM/2020/500 final. 
92   Council  Recommendation  of  30  October  2020  on  A  Bridge  to  Jobs  –  Reinforcing  the  Youth  Guarantee  and  replacing  the  Council 

Recommendation of 22 April 2013 on establishing a Youth Guarantee (OJ C 372, 4.11.2020, p. 1). 

93   Council Recommendation of 8 November 2019 on access to social protection for workers and the self-employed (OJ C 387, 15.11.2019, 

p. 1). 

18 

 
 
                                                           
Guarantee94. The implementation of these Recommendations is monitored through the multi-
lateral surveillance in the framework of the European Semester. 

Moreover,  the  Governance  of  the  Energy  Union  and  Climate  Action  sets  out  the 
framework  for  actions  ensuring  the  achievement  of  the  2030  and  2050  climate  targets 
and  of  2030  energy  targets  in  the  Union,  in  particular  by  the  Member  States95.  In  this 
framework,  Member  States  draw  up  integrated  national  energy  and  climate  plans  (NECPs), 
which  cover  10-year  periods  and  the  five  dimensions  of  the  Energy  Union96,  as  well  as 
national long-term strategies (LTS), which cover a period of at least 30 years, present notably 
national and sectoral emission reduction pathways and measures. Based on the national LTS, 
the EU LTS97 is submitted to the UNFCCC in the context of the Paris Agreement, in line with 
the Nationally Determined Contribution (NDC) of the EU and its Member States98.  

The  (updates  of  the)  NECPs99  and  LTS  should  include  assessments  of  socio-economic 
impacts of the presented measures with a particular focus on energy poverty, according 
to  the  Governance  Regulation.  In  their  NECPs  and  updates  thereof,  Member  States  should 
assess the number of households in energy poverty, taking into account inter alia Commission 
indicative  guidance  on  relevant  indicators,  and,  where  necessary,  present  indicative  targets 
and appropriate measures, including social policy measures100. Moreover, NECPs and updates 
thereof  should  include  assessments  of  the  impacts  of  planned  policies  and  measures101  with 
view to, inter alia, macroeconomic, health, environmental, employment and education, skills 
and social impacts, including fair transition aspects102. Also the national LTS, as well as the 
EU  LTS,  should  cover  assessments  of  the  expected  socio-economic  impacts  of  the  outlined 
measures103  104.  In addition,  under the Energy Performance of  Buildings  Directive, Member 
States  set  out  Long-Term  Renovation  Strategies,  which  form  part  of  the  integrated  NECPs 
and outline actions that contribute to the alleviation of energy poverty. Moreover, the Social 
Climate  Plans  under  the  proposed  Social  Climate  Fund105  (SCF),  put  forward  by  the 
Commission  as  part  of  the  ‘Fit  for  55’  package  on  14  July  2021,  would  address 
important complementary social and distributional aspects of the transition. In specific, 
the  SCF  would  support  Member  States  in  mitigating  the  social  impact  on  vulnerable 
households, transport users and micro-enterprises that are significantly affected by the price 
increases  due  to  the  introduction  of  emissions  trading  for  new  sectors  (buildings,  road 
transport). According to  the proposal,  Member States would design Social Climate Plans to 
outline measures and investments to be financed by the Fund and submit them by mid-2024 
together with the update of their NECPs. 

94   Council Recommendation (EU) 2021/1004 of 14 June 2021 establishing a European Child Guarantee (OJ L 223, 22.6.2021, p. 14). 
95   Regulation on the governance of the energy union and climate action (EU)2018/1999. 
96   By 30 June 2024, and subsequently by 1 January 2034 and every 10 years thereafter, each Member State shall submit to the Commission 
an  update  of  its  latest  integrated  NECP,  unless  they  have  provided  reasons  why  the  plan  does  not  require  updating,  according  to 
Regulation (EU)2018/1999, Article 14. 

97   Long-term  low  greenhouse  gas  emission  development  strategy  of  the  European  Union  and  its  Member  States  |  UNFCCC: 

https://unfccc.int/documents/210328.  

98  Submission of 17 December 2020 by Germany and the European Commission on behalf of the European Union and its Member States: 
States: 

Update 
https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/European%20Union%20First/EU_NDC_Submission_December%20202
0.pdf.  

European  Union 

its  Member 

contribution 

determined 

nationally 

and 

the 

the 

on 

of 

99   Due in 2023 (draft) and 2024 (final). 
100   Article 3(3d) and Annex I. of Regulation (EU)2018/1999. 
101   See  also  the  EED  recast proposal  Art. 8  (4)  which  also  asks Member  States  to  include  information  on  energy  efficiency  measures  to 

alleviate energy poverty. 

102   Article 8(2b) and Annex I of Regulation (EU)2018/1999. 
103   This may include aspects related to macro-economic and social development, health risks and benefits and environmental protection. 
104   Article 15(4d) and Annex IV of Regulation (EU)2018/1999. 
105   Proposal for a Regulation of the European Parliament and of the Council establishing a Social Climate Fund, COM/2021/568 final. 

19 

 
 
                                                           
5.2  Member States’ key policies for a fair transition 

At the aggregate level, preliminary analysis of the RRPs assessed by the Commission by 
mid-November shows  that Member States  have planned for significant green spending 
in the RRPs accounting for about 40% of total expenditure. With three of the six pillars 
setting  out  the  scope  of  the  Facility  focusing  on  social  elements,  a  significant  share  of 
measures addresses active labour market policies, such as skills, education, training and life-
long  learning.  The  Commission’s  preliminary  analysis  of  22  RRPs  submitted  by  member 
states as of mid-September shows that around 30% of their total expenditure accounting for 
around  EUR  130  billion  of  the  Recovery  and Resilience  Facility  will be  directed  towards 
social  policy.106  The  fair  green  transition  will  be  specifically  supported  by  for  example 
financing the creation of green jobs, the development of green skills or providing support to 
households  and  regions  most  affected  by  the  green  transition.  From  the  adopted  RRPs,  11 
Member  States  planned  measures  related  to  green  skills  and  green  jobs107.  These  measures 
seek  to  target  primarily  people  working  in  sectors  already  affected  by  the  green  transition, 
such as energy, transport, waste management; new industries and sectors with a potential for 
the  creation  of  jobs  stemming  from  or  linked  to  the  green  transition;  as  well  as  vulnerable 
groups.  Additionally,  it  is  worth  noting  that  21  out  of  the  22  adopted  RRPs  have  dedicated 
measures on energy efficiency, which can significantly contribute to address energy poverty 
concerns. 

In  the  framework  of  the  Energy  Union  and  Climate  Action  Governance,  some  NECPs 
address  energy  poverty,  including  indicators,  in  the  plans.  Many  NECPs  also  address 
affordability, notably in the context of the energy and climate transition. This is the case, for 
instance,  in  Austria,  Belgium,  France,  the  Netherlands  or  Denmark.  At  the  same  time, 
according to the Commission assessment of the final NECPs, the NECPs could have provided 
a  clearer  prioritisation  of  funding  needs  regarding  fair  transition,  investment  needs  for 
reskilling and upskilling and for support of labour market adjustments. A description of how 
the  different  sources  of  funding  will  complement  each  other  is  key  for  promoting  a  fair 
transition. Across the 27 NECPs, regional impacts tend to be evaluated in different manners, 
focusing  mainly  on  coal-dependant  areas.  Some  plans  refer  to  specific  groups,  such  as 
vulnerable groups affected by increases in energy prices.  

Moreover,  many  national  LTS  refer  in  varying  forms  to  the  need  for  ensuring  a  fair 
transition and/or related actions, and socio-economic impact assessments are included in 
a number of them108. For instance, Austria commits to a fair transition in its LTS, Lithuania 
aims  to  ensure  a  socially  fair  transformation  of  all  sectors  and  via  social  dialogue,  and 
Germany states that the transition must be fair to garner public support for climate policies. In 
the LTS of Portugal, social fairness is highlighted as a principle and value underpinning the 
transition  and  the  strategy  also  highlights  the  potential  of  the  transition  to  strengthen  the 
economy  and  improve  air  quality  and  public  health109.  The  2020  update  of  the  nationally 
determined  contribution  (NDC)  of  the  European  Union  and  its  Member  States  under  the 
UNFCCC  refers  to  the  need  for  addressing  social  and  economic  consequences  of  the  green 
transition and, in particular, the Just Transition Mechanism110.  

106   Preliminary assessment based on the 22 adopted RRPs. 
107   Cyprus, Denmark, Estonia, Greece, Spain, Finland, France, Ireland, Lithuania, Portugal, Slovenia. 
108   According to the country tables prepared by a team led by the consultancy Ricardo as part of a contract to support DG CLIMA with the 
assessment of the Long-Term Strategies of EU Member States, 11 of the 20 national LTS assessed as of 30 September 2021 showed 
gaps 
impact  assessments.  https://ec.europa.eu/info/energy-climate-change-
environment/implementation-eu-countries/energy-and-climate-governance-and-reporting/national-long-term-strategies_en. 

to  key  elements  of 

socio-economic 

relating 

109   Eurofound (2021), Distributional impacts of climate policies in Europe, Publications Office of the European Union, Luxembourg, p. 11. 
110   The Just Transition Mechanism: making sure no one is left behind. 

20 

 
 
                                                           
Hence, overall, a range of plans is in place and under development to address important 
complementary aspects of the transition and outline the policy approach and measures 
for ensuring a fair transition. The NECPs and LTS lay out the framework and measures to 
achieve  the  2030  and  2050  climate  targets  and  2030  energy  targets,  and  incorporate  certain 
social and labour aspects. RRPs are designed to focus on the recovery period up to 2026 and, 
within the MFF period until 2027. TJTPs are designed to focus operationally on tackling the 
socio-economic  impact  of  the  transition  in  selected  territories.  The  TJPTs  also  include  a 
general  section  on  the  national  transition  process  based  on  the  NECPs.  Similarly,  other 
available  sources  of  funding  complement  actions  in  this  area,  e.g.  the  ESF+,  ERDF,  EGF, 
REACT-EU,  and  underpin  specific  actions  in  the  area  of  fair  transition,  including  via 
cooperation across borders. 

In line with the European Green  Deal  objective to  transform the EU into a fairer and 
more prosperous society, it is key to ensure via adequate tools that the green transition is 
fair and contributes to implementing the European Pillar of Social Rights. As presented 
in section 3, the EU climate, energy and environmental policies incorporate by design social 
fairness and solidarity in many ways. The impacts of certain policies geared towards climate 
and  environmental  objectives  can  impact  different  occupations,  sectors  and  regions  in  both 
positive and negative ways, necessitating a set of accompanying policies to transition towards 
a fair and prosperous society. As section 5.1 and this section have shown, social and labour 
aspects of the green transition are reflected in the design of EU governance systems and work 
strands  in  different  forms  and  to  different  extents.  Building  on  these  plans  and  policies  in 
place, actions geared towards integrating the social and labour aspects of the green transition 
within  one  framework  can  contribute  to  effectively  and  coherently  designing,  implementing 
and  monitoring  policies  advancing  the  transition  as  a  whole.  To  this  end,  a  Council 
Recommendation  can  serve  as  a  tool  to  further  building  such  a  common  framework  for  a 
comprehensive and integrated approach to a fair transition. 

6  Comprehensive policies for a fair transition 

As  highlighted  previously,  the  concept  of  fair  transition  is  deeply  embedded  in  key 
actions at the EU level notably the European Green Deal, the European Pillar of Social 
Rights  and  the  Communication  of  January  2020  on  ‘A  Strong  Social  Europe  for  Just 
Transitions’111.  To  ensure  a  comprehensive  approach  to  a  fair  green  transition  and  ensure 
upward  convergence,  social  fairness  and  shared  prosperity,  developing  policy  packages  of 
measures, reforms and investments can help achieve coherence and consistency of measures 
cutting across several policy areas.  

6.1  Policy packages for a fair green transition 

In  line  with  the  EASE  Recommendation,  policy  packages  refer  to  a  comprehensive  and 
coherent set of measures addressing multiple objectives, with a view to maximising synergies 
through an integrated, well-coordinated approach based on one or several national strategies 
and actions plans. This should also allow aligning cross-cutting measures with the principles 
of the European Pillar of Social Rights. 

