Transition Policy for Climate Change Mitigation: Who, What, Why and How

The decarbonisation of the global economy, though likely to enhance aggregate well-being, will create many losers. The main categories of potential losers are owners of carbon-intensive business assets, workers in such businesses, communities in which such businesses account for a disproportionately large share of economic activity, and owners of carbon-intensive household assets. As decarbonisation processes accelerate, losers will increasingly press for transitional assistance, such as compensation payments and subsidies to facilitate their adjustment to carbon-constrained circumstances. Where decarbonisation depends on new policies and laws, the actionsof putative losers will also affect the enactment and implementation of such reforms, potentially leading to stalled transitions or policy reversals.

In the face of this increasing demand for “transition policy”, policymakers require expert guidance on how to develop coherent and desirable transition policy packages. Yet there is a dearth of policy-focused academic literature on this topic. This paper aims to provide a foundation for filling this gap. It first provides a definitionof transition policy, identifying its key parameters. It then explores possible values of these parameters, resulting in an original map of the “logical space” of transition policy: the possible combinations of policy objectives, policy scope, and target actors that transition policy could encompass. To move from the possible to the desirable, the paper finally suggests three criteria for normatively evaluating transition policies: fairness; political transformation potential; and expected effectiveness. An appendix to the paper provides a literature overview of relevant works from multiple disciplines.