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Greenhouse gas emissions need to be urgently reduced, in particular to decrease sea level rise and the likelihood of extreme weather events that already affect every region across the globe (1) and to reduce the economic and social costs associated with the effects of global warming (2). The Union and its Member States are Parties to the Paris Agreement adopted on 15 December 2015 under the United Nations Framework Convention on Climate Change (UNFCCC) (‘the Paris Agreement’) (3), which binds its Parties to holding the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.

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Climate change and environmental degradation pose severe threats that require urgent action, as reaffirmed most recently by the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) on the Physical Science Basis. 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 Union, those losses already average over EUR 12 billion per year (4).

Those losses could reach an additional EUR 175 billion, which is 1.38 % of Union GDP, per year if global warming reaches 3°C above pre-industrial levels, as opposed to EUR 65 billion for 2°C and EUR 36 billion per year for 1.5°C. This would disproportionately harm certain groups, notably people already in vulnerable situations and regions already facing challenges.

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The communication from the Commission of 11 December 2019 entitled ‘The European Green Deal’ (the ‘European Green Deal’) sets out the strategy for the Union to become the first climate-neutral continent and transform the Union into a sustainable, fairer and more prosperous society that respects the planetary boundaries. The need for a fair transition is an integral part of the European Green Deal, which underlined that no person and no place should be left behind. The European Climate Law (5) sets out a binding Union-wide objective of climate neutrality by 2050 and a binding intermediate target of a net domestic reduction in greenhouse gas emissions of at least 55 % by 2030 compared to 1990 levels. The 8th Environment Action Programme to 2030 (6) aims to accelerate the green transition to a climate-neutral, sustainable, non-toxic, resource-efficient, renewable energy-based, resilient and competitive circular economy in a just, equitable and inclusive way, and to protect, restore and improve the state of the environment.

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In light of Russia’s war of aggression against Ukraine, the communication from the Commission of 18 May 2022 entitled ‘REPowerEU Plan’ (the ‘REPowerEU Plan’), in line with the Versailles Declaration of 10 and 11 March 2022, sets out measures to phase out the Union’s dependence on fossil fuels from Russia by diversifying gas supplies and accelerating the reduction of the dependence on fossil fuels, including through rolling out solar, wind and heat pumps, decarbonising industry, and enabling faster permitting of renewable energy projects.

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The transformation to a climate neutral economy and society requires comprehensive policy action and substantial investment across many areas, such as climate action, energy, transport, environment, industry, research and innovation (7). To deliver on the binding Union-level target for 2030, on 14 July 2021 the Commission issued a communication entitled ‘“Fit for 55”: delivering the EU’s 2030 Climate Target on the way to climate neutrality’ as well as a number of related legislative proposals (‘the “Fit for 55” package’). The ‘Fit for 55’ package includes proposals to update relevant legislation, including the EU Emissions Trading System (EU ETS) (8), the energy taxation, energy efficiency and renewable energy Directives, the CO2 emission performance standards Regulation for cars and vans, the Regulation on the inclusion of greenhouse gas emissions and removals from land use, land use change and forestry, the Directive on alternative fuels infrastructure, and the effort sharing Regulation (ESR) with respect to sectors outside the current EU ETS, namely transport and building sectors.

It also includes proposals for new legislation, notably to support the use of cleaner fuels in the aviation and maritime transport sectors, as well as to establish a carbon border adjustment mechanism and to establish a Social Climate Fund, which is directly related to the proposed introduction of emissions trading system for fuels used in buildings and road transport. The ‘Fit for 55’ package, combined with measures taken at Union level to support and incentivise the necessary public and private investments, is aimed to help 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.