Active support to quality employment 

As  part  of  labour  market  measures,  job  creation  measures  and  well-designed,  time-
bound  employment  programmes  can  help  people,  in  particular  those  in  vulnerable 

111  Communication  from  the  Commission  to  the  European  Parliament,  the  European  Council,  the  Council,  the  European  Economic  and 

Social Committee, the Committee of the Regions ‘A strong social Europe for Just Transitions’, COM/2021/14 final. 

21 

 
 
                                                           
situations,  integrate  labour  markets  while  stabilising  incomes  in  the  short  term.  They 
further prepare beneficiaries for participation in the private sector, notably through providing 
upskilling  and  reskilling  opportunities  and  tailored  assistance112.  At  the  same  time,  such 
measures  can  contribute  to  activities  with  climate  and  environmental  objectives.  There 
examples of such measures in the Member States, for example in Slovenia, and national and 
ESF funding have supported them113. 

Hiring and transition incentives are effective  and widely  used measures to support the 
integration  of  job  seekers  into  the  labour  market,  in  particular  those  in  vulnerable 
situations.  Along  with  training  programmes,  they  have  the  largest  medium-  to  long-run 
effects, as they improve workers’ employability and their skills114. Optimizing the design of 
these  measures,  including  through  continued  monitoring  and  evaluation,  can  help  mitigate 
deadweight and substitution costs. As highlighted in the EASE Recommendation, incentives 
can also promote quality job creation amid subdued economic growth and should be targeted 
and  designed  to  facilitate  job  transitions  and  the  creation  of  jobs  that  would  not  have 
happened absent those incentives. In particular, supporting apprenticeships can be effective to 
develop the skills required on the labour market and help young people into employment (see 
Box  2).  Moreover,  transition  incentives  encouraging  the  hiring  of  workers  at  risk  of 
displacement can contribute to easing those transitions and increasing the supply of skills in 
expanding sectors.  

112   ILO (2012), Impacts of Public Employment Programmes. 
113   European Network of Public Employment Services (2021). “Greening Labour Markets”, Small-scale study, June 2021. 
114   Card, D., Kluve, J., & Weber, A. (2018). What works? A meta-analysis of recent active labor market program evaluations. Journal of the 

European Economic Association, 16(3), 894-931. 

22 

 
 
 
 
                                                           
Box 2. Incentives as a well-tested policy tool under the Youth Guarantee 

Through the EU Youth Guarantee, Member States commit to ensure that all young people 
receive  a  good  quality  offer  of  employment,  continued  education,  an  apprenticeship  or  a 
traineeship within four months of becoming unemployed or leaving formal education. Since 
the launch of the scheme in 2013 until 2020, 24.7 million young people are known to have 
taken up an offer of employment, continued  education, a traineeship  or an apprenticeship 
through  the  scheme,  corresponding  to  71.3%  of  all  entries  into  the  scheme.  Overall,  18.2 
million  young  people  took  up  an  employment  offer,  while  1.2  million  started  an 
apprenticeship and 3.1 million a traineeship.  

In  total,  around  18  million  opportunities  came  from  the  open  market  and  6.7  million 
were  partially  or  fully  funded  through  public  money,  including  about  1.6  million 
employment offers. A large share of traineeship offers within the Youth Guarantee are fully 
or partly subsidised with public money. Subsidised employment offers are implemented by 
public  employment  services  and  typically  include  hiring  incentives,  direct  job  creation 
programmes  (public  works)  and  start-up  incentives.  Hiring  incentives  are  one  of  the 
most  common  types  of  measures  included  in  Youth  Guarantee  schemes.  They  generally 
take  the  form  of  wage  subsidies  or  reductions  in  hiring  costs  through  social  security 
bonuses. Almost two thirds of Member States have started putting these hiring incentives 
in  place.  Direct  employment  creation  programmes  and  start-up  incentives  have  been  less 
common.  

The Youth Guarantee contributed to lowering the youth unemployment rate from 24.4% 
in  2013  to  14.9%  just  before  the  COVID-19  pandemic,  though  other  factors  also 
contributed to this trend. The Council Recommendation of 30 October 2020 on A Bridge to 
Jobs  – Reinforcing  the  Youth  Guarantee  will  also  aims  to  help  young  people  harness  the 
opportunities  arising  from  the  digital  and  green  transitions,  notably  by  obtaining  the 
relevant skills. 

Source:  SWD(2020)  124  final,  Commission  Staff  Working  Document  Accompanying  the 
document  Proposal  for  a  Council  Recommendation  on  a  Bridge  to  Jobs  -  reinforcing  the 
Youth Guarantee, 1.7.2020. 

Promoting  entrepreneurship,  including  social  enterprises,  in  particular  in  regions  facing 
transition  challenges,  with  a  focus  on  people  most  affected  by  the  green  transition,  can 
contribute  to  facilitating  labour  market  transitions  and  stimulate  job  creation.  Support 
should  combine  financial  measures  including  grants,  loans  and  equity,  with  non-financial 
measures,  including  improved  access  to  social  protection  for  the  self-employed,  the 
development of entrepreneurial skills115 and advisory services. Only a limited share (2-5%) of 
displaced workers typically return to work by starting a business, though a relatively high rate 
of  entrepreneurial  success  may  be  observed  among  displaced  workers  under  certain 
conditions,  noting  that  entrepreneurial  ventures  are  most  likely  to  succeed  when  redundant 
workers  master  market-competitive  and  tacit  knowledge116.  For  instance,  as  part  of  the 
Swedish programme Stöd till start av Näringsverksamhet (“Support for starting a business”), 
the public employment service offers pre-selected participants – primarily adults over 25 who 
are  unemployed  or  facing  dismissal  –  an  integrated  package  over  six  months,  including  a 
review  of  business  plans,  counselling  and  advice,  and  the  possibility  to  participate  at 

115   Commission  Recommendation  2021/402  of  4  March  2021  on  Effective  Active  Support  to  employment  following  the  Covid-19  crisis 

(EASE), (OJ L 80, 8.3.2021, p. 1). 

116   OECD (2017), The Missing Entrepreneurs 2017. OECD Publishing, Paris. 

23 

 
 
                                                           
workshops,  webinars  and  networking  opportunities.  Entrepreneurial  projects  also  receive  a 
grant that is based on the individual’s unemployment insurance entitlements117. 

Moreover, measures stimulating job creation are needed, particularly in territories most 
affected  by  the  green  transition.  These  measures  should  facilitate  access  to  finance  and 
markets  for  micro,  small  and  medium-sized  enterprises,  particularly  those  contributing  to 
climate  and  environmental  objectives, 
innovation  and 
employment  across  the  single  market,  including  in  sectors  and  eco-systems  of  strategic 
relevance in national and local contexts. Start-ups and SMEs can contribute to the application 
of  sustainable  practices,  for  instance  in  the  circular  economy,  areas  of  organic  agriculture, 
low-carbon  energy  provision  and  tackling  energy  poverty,  reduction  of  waste  or  financial 
support  to  environmentally  friendly  activities118.  New  business  models,  such  as  ‘carbon 
farming’  in  line  with  the  EU  carbon  farming  initiative119,  may  also  emerge  and  offer  new 
opportunities while contributing to climate and environmental objectives.  

to  promote  competitiveness, 

Measures  aimed  at  safeguarding  the  quality  of  work  are  needed  to  support  climate 
change mitigation, inter alia by protecting workers and the attractiveness of green jobs. 
They are further aimed at climate change adaptation, in particular with a view to addressing 
challenges  for  workers  most  at  risk,  including  outdoor  workers  and  public  service  workers, 
notably in light of extreme weather events and emergencies. At the same time, care must be 
taken to ensure that the necessary sectoral shifts are accompanied by policies to ensure high 
job  quality  in  the  circular  economy,  considering  for  instance  the  exposure  to  occupational 
safety and health risks in the waste management and construction sectors.120 Social partners 
have  a  vital  role  to  play  to  contribute  to  addressing,  through  dialogue,  the  employment  and 
social  consequences  of  the  restructuring  processes  related  to  the  green  transition.  The  EU 
Quality Framework for anticipation of change and restructuring promotes, among others, their 
involvement in restructuring operations, in anticipating change and in identifying skill needs. 
In addition, as pointed out by the Single Market Barriers Report121 and the first report of the 
Single  Market  Enforcement  Taskforce122,  alongside  the  work  on  the  remaining  COVID-19 
related barriers, it is important to address concrete  practical barriers, including in relation to 
the  recognition  of  professional  qualifications  where  relevant,  that  may  hamper  the  full 
functioning of the Single Market, which is one of the main assets to accelerate the economic 
recovery and the green and digital transitions. 

Box 3. Anticipating and managing change with social partners 

As part of the closure of the Márkushegyi mine in the Oroszlány region, Hungary, the close 
collaboration  between  the  company's  management,  trade  unions  and  the  local  employment 
service proved very effective in mitigating the social consequences of the closure, which took 
place at the end of 2014. The mine had been uncompetitive for some years and with the onset 
of the crisis and entry into force of the EU ETS Phase III in 2013 continued operation became 
uneconomical.  

A gradual restructuring plan was drawn up, giving priority to natural exits through retirement, 

117   OECD  (2018),  A  review  of  “Transition Management”  strategies:  Lessons for  advancing the  green  low-carbon  transition,  Issue  Paper, 

OECD Green Growth and Sustainable Development Forum, 27-29 November 2018, Paris, France. 

118   SEAP (insert reference once published). 
119   See also SWD(2021)609, Impact Assessment Report accompanying the Proposal for a Regulation of the European Parliament and the 
Council  amending  Regulations  (EU)  2018/841  as  regards  the  scope,  simplifying  the  compliance  rules,  setting  out  the  targets  of  the 
Member  States  for  2030  and  committing  to  the  collective  achievement  of  climate  neutrality  by  2035  in  the  land  use,  forestry  and 
agriculture sector, and (EU) 2018/1999 as regards improvement in monitoring, reporting, tracking of progress and review (LULUCF). 

120   ESDE (2019), p. 189, Publications catalogue - Employment, Social Affairs & Inclusion - European Commission (europa.eu). 
121   COM/2020/93 final. 
122   See the report of the SMET of September 2021 https://ec.europa.eu/docsroom/documents/47154.  

24 

 
 
                                                           
and  continued  employment  of  40%  of  the  workforce  (235  people),  who  worked  towards 
environmental rehabilitation and the salvaging of the equipment at the site for up to four years 
after  the  closure.  The  company's  management,  trade  unions  and  local  public  employment 
service  worked  closely  together  to  find  new  job  opportunities  for  dismissed  workers  with 
companies  in  the  area.  In  addition,  they  provided  information  and  assistance  with  the 
redundancy procedure to the dismissed employees and organised personalised support, which 
included training, advice and guidance on job search and applying for new jobs. As a result of 
the tri-partite collaboration, which went beyond what is mandatory according to the national 
legislation, the actual impact of the closure of the mine on the labour market was very limited. 

Source:  European  Commission  (2018),  Stocktaking  report  on  the  application  of  the  EU 
Quality  Framework  for  anticipation  of  change  and  restructuring,  Luxembourg:  Publications 
Office of the European Union, 2018; Energiainfo.hu (2014) ‘Bezárják a Márkushegyi bányát 
–  most  már 
the  Márkushegy  mine], 
https://www.energiainfo.hu/bezarjak_a_markushegyi_banyat_most_mar_vegleg-32682/ 

[Definitive 

végleg’ 

closure 

of 

Finally,  with  a  view  to  supporting  quality  employment  also  at  local  level  and  to 
integrating  marginal  groups  in  the  labour  market,  socially  responsible  public 
procurement  standards  should  be  incorporated  alongside  green  public  procurement 
criteria, in line with the legal framework, including in sectors of particular relevance for the 
green transition, such as energy systems, construction and renovation and sustainable mobility 
and transport. 

