Just Transition: Who Really Pays for Net-Zero?

As governments and businesses accelerate efforts to reach net-zero emissions, a new question is emerging: who pays for the transition? The concept of a just transition i.e. a fair shift to a low-carbon economy that protects workers, industries and regions, has become central to climate policy. Yet balancing environmental goals with social stability remains one of the hardest parts of the net-zero journey. 

A fair shift or a fragmented one?

The idea originates from the International Labour Organization (ILO), which defines a just transition as greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind. While the green economy may create millions of jobs, it will also disrupt traditional sectors such as mining, steel and energy. The ILO estimates that the shift could generate around 24 million jobs globally by 2030, but cost around 6 million in fossil-fuel-based industries. 

This uneven balance lies at the heart of the debate. Wealthier, service-based regions attract clean-tech investment while industrial communities dependent on high-carbon activity face economic strain. Ensuring that the benefits of net-zero are shared fairly is both a social and an economic challenge. 

Uneven geography of green growth

Across Europe, this divide is already visible. Renewable-energy clusters form around innovation hubs, while coal and manufacturing regions, such as Silesia in Poland or Teesside in the UK, face difficult adjustment. The EU Just Transition Fund, worth €17.5 billion, was created to cushion these effects through retraining schemes, SME grants and regional diversification. Yet many economists argue that support remains modest compared with the potential disruption ahead. 

In the UK, the Net Zero Growth Plan projects around 440 000 green jobs by 2030, but only if retraining frameworks succeed. Without credible support systems, the transition could widen regional inequality. 

Financing fairness 

At the financial level, the question of who funds the transition is equally pressing. Public finance alone cannot bridge the gap. 

Private capital must scale clean infrastructure but investors often prioritise predictable returns over social impact. This underscores the need for sustainable finance frameworks that reward firms for embedding equity alongside environmental outcomes. 

The social cost of decarbonisation

Energy-price shocks following the war in Ukraine revealed another dimension of inequality. As fossil-fuel prices surged, governments rushed to accelerate renewables while shielding consumers from higher costs. For lower-income households, green levies and carbon taxes can feel punitive when not paired with targeted subsidies or efficiency support. 

France’s ‘“Yellow Vests” protests remain a reminder that climate policy without fairness can face backlash. Similar tensions may re-emerge as countries tighten emissions pricing or phase out subsidies. In this sense, a just transition is not only an ethical aim but a safeguard for policy stability.

Policy and governance shifts

Recognising these risks, the UK and EU have begun embedding social safeguards into climate policy. The EU’s Green Deal Industrial Plan outlines four pillars for achieving a competitive, climate-neutral economy including skills development through new Net-Zero Industry Academies and open-trade frameworks to ensure that workers and industries can benefit from the clean-tech transition. 

Still, a gap remains between ambition and measurement. Few firms disclose the social dimension of their transition strategies with the same rigour as carbon data. For analysts and investors, valuing companies by both their emissions and their equity impact will become increasingly important. 

Looking ahead

The drive to net-zero will transform economies for decades but unless the transition is managed fairly, protecting jobs and supporting vulnerable regions all while balancing costs, it risks leaving people behind. 

A just transition is more than moral; it is economic common sense. By aligning climate action with social stability, governments and firms can build the trust and resilience needed for lasting progress. The cost of achieving net-zero is high but the cost of an unfair transition may be higher still.