Regional Just Transitions in the UK: Insights from 40 Years of Policy Experience

The industrial economy is expected to experience vast changes over the next 20 years as clean energy technologies displace fossil fuels. These transformations will create opportunities and challenges, with many workers needing new jobs and many communities requiring new engines of growth. Such changes are an inherent part of a dynamic economy, but the risks that emerge from the transition to a low-carbon economy are distinctive. Unlike other economic transformations, a rapid clean energy transition will likely be the result a vast collective choice facilitated by sweeping new policies. Although it will produce great benefits globally by arresting and reversing growth in greenhouse gas emissions, without some measures to offset the effects on local labor markets and economies, this transition will also impose hardships on people and regions connected to fossil fuel–dependent industries.

Consequently, policies need to engender a “Just Transition,” with participatory decision-making processes and equitable sharing of the benefits and costs of transition. The concept of a Just Transition has multiple dimensions. In the broadest sense, it encompasses two criteria. First, the benefits and costs of a sustainable transition of a country’s economy are fairly distributed. For example, low-income consumers should not be made to face exorbitant costs from the need to transition to alternative fuels or forms of transportation. Second, an environmentally sustainable transition should promote inclusive growth by “contributing to the goals of decent work for all, social inclusion and the eradication of poverty” (ILO 2015). For a Just Transition, three groups need to be considered: consumers, workers in particular industries, and members of communities in the affected regions.

Green and Gambhir (2020) identify three types of policies to support those three groups. First are compensation policies that compensate for financial loss, such as redundancy benefits for workers, revenue replacement grants for local governments, and tax incentives to corporations. Second are structural adjustment policies, such as training support for workers, R&D subsidies for corporations, and infrastructure investment for communities. Finally, comprehensive adaptive support policies promote an integrated approach to helping people and places adapt to new conditions by coordinating decarbonization planning, seeking reemployment of workers in cleaner industries, and developing new sources of local revenue and public goods provision.

Past economic transitions have posed challenges similar to those presented by today’s energy transition: new technologies that reshape industries always create winners and losers; liberalization and trade can undercut wages and eliminate jobs; regions that boom by specializing under one economics regime go bust under another. As workers, industries, and communities struggled, governments were prompted to intervene to provide transitional assistance. In the United Kingdom in particular, the transition away from coal is a case in point. Coal mining reached a peak employment of 1.1 million miners in 1913, then fell to a complete closure of major mines in 2015. This coal-sector transition was compounded by an economy-wide deindustrialization of the UK economy as other heavy industries, such as iron and steel manufacturing and shipbuilding, also declined.

The United Kingdom has tried a dizzying array of policies, at multiple levels of government, to address economic transitions. Although some policies provide lessons for future transitions, many lessons are the result of past failures. The response of the UK Government to momentous change in the coal sector was mostly reactive. Targeted policies to support economic transition were enacted only after the coalfields and industrial areas were beset by social and economic problems. The response was fragmented, creating an inconsistent set of regeneration policies. Funding was small, given the scale of national economic policy and the economic forces that were exacerbating inequality. Most of the coalfield regions remain poor, and regional inequality is among the highest in Europe (Martin et al. 2016) .

In some respects, the United Kingdom has played a leading role in climate change policy. Since 2001, it has imposed a climate change levy on top of the costs imposed by the European Union’s Emissions Trading Scheme, thereby driving fossil fuels out of its national energy mix. The Climate Change Act of 2008 included the first legally binding mitigation target set by a country, and an amendment in 2019 committing the United Kingdom to net-zero by 2050 made it the first major economy to have such a goal. The Climate Change Act of 2008 also established the Climate Change Committee, a powerful independent statutory body that advises government, issues strategic reports, serves as a custodian of UK climate policy, and monitors progress toward the long-term objectives set in the act (Fitzgerald and Leigh 2002).

Internationally, the United Kingdom launched the Powering Past Coal Alliance in partnership with Canada in 2017 to support national and subnational governments, businesses, and organizations in the transition from unabated coal power generation to clean energy. The alliance has more than 100 members, all seeking to phase out the use of coal globally.

Those policies and initiatives, intended to help ensure a sustainable future for the world, have led to a shift in the UK economy, leaving many businesses, workers, and communities behind. In this report, we focus on workers and communities. We review both historical policies for the coalfields and distill lessons for future Just Transition policy from regional regeneration in the United Kingdom. However, the central lessons are to not rely on regional regeneration alone to redress shocks and to anticipate and prepare for disruptive transitions. We also review recent policy developments that suggest the way forward, toward an integrated, whole-government project focused on inclusive clean energy growth.

The remainder of this section describes our scope and our approach to assessing policy outcomes. Section 2 provides brief background on the UK institutional structure and climate policy. Section 3 reviews historical coal transitions in the broader context of regional regeneration policies in the United Kingdom. This discussion highlights the changing ideologies in government over the past 50 years, from a reliance on market-based mechanisms to an emphasis on localization. Section 4 assesses those policies and their outcomes. Section 5 discusses the recent evolution toward integrated policy approaches to fossil fuel transitions in the UK. Finally, Section 6 brings this experience together to offer recommendations for future policymaking.

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