Equal access to quality and inclusive education, training and life-long learning 

Investment  in  people  is  essential  to  facilitate  job-to-job  transitions  of  workers  most 
affected by the green transition, including those facing job losses or changing task and 
skill  requirements  on  the  job,  taking  into  account  in  particular  those  in  vulnerable 
situations.  Indeed,  principle  1  of  the  European  Pillar  of  Social  Rights  outlines  the  right  to 
access  to  education,  training  and  lifelong  learning  for  all.  Investment  in  skills  formation  is 
also  essential  for enabling transitions  towards the green and digital  sectors, including of the 
people  most  affected  by  structural  changes  where  adequate,  and  to  ensure  that  the  skilled 
workforce  required  for  delivering  the  green  transition  is  in  place,  in  line  with  the  EASE 
Recommendation and the Employment Guidelines 2021.  

As  part  of  policy  packages,  the  development  and  implementation  of  National  Skills 
Strategies, in line with the European Skills Agenda, can incorporate aspects relating to 
the green transition to  form  the basis for holistic, whole-of-government approaches  on 
providing  access  to  education,  training  and  lifelong  learning  to  all.  Strategies,  together 
with  transition  pathways  co-created  for  industrial  ecosystems  under  the  EU’s  new  updated 
Industrial  Strategy, will support employment and secure strategic  competitive advantages in 
sustainable economic activities at local, regional and national levels.  

Box 4. Setting strategic policy actions in VET for the period of 2021-2025 in line with the 
EU vision and strategic objectives 

The Osnabrück Declaration on vocational education and training as an enabler of recovery 
and just transitions to digital and green economies123: This Declaration was adopted by the 
Ministers  in  charge  of  vocational  education  and  training  of  the  Member  States,  the  EU 
Candidate Countries  and the EEA  countries, the  European social partners and the European 
Commission.  Objective  2  of  the  declaration  refers  to  “Establishing  a  new  lifelong  learning 

123   https://www.cedefop.europa.eu/files/osnabrueck_declaration_eu2020.pdf. 

25 

 
 
                                                           
culture – relevance of CVET and digitalisation” while Objective 3 of the Declaration covers 
“Sustainability – a Green Link in VET”. Objective 3 encompasses for example: incentives for 
greening VET programmes and increasing, inter alia, sustainability within the provision and 
management of training programmes, and the new commitments and partnerships for quality 
and  effective  apprenticeships  linked  to  green  technologies  and  occupations,  under  the 
renewed  European  Alliance  for  Apprenticeships.  Additionally,  key  to  enabling  the  green 
transformation is the training and professional development of teachers, trainers and guidance 
counsellors and the need for partnerships, including across sectors and with new actors. 

Pro-active  steering  of  new  skills  partnerships  under  the  Pact  for  Skills  will  also  be  an 
important lever to support and navigate the transition, including through partnerships 
contributing to climate and environmental objectives, for instance in the battery value 
chain  and  hydrogen  deployment.  Those  partnerships  can  take  inspiration  from  existing 
initiatives, such as the Blueprint for Sectoral Cooperation on Skills, the Centres of Vocational 
Excellence and the reinforced European Alliance for Apprenticeships. 

Box 5. Mobilising local partnerships and networks for skills ecosystems 

The  Centres  of  Vocational  Excellence  (CoVEs)124  bring  together  a  wide  range  of  local 
partners, such as providers of vocational education and training, employers, research centres, 
development agencies, and employment services (among others). They aim to develop "skills 
ecosystems"  that  contribute  to  regional,  economic  and  social  development,  innovation,  and 
smart specialisation strategies. In this context, green skills play a key role. Out of the seven 
CoVEs selected under the 2020 call for Erasmus+ pilot projects, three  focus on green topics 
(GREENOVET  -  European  VET  Excellence  Platform  for  Green  Innovation;  Three-level 
Centers  of  Professional  Excellence:  Qualification,  Entrepreneurship  and  Innovation  in  the 
Green Economy; European Platform for Urban Greening).  

In the context of the green transition, there is a risk of skills gaps and mismatches on the 
labour market. Sectors which have already been struggling with skills and labour shortages 
might see these challenges being exacerbated by higher demand due to green policies (e.g. in 
the construction sector)125. Hence, anticipating changes to understand better the impact on the 
different  sectors  and  therefore  the  need  to  support  workers  in  up-  and  reskilling  become 
increasingly  important.  In  this  context,  targeted  green  skills  intelligence  and  foresight126, 
through  partnerships  of  different  stakeholders,  are  crucial.  The  green  dimension,  including 
green  jobs  and  skills  for  the  green  transition,  featured  prominently  in  the  2020  European 
Commission’s first Strategic Foresight Report127. The foresight report found, amongst others, 
that  effective  green  reskilling  could  be  a  way  to  protect  middle  class  jobs.  However,  it  is 
important  that  the  skills  identified  in  such  forecast  and  foresight  exercises  are  consequently 
included in VET curricula and teaching materials, both for school- and work-based learning, 
including apprenticeships.  

The Skills Agenda highlights that the key role of social partners and other stakeholders 
in making labour market projections and the identification of training needs to develop 
skills  intelligence.  Curricula  and  vocational  education  and  training  programmes  require 
adaptation to this end to ensure they provide to their graduates the necessary skills. Actions 
should  utilise  existing  expertise  of  and  cooperation  with  social  partners  and  relevant 

124   https://ec.europa.eu/social/main.jsp?catId=1501. 
125   Eurofound (2021). Tackling labour shortages in EU Member States.  
126   Cedefop  is  currently  running  a  foresight  exercise  in  four  sectors:  smart  and  green  cities;  circular  economy;  waste  management; 

agriculture/agri-tech. Results from the first sector will become available in Q1 2022. 

127   European Commission (2020). Strategic Foresight Report, chapter 3.3.  

26 

 
 
                                                           
stakeholders in this process. Actions can build on EU actions developed under the European 
Skills  Agenda, when available over the coming years, in  particular  a taxonomy of skills  for 
the  green  transition,  a  core  set  of  green  skills  for  the  labour  market  and  a  European 
competence framework on sustainability.  

Box 6. How skills intelligence can help VET keep up with new skills needs  

A  successful  concrete  example  of  how  VET  has  adapted  to  the  green  transition  is  the 
Erasmus+ funded project SolarCV128. Between 2015 and 2018, the project aimed to address 
the skills needs for Concentrated Solar Power (CSP). CSP is an emerging technology in the 
solar energy sector. In this area, project partners had identified a high level of skill gaps. The 
project,  an  Erasmus+  action  type  ‘Sector  Skills  Alliances  in  vocational  education  and 
training’, aimed to: (i) Increase the response of VET systems by anticipating the CSP labour 
demand;  (ii)  Integrate  work-based  learning  (WBL)  in  the  design  of  CSP  VET;  and  (iii) 
Increase  mobility  of  EU  CSP  learners,  by  the  recognition  of  learning  outcomes  and  by 
achieving qualifications 

One of the main concrete outputs of this project  was the creation of an e-learning platform, 
including  an  e-simulator,  with  training  materials  for  formal  VET  training  on  CSP.  The  e-
simulator is an innovative tool, combining e-learning with advanced teaching methods based 
on plant operation experiences. The project also developed an EU Competence Profile and an 
EU CSP CV standardising the skills  set  for the  CSP sector at  EU-level.  Finally, the project 
delivered  a  methodology  for  validation  of  non-formal  learning  in  the  field  of  CSP.  16 
organisations from five EU-Member States participated in the project, including solar energy 
VET  experts,  national  sectoral  associations,  energy  agencies,  government  representatives  in 
the field of qualifications, and two EU umbrella institutions. 

The displacement of workers with the greening of the economy and society, the increase 
in  occupational  demand,  the  transformation  of  tasks  and  new  emerging  green 
occupations will require the enhancing of quality and comprehensive supporting policies 
and services for the individual129. These include enabling individuals through acquisition of 
career  management  competence,  validation  of  non-formal  and  informal  learning  as  well  as 
financing  opportunities.  Building  on  previous  knowledge  and  validating  skills  and 
competences acquired in non-formal and informal settings will facilitate and ease individual 
transitions. Individuals, especially those with greater barriers, will need updated and flexible 
guidance,  counselling  and  career  services.  In  turn,  this  will  require  a  greater  investment  in 
practitioner  training,  particularly  short  and  continuing  in-service  courses  such  as  those 
involving interpreting labour market information and intelligence on greening skills demands 
to respond quicker to the identified needs130.  

Apprenticeships  have  great  potential  in  providing  opportunities  to  develop  the  right 
skills for the green transition for young people in initial education and for adults in need 
of  upskilling  or  reskilling,  taking  into  account  prior  learning.  Existing  apprenticeship 
schemes will have to adapt by updating and expanding curricula. New programmes will need 
to  be  developed  in  new  sectors  or  occupations,  and,  most  likely,  also  at  education  levels 
higher  than  upper  secondary  VET.  Apprenticeships  can  also  play  a  role  helping  workers 
transition  from  declining  to  growing  sectors  or  occupations,  as  many  countries  are 

128   http://solarcv.org. 
129   Cedefop  and  ETF  (2020)  The  importance  of  being  vocational:  challenges  and  opportunities  for  VET  in  the  next  decade,  available  at 

https://www.cedefop.europa.eu/files/4186_en.pdf.  

130   Cedefop  briefing  note  (forthcoming, 2021), Rethinking professionalism  of  guidance  practitioners:  Defining  their  role  and  recognising 

their competences crucial to developing guidance policy in the digital context. 

27 

 
 
                                                           
increasingly using or considering using apprenticeships as a way to upskill or reskills adults. 
The development of schemes combining apprenticeships and paid traineeships with training, 
particularly  in  micro,  small  and  medium-sized  enterprises,  including  those  contributing  to 
climate and environmental objectives and in sectors facing particular skill shortages, can also 
be considered.  

Attractive  and  accessible  initial  education  and  training  allows  learners  to  be  equipped 
with skills and competences relevant for the green transition, in particular in the area of 
science, technology, engineering and mathematics (STEM), guaranteeing equal access to 
‘Council 
promote  gender  equality  and  equal  opportunities. 
Recommendation  on  vocational  education  and 
sustainable 
competitiveness, social fairness and resilience’ inter alia highlighted the need for significantly 
adapting and/or expanding the offer of vocational education and training needs, especially for 
adults, by fostering the acquisition of entrepreneurial, digital and green skills. 

In  particular, 
(VET) 

training 

the 

for 

Box 7. Greening vocational education and training in Germany across all sectors 

An  example  of  how  to  integrate  horizontally  sustainability  issues  in  VET  curricula  is  the 
German ‘standard job position’131. In 2020, German authorities together with researchers and 
social  partners  decided  to  update  and  extend  the  ‘standard  job  position’  on  environmental 
protection  in  VET.  The  new  ‘standard  job  position’  on  environmental  protection  and 
sustainability encompasses a set of six core skills and competences which apprentices across 
all sectors should acquire during their apprenticeship. As of 1 August 2021, the new ‘standard 
job  position’  needs  to  be  integrated  in  all  modernised  or  newly  developed  apprenticeship 
curricula and is recommended to be included in all existing apprenticeship curricula. 

Increasing adult participation in training is key to meet the upskilling and reskilling to 
meet the changing skill requirements of many jobs  the creation of new ones as part of 
the  green  transition  needs  for  the  green  transition.  Promoting  short  courses  focusing  on 
specific  skills  for  the  green  transition,  building  on  the  European  approach  to  micro-
credentials, will also make it easier to value and recognise the outcomes of such courses. 

Fair tax-benefit systems and social protection systems 

Tax-benefit  and  social  protection  systems  require  careful  analysis  and  possible 
adaptation in view of the new challenges and needs stemming from the transition and in 
order  to  enable  them  to  support  effectively  a  fair  transition,  in  particular  in  line  with 
principles  11  to  18  of  the  European  Pillar  of  Social  Rights.  The  regressivity  of  pricing 
measures,  such  as  energy  taxes,  depends  on  multiple  factors,  such  as  taxed  commodity,  the 
level of country’s economic development and the way the collected revenue is used132. In the 
context of climate action to reduce greenhouse gas emissions, carbon prices and energy costs 
are  set  to  increase,  including  through  carbon  taxes  and  possible  extensions  of  emissions 
trading and strengthened integration of the Polluter Pays Principle.  