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At its meeting on 20 June 2019, the European Council committed, in its ‘A New Strategic Agenda 2019-2024’, to ensure a fair transition towards climate neutrality that is inclusive and leaves nobody behind. At the international level, Member States have endorsed the United Nation’s Sustainable Development Goals and ratified the Paris Agreement, which refer to the imperatives of a just transition of the workforce and the creation of decent work and quality jobs, as well as the need for adaptation and capacity-building to be gender responsive. Guidelines from the International Labour Organization provide an internationally established policy framework for a just transition towards environmentally sustainable economies and societies for all (9). Furthermore, 54 signatories (countries and social partners) endorsed the ‘Solidarity and Just Transition Silesia Declaration’ (10), which was adopted at the 24th Conference of the Parties (COP) to the UNFCCC in Katowice, including the Commission, on behalf of the Union, and 21 individual Member States. The Union and 10 Member States signed the Declaration ‘Supporting the Conditions for a Just Transition Internationally’, adopted at the 26th COP to the UNFCCC in Glasgow, committing to include information on just transition in Biennial Transparency Reports in the context of reporting on their policies and measures to achieve their Nationally Determined Contributions.

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Fairness and solidarity are defining principles of the Union’s policies towards the green transition and a requisite for its broad and sustained public support. The European Green Deal stresses that the transition must be fair and inclusive, putting people first and paying particular attention to supporting those regions, industries, workers, households and consumers that will face the greatest challenges. Moreover, the communication from the Commission of 14 January 2020 entitled ‘A Strong Social Europe for Just Transitions’ emphasises that implementing the European Green Deal will give Europe the tools to strive for more when it comes to upward convergence, social fairness and shared prosperity. The communication from the Commission of 23 February 2022 on decent work worldwide for a global just transition and a sustainable recovery puts the promotion of decent work worldwide at the heart of a just transition and an inclusive, sustainable and resilient recovery from the pandemic.

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The communication from the Commission of 4 March 2021 entitled ‘The European Pillar of Social Rights Action Plan’ (11) highlights that unity, coordination and solidarity are needed to move forward towards a greener and more digital decade in which Europeans can thrive. It proposed three EU headline targets for 2030, namely: that at least 78 % of the population aged 20 to 64 should be in employment by 2030 (12); that at least 60 % of all adults should participate in training every year (13); and that the number of people at risk of poverty or social exclusion should be reduced by at least 15 million by 2030 (14). Those 2030 headline targets were welcomed by Union leaders in the Porto Declaration of 8 May 2021 at the informal meeting of heads of state or government in Porto on 7-8 May 2021 and by the European Council in its conclusions of 24-25 June 2021.

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With the right accompanying polices in place (15), the green transition could in aggregate create around 1 million additional quality jobs (16) in the Union by 2030 and 2 million by 2050 (17), in sectors such as construction, information and communication technologies (‘ICT’) or renewable energy, while mitigating the protracted decline in middle-skilled jobs as a result of automation and digitisation. However, in a pessimistic scenario, the impacts of the green transition towards climate neutrality if not supported by an adequate policy mix could imply GDP losses of up to 0.39 % in the Union, and job losses of up to 0.26 % (18).

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The impacts of the green transition on business and employment will vary by sector, occupation, region and country, implying job changes within sectors and industrial ecosystems, as well as large labour reallocations across them (19). Restructuring and adjustment in the companies, sectors and ecosystems concerned require the development of new business models and large labour reallocations across sectors and regions. For instance, job losses are expected in some mining activities or fossil-fuel based energy production, as well as in parts of the automotive sector. Conversely, new job opportunities are expected in circular value retention activities and sustainable transport and energy production. Member States should therefore follow granular approaches, focusing on the individual regions and ecosystems concerned, in liaison with social partners and/or local and regional authorities and stakeholders.

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By creating quality job opportunities for everyone while taking measures to alleviate and prevent energy and transport poverty, the green transition can contribute to raising incomes and reducing inequalities and poverty overall (20). It can thus help tackle pre-existing socio-economic inequalities and social exclusion, improving health and well-being, and promoting equality, including gender equality. Particular attention should go to certain population groups, notably those in already vulnerable situations. This includes notably low- and lower-middle income households, who spend a high share of their income in essential services such as energy, transport and housing, as well as micro, small and medium-sized enterprises. Modelling results show that whether environmental taxes are progressive or regressive will depend largely on instrument design, including, for example, the extent to which income tax cuts or other revenue recycling options are targeted at lower income earners (21).

