Session 2B presentation from the 7th Strategic Dialogue of the Carbon Market Platform, 4-5 October 2022

1. Ensuring a just transition in carbon pricing
Moustapha Kamal Gueye,
Global Coordinator, Green Jobs Programme
International Labour Organization
2022 Strategic Dialogue of the Carbon Market Platform (CMP) 4 - 5
October 2022
Berlin Session 2B: Enhancing the role and coverage of carbon pricing
while ensuring a just transition

2. Discussion questions
• What just transition considerations need to be taken into
account when considering an expanded role and coverage of
carbon pricing?
• What is the role of revenue recycling and/or complementary
policies in addressing just transition concerns when considering
an expansion of carbon pricing?

3. Today’s carbon price is not sufficient for rapid
change of energy and food systems
Why?

4. Carbon/energy pricing often triggered social unrest
• France 2018
• Egypt 2018
• Iran 2019
• Energy poverty 2022:
⁻ 970 millions Africans (70%) cook on wood fuel
⁻ Low-income groups spend more than 50% on
basic needs (food, energy, housing, transport)
for which prices go up with carbon pricing.

5. Carbon/energy and income inequality are hurdles
to carbon pricing
10% richest
50% CO2
50% poorest
emit 7% of
global/country
CO2
But the poor spend up to 50% of income on
energy, food, housing!
The rich
less than
10%

6. The risks for low-income earners are particularly high
…at the individual level:
 Affordability by the poor of basic needs whose prices go up with energy: food,
electricity, heating, housing and transport
 Labour market effects in declining industries and regions
…at economy/government level:
 Revenues and GDP
 Sectors/industries affected directly: electricity, transport, housing, industry,
agriculture and land use
 Political economy, vested interests

7. Macroeconomic
policies
Industrial, sectoral
policies and technology
Enterprise policies
Skills, education,
training
Labour market and
social policies
Occupational safety
and health
Social protection
Policy coherence and effective institutional coordination
Social dialogue, inclusion, and participation
Labour
standards,
human
rights,
gender,
equity
A framework for a just transition towards
environmentally sustainable economies and
societies for all
Paris
Agreement
refers to a just
transition and
the creation of
decent work
Process
Content
Finance Protection of
vulnerable groups
Labour
standards,
human
rights,
gender,
equity

8. Economies generate
lower emissions and
environmental
impacts
Negative social
impacts are
minimized and
addressed
Planning for a just transition has clear
positive impact on the labour market
Environmental
quality and resilience
improve
Jobs and income
gains increase
The vulnerable are protected and included
Promoting decent work, advancing social justice

9. Financing Social Protection
‣ Egypt Fuel Subsidy reform 2014
• Extending food subsidy bread, rice, sugar,
tea, flour and oil,
• Passed one m onth before subsidy reform to
m itigate likely rising food prices
• Expanding social security pensions to cover
825,000 fam ilies for a total of $2.3 m
‣ India: NREGA
• US$ 8 bill (only ~ 0.4% GDP)
• Benefit 59 m illion people
• Adaptation, irrigation, reforestation

10. Financing skills training
Industry Financing ‘Faculty 73’
Volkswagen campus Wolfsburg
Canada
Coal Phaseout 2030, 45,000 jobs
would be impacted, but:
• Worker transition centers provide skills
development programs in West/East coal
mining and coal plants
• $26 million 5 years national budget
• Managed by the Western Economic
Diversification Canada

11. Legislation on Just Transition to channel
carbon proceeds to just transition
However, the fund, to be socially just, needs to be designed as a progressive
scheme and use proceeds to protect low income households

12. Define clear rules for just transition
implementation and long-term sustainability

13. Enact a progressive carbon price:
to be fiscally neutral
to finance Just Transition Funds
to help the poor with increasing cost of energy, food, housing and transport
to finance comprehensive Skills Training Systems
to finance Social Protection Systems
Key messages

14. Thank you for your attention
ILO Green Jobs