Public  revenues,  in  particular  from  energy  and  environmental  taxes  and  the  EU 
Emissions  Trading  System,  can  be  used  to  offset  adverse,  regressive  social  and 
distributional  impacts  of  climate  change  policies.  They  can  also  reduce  pre-existing 
poverty,  social  exclusion  and  inequalities,  while  protecting  revenue  for  adequate  social 
protection  and  sustainable  investment  expenditure.  Specific  interventions  may  include,  for 
instance,  transfer  payments,  revenue  recycling  and  tax  swapping,  sometimes  with  revenues 

131   https://www.bibb.de/dienst/veroeffentlichungen/de/publication/show/17281. 
132   JRC: energy_taxation_and_its_societal_effects_2 (3).pdf, see also ETD impact assessment, SWD(2021)641. 

28 

 
 
                                                           
earmarked for social spending133. Based on annual reporting it is estimated that, during 2013-
20, 75% of total revenues (i.e. EUR 56.5 billion) generated under the EU Emissions Trading 
System  (ETS)  was  used  for  climate  and  energy  purposes,  mainly  domestically134.  Revenue 
use for social and labour purposes is  accounted as part of the reporting requirements: about 
25%  of  total  EU  ETS  revenues  were  used  for  “measures  intended  to  increase  energy 
efficiency and insulation or to provide financial support in order to address social aspects in 
lower and middle income households”. Less than 0.1% of the reported spending was allocated 
to the category “ skill formation and reallocation of labour” in 2020135, for instance to support 
the  employment  service  in  Slovenia  in  promoting  green  jobs,  though  skill  formation  might 
well  be  part  of  activities  under  other  categories  too.  Overall,  due  to  the  existing  reporting 
requirements, the available data does not allow to conclusively quantify the use of revenues 
for social and labour aspects. 

Shifting  taxation  away  from  labour  towards  other  sources  contributing  to  climate  and 
environmental objectives, such as carbon pricing and environmental taxation, following 
the  ‘polluters  pay’  principle,  allows  reducing  the  tax  wedge,  in  particular  for  low  and 
middle  income  groups,  and  thereby  promote  job  creation  and  increase  incomes.  This 
shift is necessary not only to support the achievement of environmental and climate goals, but 
also  to  address  broader  challenges  brought  by  the  ageing  of  population,  digitalisation, 
robotisation  and  globalisation.  At  the  same  time,  potential  negative  distributional  impacts 
need to be mitigated and adequate social protection needs to be ensured. Compensatory labour 
tax  cuts  have  been  shown  to  hence  lead  to  gains  in  terms  of  employment  and  economic 
activity, as a high tax wedge on labour may negatively affect both labour demand and supply, 
particularly  at  lower  income  levels136.  This  policy  guidance  has  been  provided  by  the 
Commission  at  several  points,  including  the  Annual  Sustainable  Growth  Strategy  (ASGS) 
2021137, the Euro area recommendations 2021138 and the 2020 guidelines for the employment 
policies  of  the  Member  States  (‘the  Employment  Guidelines’),  which  are  maintained  for 
2021139. 

The  average  tax  wedge  in  the  EU27  for  a  single  person  on  an  average  wage  has 
gradually declined since 2010, to 39.7% in 2020. The tax wedge for low-income earners is 
usually  lower  than  for  those  with  higher  incomes,  but  with  a  high  diversity  among  EU 
Member  States.  In  2020,  the  tax  wedge  for  people  earning  50%  of  the  average  wage  was 
above 40% in Hungary and Germany, while below 20% in Cyprus and France. In many EU 
countries  the  tax  wedge  has  decreased  for  workers  at  the  bottom  of  the  income  distribution 
over  the  last  decade.  For  the  EU  average,  a  tax  wedge  decrease  by  2.6 pps  was  observed 
between  2010  and  2020  for  earners  at  50%  of  the  average  wage140.  While  the  overall 
trajectory is thus positive, there is scope in some cases for shifting taxation away from labour, 
in particular by reducing the tax wedge for low and middle income groups. 

In  light  of  the  social,  economic,  health  and  environmental  impacts  linked  to  the  green 
transition,  social  protection  and  social  inclusion  systems  need  to  remain  adequate  and 

133   OECD (2021), “The Inequality-Environment Nexus: Towards a people-centred green transition”, OECD Green Growth Papers, 2021-

01, OECD Publishing, Paris. https://doi.org/10.1787/ca9d8479-en. 

134   Communication  from  the  Commission  ‘EU  Climate  Action  Progress  Report  2021  -  Speeding  up  European  climate  action  towards  a 

green, fair and prosperous future’, COM/2021/960 final. 

135   The category covering skill formation was first included in the reporting template for 2020. 
136   The tax wedge on labour measures the difference between employers’ labour costs and employees’ net pay, expressed as a ratio to total 

wage cost. 

137   COM/2020/575 final. 
138   OJ C 283, 15.7.2021, p. 1. 
139   Council  Decision  (EU) 2021/1868  of  15 October  2021  on  guidelines  for  the  employment  policies  of  the  Member States  (OJ  L  379, 

26.10.2021, p. 1). 

140   Proposal for a Joint Employment Report 2022, COM/2021/743 final. 

29 

 
 
                                                           
provide income security as well as effective accessible and affordable social, health and 
long-term care services. Developing and administering adequate and transparent support for 
those  in  particular  need,  including  through  transfer  payments  tailored  to  needs  and 
vulnerabilities,  while  accounting  for  price  and  income  developments,  will  be  central  to 
maintaining broad public support and social acceptance for the structural changes and reforms 
needed to deliver on the target of climate neutrality. 

Box 8. Germany’s scheme providing income security for affected coal miners 

Within the EU, Germany has the largest number of coal-fired power plants (53) and produces 
most  coal.  Germany’s  phase-out  of  lignite  mining  for  the  generation  of  electricity  entails 
significant structural change and economic and social challenges, with over 19,650 direct and 
35,734 indirect jobs in coal mining affected141. The transition to clean energy will especially 
affect  three  coal  mining  areas:  The  Lausitzer  Revier,  the  Rheinische  Revier,  and  the 
Mitteldeutsche Revier. Demographic developments in the eastern regions are less favourable 
as  the  working  population  is  projected  to  decline  more  drastically  until  2035  than  in  the 
west142. 

In order to advance the coal exit in a socially acceptable manner, certain workers facing job 
losses  due  to  closures  or  rationalisation  measures  of  coal  and  lignite  mines  or  coal-fired 
extraction plants may be entitled to the  Anpassungsgeld (“adjustment allowance”) under the 
Steinkohlefinanzierungsgesetz  or  the  Kohleverstromungsbeendigungsgesetz.  For  instance, 
under the former, former mining workers above the age of 50 and meeting certain conditions 
can  receive  a  bridge  aid  for  a  maximum  of  five years  until  entitlement  to  benefits  from  the 
miners'  pension  insurance.  The  allowance  is  partly  funded  by  the  federal  budget  and  the 
Federal  Ministry  for  Economic  Affairs  and  Energy  determines  further  details  through 
guidelines. 

Furthermore, based on the report by Germany’s commission on growth, structural change and 
employment (referred to as the ‘Coal  Commission’), the  federal  government has pledged to 
support  the  affected  Länder  with  up  to  EUR  14  billion  in  financial  transfers  for  regional 
investments  until  2038  at  the  latest.  The  federal  government  will  fund  additional  measures 
with up to EUR 26 billion, such as rail and road infrastructure, research institutions143. People 
in the most affected regions will also be supported by the Just Transition Fund. 

Building resilience in a fair manner is essential so that the benefits of climate adaptation 
are widely and equitably shared. European regions and citizens are directly affected by 
climate  change,  for  example  through  job  losses  in  climate-affected  sectors  such  as 
agriculture, fisheries, and tourism.  Unequal exposure and vulnerability to  climate impacts 
of  different  regions  and  socio-economic  groups  worsens  pre-existing  inequalities and 
vulnerabilities. The impacts of climate change are not neutral. Men and women, older people, 
persons with  disabilities, displaced persons, or socially marginalised have different  adaptive 
capabilities.  Adaptation  measures  need  to  consider  their  situation.  To  this  end,  the 
Commission  is  already  stepping  up  support  to  the  planning  and  implementation  of  local 
adaptation,  launching  an  adaptation  support  facility  under  the  EU  Covenant  of  Mayors,  as 
well  as  supporting  the  reskilling  and  requalification  of  workers  for  a  just  resilience  with 
education and training through ESF+, Erasmus+ and European Solidarity Corps. 

141   Dehio,  J.  and  Schmidt,  T.  (2018),  "Gesamt-  und  regionalwirtschaftliche  Bedeutung  des  Braunkohlesektors  und  Perspektiven  für  die 

deutschen Braunkohleregionen", RWI Materialien 126, RWI - Leibniz-Institut für Wirtschaftsforschung. 

142   SWD(2020)504 final. 
143   Ibid. 

30 

 
 
                                                           
In  particular,  the  climate  protection  gap  refers  to  the  share  of  non-insured  economic 
losses in total losses after a climate-related catastrophe event, such as floods, wildfires or 
droughts.  To  close  this  gap  also  for  lower  and  middle  income  groups,  the  availability  of 
affordable  insurance  solutions  is  key.  Once  the  supply  of  insurance  products  exists,  the 
frequency, severity or dependency characteristics of the associated risks may imply high risk-
based insurance premiums, which can make insurance products unaffordable, notably for low-
income  households  and  micro-  and  small  enterprises144.  As  Figure  3  shows,  COACCH 
estimates  the  growth  of  unaffordability  of  flood  insurance  in  the  period  2010-2080  under 
existing  national  insurance  systems  and  different  climate  and  socio-economic  scenarios, 
showing that the long-term increase in flood frequency and related losses may pose additional 
affordability challenges in this context145. 

Figure  3.  The  growth  of  unaffordability  of  flood  insurance  in  the  period  2010-2080  under 
existing national insurance systems and different climate and socio-economic scenarios.  

Beyond risk-based premiums, better determining and measuring risks or public-private 
joint solutions, an effective incentive for taking out insurance could be through taxation 
or  subsidies,  for  example  through  a  favourable  insurance  premium  tax  rate  for 
insurance against climate change risk. Targeted fiscal measures such as tax rebates or the 
suspension of tax payments also give an incentive to purchase insurance and to avoid moral 
hazard.  Another  possible  solution  would  be  the  partial  deductibility  of  insurance  premiums 
from  taxable  income  where  not  already  in  place  for  small  and  medium  enterprises  or  retail 
customers  in  the  relevant  cohorts.  As  for  the  social  issue  of  more  financially  vulnerable 
groups,  possible  solutions  include  subsidies  on  insurance  premiums,  or  offering  special 
rebates,  such  as  a  rebate  on  house  insurance  when  buying  natural  catastrophe  insurance 
coverage  including  climate  change  related  risks146.  The  climate  protection  gap  can  also  be 
closed by reducing the physical losses as far as possible in the first place, by maximising the 
efforts  to  reduce  the  adverse  consequences  of  the  climate  related  hazards,  by  investing  in 
disaster prevention, protection,  and preparedness as well as other  climate change adaptation 
measures147. 

Access to affordable essential services, mobility and housing 

During  the  transition  towards  climate  neutrality,  access  to  essential  services  for  all,  in 
particular energy and transport, as well as mobility, social housing or housing assistance 
needs  to  be  ensured,  in  line  with  principles  19  and  20  of  the  European  Pillar  of  Social 

144   SWD(2021)123 final. 
145   COACCH (CO-designing the Assessment of Climate Change costs) is H2020 innovative research project that gathers leading experts on 

climate change sciences from 14 European research institutions. https://www.coacch.eu/policy-briefs. 

146   SWD(2021)123 final. 
147   Ibid. 

31 

 
 
 
                                                           
Rights. Inadequate access to services is usually characterised by a combination of factors, for 
instance, in the case of energy poverty, low incomes, poor thermal efficiency of buildings and 
high energy costs. 