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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 and opportunities at various skill levels, including for women, persons with disabilities and groups in vulnerable situations, through social economy entities active in those areas. By promoting product circularity, they reduce carbon emissions vastly, while the jobs created are in proximity to the products that need to be maintained, refurbished or shared.

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According to the latest available data in the EU statistics on income and living conditions for 2019/2020, energy poverty affected about 8 % of the Union population, that is more than 35 million people, who were unable to keep their homes adequately warm, with significant differences between Member States and between income groups (22). Overall, the Energy Poverty Observatory estimates, based on a combination of indicators, that more than 50 million households in the Union experience energy poverty (23). Energy poverty, resulting from a combination of low income, a high share of disposable income spent on energy and poor energy efficiency, has been a major challenge for the Union for some time. Furthermore, the risk of energy poverty increases with high and volatile energy prices, which are driven by a number of factors including those related to Russia’s war of aggression against Ukraine and the subsequent Union policy response. This form of poverty affects not only low-income households, but also lower middle-income households in many Member States.

Households with above-average energy needs, which include families with children, including those headed by single parents, persons with disabilities, and older persons, are also more susceptible to energy poverty (24) and to its effects. Women, and in particular those who are single parents and older women (25), are also particularly affected by energy poverty. In addition to energy poverty, the concept of transport poverty is increasingly recognised where certain categories of population are unable to attain a socially and materially necessitated level of transport services. Without the right accompanying measures to alleviate and prevent energy and transport poverty, those forms of poverty are at risk of being exacerbated notably due to the internalisation of emissions costs in price formation or to the costs of adaptation towards higher-efficiency, lower-emission alternatives.

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Principles of social fairness, cohesion and solidarity are firmly built into the design of relevant climate, energy and environmental frameworks at Union level, including via the ‘polluter pays principle’ and effort sharing between Member States, as well as in some redistribution of EU ETS allowances for the purposes of solidarity, growth and interconnections within the Union and their use for the Modernisation Fund, which contributes to the significant investment needs of lower-income Member States to modernise their energy systems. Moreover, the framework of Union energy legislation provides Member States with tools to ensure the protection of energy poor and vulnerable household customers while avoiding market distortions. While those tools help in facilitating the green transition, they are intended to provide the means to ensure the necessary protection more generally, as shown for instance by the communication from the Commission of 13 October 2021 entitled ‘Tackling rising energy prices: a toolbox for action and support’ and the REPowerEU Plan.

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Member States have a range of tools at their disposal to outline and coordinate their actions for a fair transition. National energy and climate plans (NECPs) prepared in accordance with Regulation (EU) 2018/1999 of the European Parliament and of the Council (26) should assess the number of households in energy poverty and outline the measures needed to address the social and territorial implications of the energy transition. Territorial Just Transition Plans (TJTPs) prepared in accordance with Regulation (EU) 2021/1056 of the European Parliament and of the Council (27) should identify the territories eligible for support under the Just Transition Fund up to 2027. Funded by NextGenerationEU, national recovery and resilience plans (RRPs) prepared in accordance with Regulation (EU) 2021/241 of the European Parliament and of the Council (28) set reforms and investments to foster the green transition, inclusive growth, social and territorial cohesion, resilience and prospects for the next generation, with an implementation horizon up to 2026. Some actions for a fair transition are also implemented in the context of other programmes and initiatives, in particular the Cohesion policy funds.

