September 2023 | A paradigm shift is developing in economic and environmental policy. Countries around the world are starting to build just transition principles into state-led green industrial strategies. Advanced economies, including the US and the EU’s member states, are advancing worker power in new, green industries to secure a fair transition for workers

THE ECONOMIC OPPORTUNITY OF THE 21ST CENTURY There is an emerging consensus that a green industrial strategy is a net benefit to the UK economy | In the US, the Inflation Reduction Act (IRA) explicitly links low-carbon policies to wider economic aims like reducing inflation, creating jobs, and growing the economy – perhaps best summarised by President Joe Biden’s now-famous mantra: “When I think climate change, I think jobs” (White House 2022b). EU member states have responded with their own package of support, the Green Deal Industrial Plan, which expands skills training to support workers in polluting or declining sectors to transition into work in new, green industries.

Provisions within the IRA explicitly promote a fairer transition. The bill encourages strong commitments to fair pay by quintupling tax credits for renewable energy and energy efficiency projects that pay workers at prevailing wage rates. Local content requirements mean a large amount of the funding is only available to companies whose goods are assembled or sourced domestically. Firms in receipt of federal subsidies are also expected to guarantee high quality, affordable childcare for their workers and are ‘strongly encouraged’ to sign collective bargaining deals with trade unions. | Securing a fair transition towards a net zero economy is both a political necessity and the economic opportunity of the 21st century. Successful decarbonisation of the economy requires workers and communities to feel they are being treated fairly. While capturing and fairly sharing the significant economic opportunities of the transition is also the best means to address the genuine experiences of unfairness.

A ‘just transition’ describes policy that matches environmental ambitions with fair treatment of those affected by changes from green policies. First coined by trade unions and labour movements around the world, a just transition is defined as the need to provide and guarantee “better and decent jobs, social protection, more training opportunities and greater job security for all workers affected by global warming and climate change policies” (ITUC 2023).

However, as IPPR’s Environmental Justice Commission (EJC) argued, to deliver a comprehensively fair transition, how decarbonisation will affect everyone must be considered: from workers to consumers to households to minority ethnic groups and marginalised communities. | A green industrial strategy could create a huge number of well-paid jobs and a net increase in overall employment in the UK economy (CCC 2023).

Previous research from IPPR has shown that the mid- and high-skilled jobs needed in green manufacturing will have comparable or higher salaries than both equivalent oil and gas jobs and average salaries in regions where investment is likely to take place (Emden et al 2020; EJC 2021).

In the UK there is a striking overlap in the areas with high concentrations of carbon-intensive industry, the areas the government wants to level up, and potential opportunities in the net zero economy (Birkett et al 2023; LaybournLangton et al 2017; Jung and Murphy 2020).

The US and EU have already begun to use green industrial strategy to drive the creation of high-skill, well-paid jobs, and secure a fair transition for workers. | While the Climate Change Committee estimates that shifting to a net zero economy will be a net positive for employment, the UK’s commitments to ensuring a fair transition that supports workers and communities has so far been relatively piecemeal, limited, or absent altogether. | In this briefing, we explore how the UK can learn from the successes and failures of fair transition policies in the US and EU. In particular, we find there are five key principles for UK policy as part of a proactive green industrial strategy and highlight a set of five recommendations for fusing green industrial strategy with boosting worker power.

1. Long-term certainty and investment: Long-term policy certainty is crucial to the success of decarbonisation across the world. To this end, the IRA and the GDIP have embedded long-term investment measures within a 10-year framework (Satchell 2023), signalling policy stability for developers, investors, and workers.

2. Conditionality: The vehicle through which the IRA embeds many of its fair transition policies, however, a stronger legislative approach in the UK would be required to deliver in practice.

3. Skills training: Through further tax incentives for using registered apprenticeships and the promise of Skills Academies for key net zero 6 IPPR | Fairer winds Workers' rights in the age of transition sectors, the US and EU respectively have put training at the centre of their industrial strategies.

4. Socialising rewards: The US has sought to place restrictions on share buybacks and ensure excess profits are shared. These measures could and should be matched by UK legislation, particularly in light of recent excessive oil and gas profits and dividend payments.

5. Focussing on regions: The US has sought to build consensus for climate policies by increasing tax incentives for areas with historic ties to fossil fuels that also tend to vote Republican. In the UK opportunities for net zero investment also overlap with carbon-intensive regions. | | | | | | United Nations – Just Transition* https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/CDP-excerpt-2023-1.pdf | A just transition, broadly defined as ensuring that no one is left behind or pushed behind in the transition to low-carbon and environmentally sustainable economies and societies, can enable more ambitious climate action and provide an impetus to attaining the Sustainable Development Goals.

Countries need to develop, through inclusive dialogue, approaches to a just transition that reflect the needs, priorities and realities of their societies and their historical responsibilities for climate change and environmental degradation. | | A just transition, broadly defined as ensuring that no one is left behind or pushed behind in the transition to low-carbon and environmentally sustainable economies and societies, can enable more ambitious climate action and provide an impetus to attaining the Sustainable Development Goals.

The concept of just transition, while arising from concerns for justice at the local and national levels, cannot be separated from the broader issues of global climate justice and common but differentiated responsibilities. | | | | | | | | | Local Government Association: Green jobs: creating the workforce to deliver net zero: https://www.local.gov.uk/publications/green-jobs-creating-workforce-deliver-net-zero | To deliver net zero and mitigate climate change, there needs to be a step change in the development of the workforce through a strong skills and jobs pipeline that is responsive to change and need. Despite commitments and good intentions from all partners, the current system is not up to the scale of the challenge needed for such a transition, with a clear need for better alignment between net zero investments and the skills and employment system. | Delivery of green jobs and skills should be based on a local first principle. | | | | | | | | | | Perez and Leach: A smart green direction for innovation: the answer to unemployment and inequality? : https://www.elgaronline.com/edcollchap-oa/book/9781788970815/book-part-9781788970815-7.xml | With the increasing impact of robotics on manufacturing, the rise of services such as Uber and internet shopping, and the emergence of artificial intelli gence, one cannot blame the many voices that fear increasing unemployment and job insecurity into the future. Is innovation at fault? No. It is the lack of appropriate policies | | | | | | | | | | | CBI: GOING FOR GREEN: The UK’s net zero growth opportunity

https://www.cbi.org.uk/media/pplbtdca/12820_green_growth_report.pdf | | | | Looking across the opportunities in new markets over the next five years, and considering UK strategic advantages, the CBI estimates that by 2030, a non-exhaustive list of 27 green growth ‘prizes’ could increase in value to contribute £37-57 billion of annual UK GDP alone. | | | | | | |