Preventing  and  tackling  energy  poverty  at  its  root  requires  mobilising  public  and 
private  investments  for  energy  efficiency  improvements,  including  of  dwellings,  for 
example  through  tax  incentives,  grants  and  loans.  Key  barriers  to  renovations  are 
insufficient  information  on  the  current  energy  and  resource  profile  of  buildings  and  the 
potential  benefits  of  renovation,  lack  of  trust  in  the  actual  energy  savings,  as  well  as  split 
incentives  between  owners  and  tenants  as  well  as  among  owners  of  building  units.  People 
with  low  incomes  have  often  little  control  over  their  energy  expenditure,  causing  a  vicious 
circle  of  high  energy  bills,  arrears  and  problems  with  wellbeing  and  health.  People  in 
inefficient buildings are more exposed to cold spells, heatwaves and other impacts of climate 
change148.  However,  also  persons  and  households  beyond  those  with  low  income  may  be 
affected  by  energy  poverty.  Efforts  to  improve  renovation  rates  to  increase  climate  and 
disaster risk resilience are also needed. 

Interventions aiming at supporting the renovation of buildings or the uptake of electro 
mobility  should  be  designed  in  a  way  to  avoid  favouring  higher  income  households. 
Otherwise,  these  interventions  would  yield  additional  adverse  distributional  effects. 
Vulnerable  people  may  also  benefit  from  the  application  of  the  energy  efficiency  first 
principle in the decision making process of new energy investments149. In combination with 
energy  efficiency  improvements,  in  line  with  the  ‘Fit  for  55’  proposals,  mainstreaming 
renewable  energy  in  buildings  via  substantial  increases  in  renewables  self-consumption, 
renewable  energy  communities,  and  local  energy  storage,  can  result  in  energy  poverty 
reduction and increased energy security150. While policy-makers need to take into account the 
fact that incentives are needed to increase energy efficiency, investments in this area e.g. for 
the  entire  social  housing  stock  need  considerable  time,  during  which  income  support  and 
other measures are needed (the ”time inconsistency problem”). 

Actions  may  also  aim  at  empowering  energy  consumers,  including  vulnerable  citizens, 
by  promoting  inter  alia  consumer  rights,  education  campaigns,  information  tools,  such  as 
online  price  and  service  comparison  tools,  single  access  points,  self-production  and  self-
consumption models  (‘prosumer models’). Renewable and citizens’ energy communities are 
expected to be key social partners during the implementation of energy efficiency policy151; 
and  social  innovations  in  the  energy  sector  have  a  proven  ability  to  empower  citizens  and 
boost ‘prosumerism’, and should be further nurtured152. The empowerment can also be driven 
by,  for  instance,  local  renewable  energy  generation,  collective  schemes  and  community 
initiatives,  including  switching  campaigns  and  micro  generation  cooperatives,  as  well  as 
accessible  and  effective  consumer  complaint  mechanisms  in  line  with  the  regulatory 
framework. 

Effective  measures  are  needed  to  make  sustainable  consumption  patterns  accessible  to 
all  socio-economic  groups  and  promote  healthier  lifestyles  that  are  less  carbon-

148   European Environment Agency, Report No 22/2018: Unequal exposure and unequal impacts: social vulnerability to air pollution, noise 

and extreme temperatures in Europe. 

149        Commission  Recommendation  (EU)  2021/1749  of  28  September  2021  on  Energy  Efficiency  First:  from  principles  to  practice  — 

Guidelines and examples for its implementation in decision-making in the energy sector and beyond (OJ L 350, 4.10.2021, p. 9). 

150        Proposal  for  amending  Directive  (EU)  2018/2001,  Regulation  (EU)  2018/1999  and  Directive  98/70/EC  as  regards  the  promotion  of 

energy from renewable sources, and repealing Council Directive (EU) 2015/652, COM/2021/557 final. 

151   Proposal for a Directive of the European Parliament and of the Council on energy efficiency (recast), COM/2021/558 final. 
152   European Commission (2020), Social innovations for the energy transition, Joint Research Centre, JRC122289. 

32 

 
 
                                                           
intensive. Consumers are increasingly ready to make sustainable choices153. Yet, studies have 
shown  a  gap  between  the  consumers'  good  intentions  and  their  actual  behaviour.  Poorer 
households are not less green per se, but only in respect of cost-intensive green activities154. 
This implies that financial incentives and subsidies are in some contexts relevant to promote 
cost-intensive  green  consumption  activities,  especially  for  low-income  households.  At  the 
same time, studies that focus on the impacts of consumption show that the biggest predictor of 
environmental impact is people's income. This is because most consumers are more likely to 
focus  on  behaviours  with  relatively  small  impacts,  while  the  largest  impacts  come  from 
overall  lifestyle  –  size  of  housing,  size  of  car,  frequency  of  flying,  number  of  appliances 
owned  –  which  usually  corresponds  to  their  income155.  In  many  developed  countries  per 
capita emissions of the poorest half of the population have declined since 1990 and are 
close  to  2030  climate  targets,  contrary  to  that  of  wealthier  groups156,  who  will  have  to 
increase their contribution to emission reductions efforts significantly.  

Circular value retention activities (including repair, re-use, remanufacturing and servitisation 
business  models)  can  foster  affordable  and  sustainable  access  to  goods  and  services.  They 
also  generate  jobs  at  various  skill  levels,  including  for  people  with  disabilities  and  other 
groups in  vulnerable  situations, with  social economy enterprises active in  these areas.157 By 
avoiding new purchases, they  reduce  carbon  emissions  vastly, whilst  the  jobs  created are in 
proximity to the products that need to be maintained, refurbished or shared. 

It is also important to prevent and tackle mobility challenges and obstacles to mobility 
by,  inter  alia,  ensuring  the  affordability  of  sustainable  forms  of  transport.  This  also 
requires  taking  into  account  different  gender-specific  needs,  including  in  cities,  peripheral, 
rural and remote areas, through adequate financial incentives and support measures, such as 
voucher systems, and the development of the necessary infrastructure, such as recharging and 
refuelling  networks,  in  line  with  the  legal  framework.  This  includes  promoting  innovative 
solutions for, and the uptake of sustainable modes of mobility and transport where adequate, 
ensuring affordability, accessibility and safety, as well as sufficient availability and frequency 
of public transport also in rural areas, taking into account that affordable mobility is essential 
for employment, social inclusion and connectivity. To this end, the Commission presented, in 
December  2020,  the  Smart  and  Sustainable  Mobility  Strategy,  which  lays  down  the 
foundation for how the EU transport system can achieve its green and digital transformation 
and  become  more  resilient  to  future  crises.  In  the  same  line,  in  December  2021,  a  new 
European  Urban  Mobility  Framework  will  be  launched,  providing  guidance  to  specific 
challenges and opportunities in urbanised regions. 

153  In  the  New  Consumer  Agenda, presented in  November  2020, the  Commission  announced  that it  will  present  a  legislative  proposal to 
empower  consumers  for  the  green  transition  with  better  information  on  products’  sustainability  and  better  protection  against  certain 
practices,  such  as  greenwashing  and  early  obsolescence.  This  will  help  to  ensure  that  all  consumers,  regardless  of  income,  are 
empowered to play their part in the green transition. 

154   Social Situation Monitor, Determinants of the greening of households in Europe (forthcoming). 
155   S.  Moser  and  S.  Kleinhückelkotten,  'Good  intents,  but  low  impacts:  Diverging  importance  of  motivational  and  socio-economic 
determinants explaining pro-environmental behavior, energy use, and carbon footprint', Environment and Behaviour, Vol. 50(6), 2017, 
pp.  626-656,  and  J.M.  Cayla  et  al,  'The  role  of  income  in  energy  consumption  behaviour:  Evidence  from  French  households  data', 
Energy Policy, Vol. 39(12), 2011, pp. 7874-7883. 

156   Climate  change  & 

the  global 

inequality  of  carbon  emissions,  1990-2020,  Lucas  Chancel 

(2021)  available  at: 

https://wid.world/document/summary-of-climate-change-the-global-inequality-of-carbon-emissions-1990-2020-study-world-inequality-
lab-working-paper-2021-21.  

157   See also the Communication from the Commission ‘Building an economy that works for people: an action plan for the social economy’, 

COM(2021) 778 final. 

33 

 
 
                                                           
6.2  Cross-cutting elements supporting policy actions 

A  whole-of-economy  and  whole-of-society  approach  to  the  fair  transition  can  support 
policy action, based on the coordination of policy-making at all levels and across all relevant 
policy  areas,  the  involvement  of  social  partners  at  all  levels  and  stages,  enabling  the 
participation  of  the  whole  of  civil  society  and  stakeholders,  and  strengthened  operational 
capacities necessary to deliver a fair transition. Such coordination and engagement can ensure 
that  the  European  Green  Deal  principles  of  fairness  and  solidarity  are  integrated  in  policy 
design,  implementation  and  monitoring  from  the  outset,  providing  the  basis  for  broad  and 
long-term support for policies advancing the green transition. 

An effective whole-of-economy, whole-of-society approach to fair transition policies 

As part of a whole-of-economy approach, it is notably important that policy-making is 
coordinated  at  all  levels,  including  across  borders  in  border  regions,  and  across  all 
relevant  policy  areas,  including  energy,  environment,  climate,  trade  and  competition 
policies, as well as research and innovation. Such coordination and mainstreaming can help 
Member  States  and  the  EU  ensure  that  social  and  labour  aspects  of  the  green  transition  are 
integrated  in  policy  design,  implementation  and  monitoring  from  the  outset,  and  not  as  an 
afterthought, in line with the Clean Planet for All long-term vision and the European Green 
Deal. 

High-quality  and  effective  social  partners’  involvement  is  a  prerequisite  for  the  good 
functioning  of  the  European  social  market  economy,  ensuring  more  sustainable  and 
inclusive  policy  outcomes.  Social  partners  have  played  a  key  role  in  the  COVID-19  crisis, 
and the Employment Guidelines call upon Member States to ensure the timely and meaningful 
involvement  of  the  social  partners  in  the  design  and  implementation  of  employment,  social 
and, where relevant, economic reforms and policies, including by supporting their increased 
capacity.  In  line  with  national  practices  and  institutional  frameworks,  the  engagement  with 
social partners at all levels aims to improve the design and ensure ownership of reforms. The 
involvement of civil  society organisations is  also important  and instrumental to  this.  This is 
particularly important at a time when strong consensus is needed to support to the green and 
digital transitions. Overall, the quality of the involvement of the social partners in the national 
employment and social policies has remained stable or slightly improved over the past years, 
but still differs significantly across Member States.  

It is necessary to involve social partners at national, regional and local as well as cross-
border levels in all relevant stages of policy-making, in particular on climate, energy and 
environmental  policy,  and  in  the  design  and  implementation  of  sectoral  transition 
pathways,  in  accordance  with  national  practices.  In  particular,  social  partners  and  other 
stakeholders should be consulted and involved in  the implementation  and monitoring of the 
‘Fit for 55’ package on delivering the 2030 climate target. Moreover, it is also important to 
enable  civil  society  and  stakeholders,  including  organisations  by  and  for  youth,  children, 
people with disabilities, ethnic minorities, people with migrant background and other persons 
in  vulnerable  situations,  in  policy  design  and  implementation,  in  line  with  the  European 
Climate Pact. This can be achieved in particular through providing for enabling conditions for 
civic  participation  according  to  local  circumstances,  adequate  access  to  resources,  and 
structured  and  systematic  involvement  in  policy-making  processes,  including  during  the 
implementation of the ‘Fit for 55’ package. 

Strengthening operational capacities and mechanisms of delivery systems, in particular 
of  (public)  employment  services,  training  providers,  social  and  health  services,  to 
effectively  integrate  fair  transition  objectives,  requires  a  consideration  of  all  activities 

34 

 
 
and processes of service providers. Those include analysis, prevention, profiling, outreach, 
preparation  based  on 
individualised  action  plans,  counselling  and  guidance,  skills 
development and validation, as well as the job offer and post-offer phase.  