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Building on the principles and policies of the European Green Deal and the European Pillar of Social Rights in particular, there is scope to enhance the design of policies in a comprehensive and cross cutting manner and to ensure the coherence of spending efforts, at Union and national level. In the communication from the Commission of 17 September 2020 entitled ‘An EU-wide assessment of National Energy and Climate Plans Driving forward the green transition and promoting economic recovery through integrated energy and climate planning’, the Commission, while recognising that the final NECPs provide some indicators and policies on energy poverty, concluded that they do not always provide a clear prioritisation of funding needs for a fair transition, nor for reskilling and upskilling or for supporting labour market adjustments. The TJTPs should focus on selected territories and thus are not expected to lay out an overall strategy and policies for a fair transition at national level. While the reforms and investments they support and help finance are designed to provide lasting impact, both TJTPs and RRPs are limited in time.

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A fair transition towards climate neutrality in the Union by 2050 will ensure that no one is left behind, in particular workers and households most affected by the green transition, and notably those already in vulnerable situations. To that end, as set out in this Recommendation, Member States should put in place comprehensive policy packages (29), strengthen cross-cutting elements that promote fair green transition, and make optimal use of public and private funding. The policy packages should consider the people and households that are most affected by the green transition, notably by job losses but also by changing working conditions and/or new task requirements on the job, as well as those subject to adverse impacts on disposable incomes, expenditure, and access to essential services. As part of the most affected groups, policy packages should, in particular, but not only, consider people and households in vulnerable situations, notably people furthest away from the labour market, for instance due to their skills, territorial labour market conditions, or other characteristics, such as sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Moreover, people and households in vulnerable situations may include those living in or at risk of poverty and/or energy poverty, facing barriers to mobility, or an overburden of housing costs, including households headed by single parents, which are more often women than men. Policy packages should be adapted to local circumstances, taking into account the needs of the most vulnerable and remote parts of the Union, including the outermost regions and islands.

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Active support to quality employment should focus on helping workers, job seekers, people not in employment, education or training (NEETs) and the self-employed most affected by the green transition. In particular, under-represented people such as women, low-skilled workers, persons with disabilities, older people or people with comparatively low capacities to adapt to changes in the labour market require support to improve their employability and for finding employment, in line with Commission Recommendation (EU) 2021/402 (30). Building on previous policy guidance, in particular that Recommendation and Council Decisions (EU) 2020/1512 (31) and (EU) 2021/1868 (32), policy packages should thus include tailored measures to support hiring and transition incentives, support for entrepreneurship, in particular for women or persons with disabilities, and quality job creation measures, in particular for micro, small and medium-sized enterprises and in most affected territories. Such measures, combined with adequate Union support, can also be instrumental in addressing challenges for the labour market, such as those stemming from the influx of Ukrainian refugees, in particular in the most affected Member States. They should also foster the effective implementation and enforcement of existing rules on working conditions and support for socially responsible restructuring in line with existing rules and standards. Social partners have a vital role to play in contributing to addressing, through dialogue, the employment and social consequences of the challenges of the green transition.

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Access to quality and inclusive education, training and life-long learning for all is essential for ensuring that the workforce has the skills required to deliver on the green transition. Fair transition aspects should thus be integrated in the development and implementation of national skills strategies, taking into consideration the proposals made by the Commission in the ‘European Skills Agenda’ (33) and the ‘Updated New Industrial Strategy’ (34). Skills partnerships under the Pact for Skills will also be an important lever. Up-to-date labour market and skills intelligence and foresight, including at regional, sectoral and occupational levels, allow for the identification and forecasting of relevant occupation-specific and transversal skills needs, including as a basis for adapting curricula to meet the skills needs for the green transition. Vocational education and training should equip young people and adults, with a particular focus on women and low-skilled workers, with the skills needed to master the green transition, in accordance with Council Recommendation 2020/C 417/01 (35).

