EP Research Service: Social and labour market impact of the green transition

Brussels, 13 June 2024

Written by Lasse Boehm with David Kläffling

The European Union’s (EU) climate policies, part of the European Green Deal put forward by the von der Leyen Commission, will have profound consequences for other policy areas. During the 2019-2024 legislative term of the European Parliament, the EU adopted an overarching objective to cut net greenhouse gas emissions by at least 55 % by 2030, and achieve climate neutrality by 2050. This entails changing the way energy is produced and consumed in the EU, with knock-on effects for individual citizens, households, and businesses.

This briefing explores and maps out some of the social consequences of the Green Deal, focusing in particular on the effect the green transition will have on labour markets. It also touches briefly on the housing and transport sectors. The briefing’s purpose is to offer an overview of the most important impacts in these areas, without pretending to be a full study. For reasons of brevity, it leaves out or touches only briefly on other important dimensions, such as education and gender.

While insufficient action in the face of climate change would lead to significant costs as well as severe consequences for human life and the natural environment, the design of climate policies poses distributional challenges for individuals, and at a systemic level for different regions and industrial sectors.While studies on the Green Deal’s labour market consequences are often limited to the aggregate level, this ‘macro’ perspective can hide significant regional and sectoral diversity.

Existing EU funds and instruments have been designed to buffer against negative social consequences, particularly by providing upskilling opportunities, but their scope and size is limited. As the EU has only relatively limited competences in the area of social policy, significant policy action at national and regional level is unavoidable. The convergence and coordination of policy and funding instruments is crucial. Success or failure of regional, national, and European responses will be determined by the ability of policymakers to set up an integrated policy framework comprising social, labour market and industrial policy elements.