Quality data and evidence for a fair transition 

The  evidence  base  for  the  design,  implementation  and  monitoring  of  fair  transition 
policies and their impact can be strengthened by establishing and advancing the gradual 
harmonisation  and  consistency  of  definitions,  concepts  and  methodologies,  building 
notably on the Commission Recommendation (EU) 2020/1563 on energy poverty, including 
indicators to be used in assessments and relevant national plans. Actions in this area can build 
on the Social Scoreboard and the sustainability scoreboard used in the country reports under 
the European Semester,  the European Green Deal  dashboard and the monitoring framework 
under development in relation to the Union’s 8th Environmental Action Programme. 

Sound  (quantitative  and  qualitative)  analysis  forms  the  base  for  sustainable  and 
inclusive policymaking. In some areas, complementary data collection may be needed or 
the set-up of new data sources could be explored. These can include additional, potentially 
permanent, additions to existing annual or otherwise regular instruments (e.g. LFS, EU-SILC, 
Household  Budget  Surveys,  as  well  as  enhanced  access  to  other  data  sources,  e.g.  cross-
nationally  linked  microdata  sets  or  linked  administrative  data,  where  relevant,  or  also  data 
from  social  partners,  industries  and  companies.  In  addition,  high  frequency  data  (local, 
national,  European)  and  big  data  opportunities  can  be  explored,  for  instance  in  relation  to 
analysis of mobility patterns and related incentive structures and behavioural changes158. 

An open and transparent dialogue on expected and actual impacts is key for ensuring a 
fair  transition,159  and  a  good  practice  for  adjusting  policies  throughout  the  transition 
where needed, including when actual impacts differ from expected ones, when milestones are 
not being met, or when any potentially unexpected externalities are generated. In line with the 
European Pillar of Social Rights  Action Plan, the Commission also  will present  a dedicated 
guidance on distributional impact assessments in 2022.  

Effective  and  transparent  monitoring,  foresight,  and  evaluation  of  above  mentioned 
effects  (of  national  reforms  and  measures  contributing  to  climate  and  environmental 
objectives),  should  be  based  on  adequate  methodologies  for  ex-post  policy  impact 
evaluations.  Analyses  should  include  the  assessments  of  effects  via  price  and  substitution 
channels as well as changes in preferences and behaviours, focused on the areas of energy and 
transport  as  well  as  beyond  where  relevant.  Such  evaluations  should  be  qualitative  and 
quantitative, compare actual outcomes to sound baseline assessments, ex-ante projections, and 
relevant counterfactuals.160 

To  substantiate  the  analyses,  stakeholders,  including  academia,  practitioners,  social 
partners, civil society, and other relevant actors should be involved in the process. This 
may concern the identification of relevant definitions of indicators (for example pertaining to 
unmet  demand  in  the  context  of  transport  poverty  or  aspects  to  consider  related  to  energy 
poverty, among other elements) as well as the identification of relevant, adequate, and timely 

158   As recently done in JRC studies to assess mobility patterns in response to COVID-19 restrictions (e.g. in Spain). 
159   See  for  instance  the  experience  in  Ireland  with  the  ‘Just  Transition  Review  Group’  that  has  been  established  within  the  National 
Economic  and  Social  Council.  Through  this  group,  the  council  will  review  the  ongoing  transition  and  identify  specific  needs  among 
cohorts of workers and enterprises, in communities and among specific groups of people. See Eurofound (2021). 

160   Horizon 2020 and Horizon Europe framework programmes support a number of projects that promote the involvement of citizens, civil 
society and stakeholders in the Just Transition, particularly regarding the challenges facing carbon-intensive region, as well many socio-
economic transition related projects. See  

Table 2 in Annex 1 for an overview. 

35 

 
 
                                                           
datasets,  including  from  linked  administrative  (micro-)  datasets  where  available.  Where 
useful,  evaluations  should  take  into  account  available  surveys  on  above  aspects  and 
indicators, on citizen expectations and on their perceptions regarding the impacts and social 
fairness of climate change policies. Adequate monitoring and foresight on the internal energy 
market and prices and their impacts on households and industry should also be ensured, with a 
view to providing for a well-managed, fair transition.  

The outcomes of evaluations, foresight and monitoring exercises may be presented to the 
public  in  regular  intervals,  including  through  exchanges  with  social  partners,  civil 
society and other stakeholders. Systematic and transparent reviews of expected and actual 
impacts  of  policy  measures  and  investments,  based  on  shared  and  supported  indicators  and 
methods, can play a key role in maintaining and increasing broad public support for and social 
acceptance  of  the  green  transition  and  the  necessary  measures  for  its  timely  and  successful 
implementation. 

6.3  Effective financial support exploiting synergies at all levels 

The optimal use of public and private funding facilitates the mobilisation of all resources 
available in the area and their effective deployment, which is of particular importance in 
light  of  the  significant  investment  needs  stemming  from  the  green  transition.  At  the 
Union level, actions on the social and labour aspects of the green transition are supported in 
particular by a range of funds and instruments, summarised in Annex 3. 

7  Conclusions 

The  transition  of  our  economies  and  societies  is  the  defining  task  of  our  generation. 
While the objectives are ambitious and the process is not without risks, we can succeed 
to  ensure  a  fair  transition  towards  climate  neutrality  that  fosters  decoupling  of  our 
economic  activity  from  CO2  emissions,  while  creating  new  quality  employment  and 
supporting  those  in  need  as  well  as  delivering  positive  social  co-benefits,  including 
improvements in social and territorial cohesion, health and well-being. 

In the future, the evidence base for fair transition policies, and notably for monitoring 
and  evaluation,  could  be  strengthened  via  a  number  of  actions,  focused  notably  on 
indicators,  scoreboards,  concept  definitions,  as  well  as  small-scale  pilot  projects  and 
other forms of policy experimentation. As regards indicators, the Commission already has 
developed a number of indicator sets and scoreboards which contain relevant information for 
monitoring and assessing specific aspects of fair transition policies161. In addition and related, 
indicators to measure transport poverty could be developed.162  

Further data on the fair green transition will help strengthen research in the area and 
thereby influence both public debates and policy-making, including at the international 
level.163  Moreover,  global  (research)  interests  in  these  domains  would  be  boosted,  and 
international cooperation and exchange of best practices intensified. In addition, the EU could 

161    Including  notably  the  (forthcoming)  European  Green  Deal  Dashboard,  the  Social  Scoreboard  and  the  scoreboard  on  environmental 
sustainability,  both  used  in  the  European  Semester;  dedicated  guidance  on  energy  poverty  analysis  and  indicators;  the  Resilience 
Dashboards  developed  in  the  context  of  strategic  foresight;  the  monitoring  framework  proposed  for  the  8th  Environmental  Action 
Programme, currently in inter-institutional negotiation, including on indicators related to sustainable development and well-being. 
162  This can include aspects of unmet demand, which is relatively more established in other social dimensions such as health research. The 
work in this domain may also relate to (lack of) access to essential services as one specific and possibly very severe result of transport 
poverty, alongside aspects of social isolation and social exclusion. 

163   Data  should  be  representative  of  local  sub-populations,  geographically  and  inter-temporally  comparable,  and  of  relatively  high 
frequency. By establishing unique and comprehensive data, analysis of policy impacts by skills, income group, gender, age and socio-
economic status and background can be enhanced. 

36 

 
 
                                                           
serve as a role model for other regions, which should not be underestimated given the global 
and universal dimension of the challenge under consideration. 

In  addition,  sound  monitoring  and  evaluation  go  hand  in  hand  with  modelling 
capacities.  Much  progress  has  been  made  in  this  area  over  recent  years,  in  the  future  e.g. 
skills, gender and other social dimensions could still be added to the relevant macro-models, 
to  model better costs and frictions regarding labour market  transitions  and restructuring. By 
further using  advanced  modelling and  (ex-post)  evaluation  methodologies, transparency  and 
the impact of our analyses will be further improved. Ongoing projects164 will be instrumental 
in  this  respect  and  provide  important  support  to  assessing  and  monitoring  notably  the 
distributional impacts of policy measures with climate and environmental objectives165.  

While  very  technical,  the  return  on  investment  for  improvements  of  data,  indicators, 
analytical,  modelling  and  evaluation  capacity  is  high.  Proper  data  yield  the  ability  to 
design,  deliver  and  communicate  better  policies  which  foster  sustainable  development,  save 
and create jobs, design adequate and fair taxation and social protection systems, and enable an 
informed, transparent and inclusive public debate on the objectives and impacts of the policy 
measures proposed.  

Building on a strong evidence base, the right accompanying policies at all levels – at EU, 
Member  States,  regions  and  the  local  level  –  will  help  realise  the  transformative 
potential of the green transition. As Section 6 has shown, the design, implementation and 
monitoring  needs  to  involve  all  stakeholders,  including  social  partners  and  civil  society 
organisations, in a transparent manner, as a pre-condition for broad buy-in, social acceptance 
and public support. 

164   Such as the DG EMPL-JRC project on “Assessing and Monitoring the Employment and Distributional Impacts of the twin transition, 
and notably of the Green Deal” (GD-AMEDI), which aims to fine-tune simulations of distributional impacts on household incomes and 
expenditures and to improve the modelling of the, labour market transitions.  In addition, there are a number of ongoing or upcoming 
calls  for  related  research  and  innovation  actions  under  Horizon  2020  and  Horizon  Europe,  including  notably  the  Green  Deal  Call 
launched end 2020 under Horizon 2020, as well as for Horizon Europe missions on climate change adaptation and on climate-neutral 
cities and for experimentation, and further calls for behavioural studies and living labs to test effects and uptake of green technologies 
and consumption models. 

165   Also  building  on  available  guidance  such  as  European  Commission  (2013),  Design  and  commissioning  of  counterfactual  impact 
evaluations:  A  practical  guidance  for  ESF  managing  authorities;  European  Commission  (2019),  Advanced  counterfactual  evaluation 
methods:  Guidance  document;  and  N.  Crato  and  P.  Paruolo  (2019)  (eds),  Data-Driven  Policy  Impact  Evaluation;  How  Access  to 
Microdata is Transforming Policy Design, Springer.  

37 

 
 
 
 
                                                           
8  Annexes 

8.1  Annex 1: Charts and tables 

This section includes the charts and tables referred to in the report. 

Figure 4. Impact gap from revenue recycling, between highest and lowest expenditure decile, 
in percentage points. 

Impact gap D1-D10, percentage points

i

s
t
n
o
p
e
g
a
t
n
e
c
r
e
p
n

i

,

p
a
g
t
c
a
p
m

I

8

7

6

5

4

3

2

1

0

-1

-2

100

90

80

70

60

50

40

30

20

10

0

Share of new revenue recycled, in percent

All households

< median income

< 60% median income

Table 1. Impact gap from revenue recycling, between highest and lowest expenditure decile, 
in percentage points, for select expenditure deciles. 

Impact gap D1-D10, % pt 

Share of revenue recycled: 

Beneficiaries of transfer: 

100 

All households 

< median income 

< 60% median income 

0.801 

2.631 

7.274 

75 

0.428 

1.800 

5.283 

50 

0.055 

0.970 

3.291 

25 

-0.318 

0.139 

1.300 

Table  2.  Horizon  2020  and  Horizon  Europe  framework  programmes  that  support  projects 
that promote the involvement of citizens, civil society and stakeholders in the Just Transition. 

The  ENTRANCES  project  looks  at  the  transition  as  a  socio-economic-psychological 
process that affects the daily life of local communities. The project focuses on 13 coal and 
carbon-intensive  regions  across  Europe,  looking  at  socio-economic  factors,  political 
dynamics  and  deep  territorial  transformations  linked  to  the  energy  transition.  The 
CINTRAN project studies the structural changes involved to find ways to minimise risks. 
It  is  conducting  quantitative  model-based  research  and  qualitative  analysis,  focusing  on 

38 

 
 
 
 
 
 
 
 
 
Greece  (Western  Macedonia),  Poland  (Silesia),  Estonia  (Ida-Virumaa)  and  Germany 
(Rhenish mining area). TIPPING.PLUS is identifying positive as well as negative social-
ecological  tipping  points,  to  facilitate  and  speed  up  the  transition  but  also  to  prevent 
catastrophic outcomes provoked by crossing irreversible negative thresholds. 