Apprenticeships and paid traineeships, including strong training components, in particular for young people, contribute to labour market transitions, notably towards activities contributing to climate and environmental objectives, and sectors facing particular skills shortages. Increasing adult participation in lifelong learning should be promoted to meet upskilling and reskilling needs, inter alia, by empowering individuals to seek training that is tailored to their needs and, where appropriate, via short, quality-assured courses on skills for the green transition, taking into consideration Council Recommendation of 16 June 2022 (36), which aims to make it easier to value and recognise the outcomes of such courses.

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The composition of tax-benefit systems and social protection systems should be examined against the specific needs stemming from the green transition, reflecting also the ‘polluter pays principle’ and the need that accompanying policies do not introduce subsidies to fossil fuels consumption, do not lock in consumers to a specific technology, do not decrease incentives for building renovations and thermal energy system substitutions and do not decrease incentives within general energy efficiency measures. A combination of various policies can support the most vulnerable households and workers most affected by the green transition. Depending on the national and individual situation, this could, for instance, involve a shift of taxation away from labour and towards climate and environmental objectives as envisaged in the proposal for revision of the Energy Taxation Directive (37), a review of unemployment schemes and/or temporary and targeted direct income support, where necessary. Social protection systems, including social inclusion policies, can be reviewed and, where applicable, adapted in light of the green transition, in particular to provide for income security, notably during job-to-job transitions, and to provide adequate social, health and care services through adequate social infrastructure, notably in most affected territories, for instance rural and remote areas, such as the outermost regions, in order to prevent social exclusion, and address health risks. To prevent and combat social exclusion of children, investments in social infrastructure for children aim to ensure access to key services for children in need, as set out in Council Recommendation (EU) 2021/1004 (38).

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To build physical and financial resilience to the irreversible impacts of climate change in an inclusive manner, risk-awareness, risk reduction and risk-transfer solutions need to be promoted, in particular by increasing the availability of insurance solutions and by investing in disaster risk-management and adaptation to reduce the physical impacts of climate change, thereby reducing losses, as well as the climate protection gap, taking into account micro, small and medium-sized enterprises, as well as rural and remote areas, such as the outermost regions and islands. Disaster risk-management including civil protection systems at national and Union level should be reinforced to better prevent, prepare for and respond to climate-related shocks.

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Everyone has the right to access essential services of good quality, including energy, transport, water, sanitation, financial services and digital communications, and support for equal access to such services should be made available to those in need (39). Furthermore, access to social housing or housing assistance of good quality should be provided for those in need (40). In addition, low and medium income households, vulnerable customers, including final users, people facing or risking energy poverty and people living in social housing, can benefit from the application of the ‘energy efficiency first principle’. In addition to protecting and empowering energy consumers, specific measures are needed to prevent and tackle the root causes of energy poverty, in particular by promoting investments targeted at energy efficiency improvements, notably in the social housing sector. The proposed updates of the Energy Efficiency Directive (41) and the Energy Performance of Buildings Directive (42) are also intended to tackle the main non-economic barriers to renovation such as split incentives, including owner-tenant settings, and co-ownership structures. In this context, specific attention should be paid to women and particular groups which are more at risk of being affected by energy poverty, such as persons with disabilities, single parents, elderly people, children, and persons with a minority racial or ethnic background.

Pre-existing and emerging mobility challenges can be tackled through support measures and the development of the necessary infrastructure, such as public transport. The affordability, accessibility and safety of sustainable mobility and different modes of transport, including private and public transport, are key to ensuring everyone benefits from and is part of the green transition. Urban mobility plays a significant role in this context, as also reflected by the communication from the Commission of 14 December 2021 entitled ‘The New EU Urban Mobility Framework’.

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A whole-of-society approach to the fair transition should support policy action, based on the coordination of policy-making and strengthened operational capacities at all levels and across all relevant policy areas, giving also an active role to regional and local authorities. It should also be based on the involvement of social partners at all levels and stages, as well as an effective and impactful participation of civil society and stakeholders. Such coordination and engagement could 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 inclusive policies advancing the green transition.