The  Transition  Super-Labs  pilot  project  will  apply  the  “living  labs”  methodology  to  the 
context  of  the  transition  to  carbon-neutrality.  The  idea  is  to  work  with  all  the  relevant 
actors to conceptualise, implement, monitor and revise a rapid shift to climate neutrality in 
an  integrated  way  and  in  an  economically,  socially  and  environmentally  sustainable 
manner.  The  Fostering  a  Just  Transition  in  Europe  topic  will  bundle  several  projects 
examining  diverse  dimensions  of  climate  justice,  including  distributional  implications 
associated  with  changes  in  GDP,  industrial  competitiveness  and  trade,  employment  and 
skills, taxation, incomes and wealth, vulnerabilities and human health, structure of sectors, 
business models and relative prices etc. 

Revising  the  ‘Fiscal  EU’:  Fair,  Sustainable,  and  Coordinated  Tax  and  Social  Policies 
(FairTax)  project  proposes  measures  that  could  tackle  both  environmental  and  fiscal 
challenges  currently  facing  the  EU,  increasing  the  productivity  and  employment  in  the 
EU.  By  proposing  the  introduction  of  the  border  carbon  adjustments  (BCA),  the  project 
supports  that  Member  States  could  cut  distortionary  measures  such  as  taxes  on  labour, 
thereby increasing growth- and employment friendliness of taxation. 

8.2  Annex 2: Stakeholder consultations  

The  Commission  has undertaken a  number  of general  and  targeted  consultation  activities 
on the green transition, including its social and labour aspects, notably through:  

  Online public consultations as part of the July 2021 package (e.g. EU Emissions Trading 

System, Energy Taxation Directive, Energy Efficiency Directive, and others); 

  Bilateral/multilateral stakeholder meetings, including more than 50 meetings on the ETS 

revision, in particular in the context of the package adopted on 14 July 2021; 

  An  online  open  public  consultation  on  the  2030  Climate  Target  Plan  (Mar  -  Jun  2020; 
over 1,000 replies), following a 4-week consultation on the Inception Impact Assessment.  

the 

For 
the Commission conducted both targeted consultations and an open Call for Evidence. 

a  Council  Recommendation, 

preparation 

proposal 

this 

for 

of 

Targeted hearings  

A  number  of targeted  consultations  and  exchanges took  place  in October  2021,  notably 
with  the  Employment  Committee  (EMCO)  and  the  Social  Protection  Committee  (SPC), the 
Economic Policy Committee (EPC), European social partners, and civil society organisations. 

Amongst  different  parties, there  was  a  broad  agreement  on  the  need  to address  climate 
change with  adequate  measures,  while  also ensuring  a 
transition through 
comprehensive policy packages. Regarding social and labour aspects, there was agreement on 
the need for: up-and reskilling initiatives; an improved understanding of employment and 
social  impacts,  including  on  the  quality  of  jobs,  of  climate  change  policies,  and  related 
monitoring  and 
indicators; 
mainstreaming gender  equality;  good  use  of existing  policies  and  funding  instruments, 
avoiding  duplication  and  administrative  burden,  but  also  requests  for more  funds  and 
capacity building, particularly for SMEs; integration into existing governance mechanisms; 

reporting  based  on  “real 

life  data”  and 

relevant 

fair 

39 

 
 
 
and the involvement of social partners and civil society in the design and implementation of 
climate change and funding strategies for fair transitions.  

Social partners agreed on the need for strengthening intelligence on the employment, skills, 
social  and  distributional  aspects  of  the  green  transition,  mobilising  public  and  private 
investments,  ensuring  long-term  predictability,  and  promoting  the  inclusive  management  of 
the  transition.  More  specifically, Trade  Unions highlighted  the  need  for  more  ambitious 
measures  on  the  social  and  labour  aspects  of  the  green  transition,  namely  regarding  the 
adaptation  of  work  regarding  working  conditions,  namely  health  and  safety,  skills,  funding 
and  the  worker’s  involvement  and  active  involvement  of  social  partners. Employers in 
particular  stressed the  need 
for  maintaining  and  promoting  competitiveness  and 
entrepreneurship,  while  also  highlighting  the  need  for  adequate  skills  development, 
investment initiatives and guidance on their deployment.  

Civil society participants highlighted in particular the need to consider people ‘in vulnerable 
situations’, for instance with low levels of skills and at risk of exclusion, to promote the role 
of social and civil dialogue, and to take into account the role of local authorities. Further, they 
emphasised relevant elements of the renovation wave and housing, food systems, behavioural 
changes,  a  link  with  the  social  economy,  progressive  and  gender-sensitive  taxation,  the 
territorial dimension, and access to essential services and education.  

When consulted in EMCO and SPC, most of the Member States who intervened stressed that 
the green transition  has  significant  and diverse impacts  and that it needs to  be just and fair. 
Some  Member  States  stressed  the  importance  of  minimizing  administrative  burden, 
particularly  in  the  scope  of  the  European  Semester,  ensuring  increased  complementarity  of 
existing funds and promoting exchanges of best practices, while stressing the need to account 
for  country  specificities. The  involvement  of  social  partners  and  respect  for  their  autonomy 
was  considered  of  particular  importance  in  this  context.  The EPC was  also  consulted,  with 
Member  States 
the aforementioned  committees,  notably 
in 
regarding the  importance  to  ensure  a  fair  transition,  the  coherence  and synergy  between 
existing  instruments,  including  the  European  Semester,  as  well  as  possible  administrative 
burdens and the role and respect for the autonomy of social partners.  

reiterating points 

raised 

Call for Evidence  

received  66 

In  addition, the  Commission  launched,  between  October  and  November  2021,  a  call 
for evidence, having 
spectrum of 
stakeholders132 (see  Figure  5 below). Overall,  there  was  a  good  balance  in  terms  of  replies, 
with 61%  micro  and  small  organisations,  but  also  21%  large organisations; feedback 
from European  and  national  social  partners,  civil  society  organisations  in  the  area  of  social 
affairs, but also climate and environmental organisations. 

from  a  broad 

contributions 

40 

 
 
 
Figure 5. Overview of type of stakeholders who submitted feedback in the call for evidence. 

Trade Union
13%

Academic/Research 
Institution
5%

Business Association
11%

Public authority
3%

Other
11%

NGO (Non-
governmental 
organisation)
28%

Company/Business 
organisation
16%

Environmental 
Organisation
2%

EU Citizen
11%

Consulted parties acknowledged the need for a long-term strategy on green transition and 
welcomed  the  focus  on employment  and  social aspects. More  specifically,  the  potential 
impact  on  inequalities,  jobs  and  skills  has  been  raised  in  several  contributions,  with  some 
parties considering there is an absence of targeted measures on the labour and social aspects 
within the current proposals under the ‘Fit for 55’ package.  

Regarding  the type  of  instrument  chosen (Recommendation),  feedback  provided  support 
to both a  legal  framework,  as  well  as  a  Council  Recommendation,  with  some  organisations 
referring  to  the  need  to  ensure  coherence  and  avoid  overlapping  initiatives,  which  would 
represent additional administrative burden. 

There  was  an  overall  appeal  for  providing  adequate funding and  technical  assistance 
regarding available funding instruments to Member States, focusing on vulnerable regions, 
sectors  and groups  (workers  and  households).  Contributions  highlight  an  increased  need  to 
invest in reskilling and upskilling initiatives, capacity building and infrastructures.  

Concerning the  elements  of  the  present  Recommendation,  there  was  broad  support 
to strengthening social dialogue and collective bargaining, with some respondents calling 
for workers’  right  to  information,  consultation  and  co-decision.  Moreover, the  vast  majority 
of contributions 
the need for  a granular mapping  and  analysis  of skills 
needs (skills intelligence), providing quality training, including VET, and continuous life-
long 
transitions, labour  mobility  and 
reallocation, including for workers in platforms and self-employed. 

learning,  positively  contributing 

to job-to-job 

stressed 

41 

 
 
  
 
Other  issues  were  mentioned  in  numerous  contributions,  notably direct  income  support 
measures  to  vulnerable  workers  and households,  access  to  essential  services,  including 
transport,  ensuring  health  and  safety  at  work  which  is  adapted  to  ‘green jobs’.  In  addition, 
parties  called  for  the  need  to  ensure competitiveness  and foster entrepreneurship,  with  a 
special focus on SMEs. 

Finally, respondents  highlighted  the  importance  of embedding just  transitions and  social 
sustainability in different monitoring instruments, notably the European Semester and NRPs, 
as well as the NECPs. 

8.3  Annex 3: Summary of funding sources available to Member States 

Table 3. Summary of EU funding instruments available to Member States for ensuring a fair 
transition towards climate neutrality (2021-2027). 

Fund/ instrument 

Recovery and 
Resilience Facility 
(RRF) 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

EUR 723.8 billion for the 
period 2021-2023 

Support areas contributing to a 
fair transition 

and 

and 

territorial 

economic, 

In  line  with  the  Regulation  (EU) 
2021/241, Member States RRPs need 
to  meet  a  minimum  of  37%  of  total 
national  allocations 
for  climate-
related investments and reforms and, 
moreover, 
smart, 
contribute 
to 
inclusive  growth; 
sustainable  and 
social 
cohesion; 
social 
health, 
institutional  resilience;  as  well  as 
policies  for  the  next  generation.  A 
significant  number  of  measures  in 
the RRPs are specifically targeted to 
support the acquisition of new green 
skills and open new job opportunities 
related  to  green  technologies,  while 
21  out  of  the  22  adopted  RRPs 
include  energy  efficiency  measures, 
which  can  help  address  energy 
poverty concerns. 

Just Transition Fund 
(JTF) 

EUR 19.3 billion for 2021-
2027 

The  JTF  is  designed  to  address  the 
social  and  economic  impacts  of  the 
green  transition,  focusing  on  the 
regions,  industries  and  workers  who 
face the greatest challenges based on 
the  Territorial  Just  Transition  Plans 
(TJTPs)  by  Member  States. 
It 
training,  re-skilling  and 
supports 
in 
economic 

diversification 

166   The amounts specified are not specific allocations for the implementation of the current Proposal for Recommendation but represent the 

total financial envelope of each spending programme and fund. 

42 

 
 
 
                                                           
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

particular.  It  can  also  support  other 
investments 
social 
such 
infrastructures  if  in  line  with  the 
TJTPs. 

as 

Social Climate Fund 
(proposal) 

EUR 72.2 billion for the 
period 2025-2032 

InvestEU “Just 
Transition” scheme 

EUR 110 billion167 
(estimate) 

on 

impacts 
households, 

The Fund will address the social and 
the 
distributional 
vulnerable 
micro 
transport  users 
enterprises 
arising 
the  extension  of 
emissions  trading  for  the  two  new 
sectors  of  buildings  and 
road 
transport. 

from 

and 

60% 

climate 

supported 

The  InvestEU  guarantee  amounts  to  
EUR  26  billion  and  is  expected  to 
trigger  to  mobilise  more  than  EUR 
372  billion  of  additional  investment 
across  the  Union  and  should  be 
indicatively  allocated  between  the 
four InvestEU policy windows.  
Investments  supported  under 
the 
InvestEU Programme are expected to 
contribute  overall  at  least  30  %  to 
In  particular, 
climate  objectives. 
infrastructure 
under 
InvestEU  should  contribute  to  at 
and 
to 
least 
environmental objectives. More than 
EUR  2.7billion    of  the  InvestEU 
budget 
support 
Social 
priorities 
Investment  and  Skills  Window.  In 
the 
addition,  and  as  part  of 
Investment 
Sustainable 
Green 
Plan/European 
Deal 
InvestEU  will 
Investment  Plan, 
contribute 
the  Just  Transition 
dedicated 
Mechanism,  with 
InvestEU  Just  Transition  Scheme 
implemented 
(InvestEU 
financial 
through  any 
product  under 
four  policy 
windows.  The  InvestEU  JTS  will 
that  address 
support 

is  allocated 
under 

InvestEU 
the 

investments 

to 
the 

Europe 

JTS), 

to 

a 

167   The figure reflects mobilised expected investments, not EU budget contribution. 

43 

 
 
                                                           
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

from 

social,  economic  and  environmental 
challenges 
the 
deriving 
transition  towards  achieving  of  the 
Union’s  2030  climate  target  and  its 
target of achieving climate neutrality 
by 2050.  
Implementing partners will track and 
report  back 
the  European 
to 
Commission  on  the  financing  and 
or 
investment 
their 
operations 
relevant 
supporting 
components 
projects  or  final  recipients  under  the 
InvestEU JTS. 