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A strong evidence base is key to putting in place sound social and labour market policies that ensure a fair and inclusive transition. To that end, the gradual harmonisation and consistency of definitions, concepts, classifications and methodologies, notably based on Commission Recommendation (EU) 2020/1563 (43), facilitate assessments and their comparability. Further research and innovation actions can contribute to the knowledge base that may feed into policy and public discourse. In turn, exchanges with the public in all its diversity and with key stakeholders, for instance on the outcomes of evaluations, foresight and monitoring exercises, can contribute to policy-making and ownership.

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Appropriate granular and high quality, sex-disaggregated data and indicators are needed in particular to assess the employment, social and distributional impacts of climate change policies. Such data and indicators are currently not fully available. For instance, while some progress has been made on the measurement of energy poverty, indicators to assess transport poverty could be developed in accordance with national circumstances. Monitoring and evaluation can be strengthened via a number of actions, focussing on indicators, scoreboards as well as small-scale pilot projects and policy experimentation. Actions should build on, or draw from, existing scoreboards such as the Social Scoreboard and the European Green Deal dashboard, which contain relevant information on specific aspects of fair transition policies.

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The optimal and efficient use of public and private funding and the mobilisation of all available resources and their effective deployment are of particular importance in light of the significant investment needs stemming from the green transition. At Union level, relevant actions are supported through the Union budget and NextGenerationEU. They will be implemented under the Recovery and Resilience Facility (RRF), the Just Transition Mechanism (JTM), including the Just Transition Fund (JTF), the European Social Fund Plus (ESF+), the European Regional Development Fund (ERDF), the Cohesion Fund, the Recovery Assistance for Cohesion and the Territories of Europe (REACT-EU), ERASMUS+ and the European Globalisation Adjustment Fund for Displaced Workers (EGF), the LIFE programme, the Horizon Europe programme, the Modernisation and Innovation Funds (44) and the funds under the Common Agriculture Policy (CAP). In addition, the Commission supports Member States through the Technical Support Instrument, by providing tailor-made technical expertise to design and implement reforms, including those promoting a fair transition towards carbon neutrality.

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The European Semester is the Union economic and employment policy coordination framework. It will continue to play this role in the recovery phase and in advancing the green and digital transitions, structured around the four dimensions of competitive sustainability, supporting the delivery of the Sustainable Development Goals. Under the European Semester, the Commission will monitor socio-economic outcomes and impacts closely and where relevant, propose targeted country-specific recommendations to ensure that no one is left behind. Complementarity with the measures supported under the Recovery and Resilience Facility will be a priority. The monitoring of this Recommendation will therefore take place as appropriate in the context of the European Semester including in the framework of the relevant committees, within their respective fields of competences, based on adequate assessments, policy impact evaluations, and the state of implementation of the guidance provided in this Recommendation. The monitoring arrangement will not add unnecessary administrative burdens for Member States.

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Moreover, as part of the draft and final update of their NECPs in 2023 and 2024, respectively, in accordance with Article 14 of Regulation (EU) 2018/1999, Member States should draw on this Recommendation to consider mainstreaming employment, social and distributional impact assessments and fair transition aspects across the five dimensions of the Energy Union, and further enhance policy measures for addressing those impacts, with a particular focus on energy poverty.

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Furthermore, the monitoring of the implementation of this Recommendation can build on existing evidence in the context of established multilateral surveillance processes, such as the European Semester. The Council or the Commission can request the Employment Committee and the Social Protection Committee, in accordance with Articles 150 and 160 of the Treaty on the Functioning of the European Union, respectively, and in cooperation with other relevant committees, in particular the Economic Policy Committee, to examine in their respective area of competence the implementation of this Recommendation on the basis of adequate reporting by the Commission and other multilateral surveillance tools. Also against this background, the Commission is working to enhance data availability, disaggregated by sex, to update and use existing frameworks and methodological guidance, including for the measurement of energy and transport poverty and environmental inequalities, and for evaluating the effectiveness and actual impact of policy measures,

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