Public Sector Loan 
Facility 

EUR 18.5 billion168 

European Social 
Fund Plus (ESF+) 

EUR 99.3 billion 

European Regional 
Development Fund 
(ERDF) 

EUR 226 billion 

the  Just  Transition 
As  part  of 
Mechanism 
lending 
the 
(JTM), 
facility,  comprising  a  grant  from  the 
EU budget (EUR 1.525 billion) and a 
loan  component  from  the  European 
Investment  Bank  (EUR  10  billion), 
aims 
public 
at 
investments 
territories  most 
negatively  affected  by  the  green 
less 
transition.  Public  entities 
developed  regions  can  benefit  from 
higher  grant  rates  (up  to  20%  of  a 
loan). 

supporting 
in 

in 

The  ESF+ 
in  people, 
invests 
including  in  the  area  of  supporting 
green  skills  development  at  all 
green 
promoting 
levels, 
entrepreneurship,  search  assistance 
for  green  jobs,  job  creation  in  green 
sectors,  social  inclusion  of  people 
impacted 
transition, 
occupational  safety  and  health,  and 
other areas. 

the 

by 

including 

Interreg, 
The  ERDF 
to  creating  economic 
contributes 
opportunities  and 
improving 
quality  of  life  in  all  regions  across 
the EU. It pays particular attention to 
addressing  the  needs  of  vulnerable 
groups,  disadvantaged  communities 

to 

168   The figure reflects mobilised expected investments, not EU budget contribution. 

44 

 
 
                                                           
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

training 

and territories. Investments under the 
ERDF  support 
infrastructure  and 
equipment  for  quality  and  inclusive 
education  and  training,  up-  and  re-
life-long 
and 
skilling, 
learning  opportunities, 
childcare, 
social  services,  health  and  housing, 
as  well as  for the green  transition  of 
businesses in the tourism and culture 
sectors.  Through 
to 
developing  social  infrastructure  and 
promoting  social  economy,  labour 
market intelligence, skills forecasting 
technology  or  modernizing  VET 
facilities  aimed  at 
re-up/skilling 
people  to  secure  their  employability 
and  adaptation 
labour  market 
to 
changes,  the  ERDF  helps  to  bring 
about a smooth and fair transition to 
greener Europe. 

its  support 

Cohesion Fund 

EUR 48 billion 

EUR 50.6 billion 

Recovery Assistance 
for Cohesion and the 
Territories of Europe 
(REACT-EU) 

The  Cohesion  Fund  will  support 
basic  infrastructure  in  environment 
transport and energy. 

REACT-EU  is  a  tool  to  address  the 
immediate  impact  of  the  pandemic 
and  acts  as  a  bridge  between  2014  -
2020  and  2021-2027  programming 
periods. 25% of the envelope should 
contribute  to  climate  objectives  by 
supporting,  for  instance,  trainings  in 
sustainability 
energy 
trainings 
or  waste 
in  water 
management, administrative capacity 
for  more  sustainable  management, 
self-employment  in  green  activities 
and 
in  areas  or 
sectors  considered as contributing to 
climate 
and 
adaptation. 

change  mitigation 

job-maintenance 

efficiency, 

ERASMUS+ 

EUR 26.5 billion in 2021-
2027 

Support for the greening of education 
and  training  systems,  for  example 
through  Centres  of  Vocational 
excellence,  Alliances  for  Innovation 
projects. 
and 
Environment  and  the  fight  against 
global  warming  are  a  horizontal 

forward-looking 

45 

 
 
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

in 

competences 

priority  for  the  selection  of  projects. 
For  instance,  the  Programme  will 
foster 
various 
environmental  sustainability-relevant 
sectors,  developing  green  sectorial 
skills  strategies  and  methodologies, 
future-oriented curricula and learning 
opportunities. 

Up to EUR 186 million (in 
2018 prices) per year  

European 
Globalisation 
Adjustment Fund for 
Displaced Workers 
(EGF) 

Horizon Europe  

EUR 95.5 billion 

46 

The EGF offers assistance to workers 
who  lost  their  jobs  in  the  course  of 
major restructuring events, including 
those caused by the green transition. 
The  EGF  can  be  mobilised  on 
average  up  to  a  maximum  annual 
amount of EUR 186 million in 2018 
prices, in the period 2021-2027. The 
EGF 
one-off 
assistance  to  the  displaced  workers, 
with  the  aim  of  bringing  them  back 
into 
employment, 
including  via  personalised  active 
labour  market  policy  measures  and 
the development of skills needed in a 
circular economy. 

sustainable 

reactive, 

offers 

in 

clean 

The Horizon Europe programme, the 
EU's  key  funding  programme  for 
research  and  innovation,  supports 
research  and  innovation  that  should 
help  achieve  climate  neutrality  in 
Europe  by  2050,  while  boosting 
competitiveness  and  resilience  and 
ensuring  a  fair  transition,  including 
the  engagement  and  participation  of 
citizens 
energy 
the 
transition.  For  instance,  a  dedicated 
Green  Deal  call 
launched  under 
Horizon  2020  provides  EUR  1 
billion  for  research  and  innovation 
projects  that  respond  to  the  climate 
crisis  and  help  protect  Europe's 
unique  ecosystems  and  biodiversity, 
while  covering  the  horizontal  areas 
of  strengthening  knowledge  and 
empowering  citizens  which  can 
support  fair  transitions.  Dedicated 
Horizon  Europe  Missions,  with  a 

 
 
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

budgetary support of up to EUR 1bn 
each,  support  regions  and  cities  e.g. 
in  the  design  and  implementation  of 
region-specific  transition  pathways, 
and in developing concrete solutions 
for  making  European  cities  climate-
neutral by 2030. 

Technical Support 
Instrument (TSI) 

EUR 0.86 billion 

in  a 

require 

co-financing 

its  social  and 

The  Technical  Support  Instrument 
(TSI)  is  the  EU  programme  that 
provides 
technical 
tailor-made 
expertise  to  EU  Member  States  to 
design  and  implement  reforms. The 
support  is  demand  driven  and  does 
not 
from 
Member States. For example, the TSI 
and  its  predecessor  programme,  the 
SRSP,  supported  the  just  transition, 
including 
labour 
large  number  of 
aspects, 
Member  States,  among  others  by 
supporting  the  preparation  of  the 
territorial  just  transition  plans  in  18 
technical 
Member  States.  Future 
to  support 
support  can  continue 
Member  States 
fair 
transition  in  a  wide  range  of  policy 
areas,  including  health,  education, 
labour  market  and  social  services, 
green 
transition,  governance  and 
public  administration,  equality  and 
specifically gender budgeting, digital 
transition including digital skills, and 
reinforcement 
administrative 
of 
capacity. 

towards  a 

LIFE programme 

EUR 5.4 billion 

The  general  objective  of  the  LIFE 
Programme for the period 2021-2027 
shall  be  to  contribute  to  a  just 
transition 
towards  a  sustainable, 
circular,  energy-efficient,  renewable 
energy-based,  climate-neutral  and 
resilient  economy, 
to 
protect,  restore  and 
the 
quality of the environment, including 
the  air,  water  and  soil,  and  to  halt 
and  reverse  biodiversity  loss  and  to 
tackle the degradation of ecosystems, 

in  order 
improve 

47 

 
 
 
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

by 

supporting 

the 
including 
implementation  and  management  of 
the  Natura  2000  network,  thereby 
contributing 
sustainable 
to 
development.  

Specific  components  will  contribute 
to the social and labour aspects of the 
green transition,  including actions  to 
provide  solutions 
for  vulnerable 
consumers and for addressing energy 
poverty  in  the  framework  of  the 
sub-
clean 
programme. 

transition 

energy 

EUR 291.1 billion 

EUR 95.5 billion 

European 
Agricultural 
Guarantee Fund 
(EAGF) 

European 
Agricultural Fund 
for Rural 
Development 
(EAFRD) 

The Common Agricultural Policy (CAP) 
plays a crucial role to ensure food 
security, the sustainable use of natural 
resources and the balanced development 
of Europe’s rural areas. Three out of 
nine of the Common Agricultural 
Policy’ (CAP) s specific objectives 
directly concern the environment and 
climate – covering climate change, 
management of natural resources, and 
biodiversity. Taken as a whole, the 
CAP’s objectives address the three 
dimensions of sustainability 
(environmental, economic and social). 
Agriculture and rural areas are central to 
the European Green Deal, and the new 
CAP will be a key tool in reaching the 
ambitions of the Farm to Fork and 
biodiversity strategies while 
contributing to a fair transition. The 
CAP plays a positive role in reducing 
poverty and the creation of better jobs 
for farmers.  

A  number  of  measures  under  rural 
development,  second  pillar  of  the  CAP, 
are  strengthening  the  socio-economic 
fabric  in  those  areas,  by  bringing  jobs 
and  growth  to  rural  areas,  promoting 
social  inclusion  and  local  development. 
The  distribution  of  support  provides 
stability and contributes to remunerating 
farmers  for  environmentally  friendly 
farming and delivering public goods not 
normally paid for by the markets. 

Connecting Europe 

EUR 20.7 billion 

Connecting  Europe  Facility  aims  at 

48 

 
 
Fund/ instrument 

Total financial envelope166 
Amounts in current prices, 
unless specified otherwise 

Support areas contributing to a 
fair transition 

Facility  

EUR 111 million annually 
over 2021-27 

Research Fund for 
Coal and Steel 
(RFCS) 

(Research 
Programme; outside 
EU budget) 

Modernisation Fund 
(outside the EU 
budget and NGEU) 

The total revenues of the 
Modernisation Fund may 
amount to some EUR 14 
billion in 2021-30, 
depending on the carbon 
price169. 

the 

developing  and  modernising  of  the 
trans-European networks in the fields 
of  transport,  energy  and  digital,  and 
facilitates  cross-border  cooperation 
in  the  field  of  renewable  energy.  It 
supports 
of 
multimodal  and  high-performance 
infrastructure with a special focus on 
cross-border  connections.  The  CEF 
contributes at least 60% of its budget 
to  the  Union´s  climate  objectives, 
and  supports  environmentally  and 
socially sustainable projects. 

development 

and 

The  RFCS  co-finances 
through 
grants 
research 
innovation 
research 
projects  at  universities, 
centres,  and  private  companies.  It  is 
funded via the revenues generated by 
and  Steel 
the  European  Coal 
Community  (ECSC)  in  liquidation 
assets.  It  contributes  to  inter  alia  to 
research  projects  for  the  coal  sector 
transition  of 
fair 
to  assist 
formerly  operating  coal  mines  or 
coal mines in the process of closure, 
and related infrastructure in line with 
the Just Transition Mechanism. 

the 

and 

improve 

The Modernisation Fund supports 10 
lower-income  EU  Member  States  in 
their  transition  to  climate  neutrality 
by helping to modernise their energy 
systems 
energy 
efficiency.  This  includes  actions  for 
a  fair  transition  in  carbon-dependent 
regions,  notably  for  redeployment, 
re-skilling and upskilling of workers, 
education, job-seeking initiatives and 
start-ups.  The  fund  uses  revenues 
from  the  auctioning  of  2%  of  the 
total  allowances  for  2021-30  under 
the  EU  ETS, 
to 
transferring allowances. 

in  addition 

169   See: https://ec.europa.eu/clima/eu-action/funding-climate-action/modernisation-fund_en. 

49