Fossil fuel phase-out and just transition

Background Paper Forum Climate Economics 7

This background paper discusses various aspects that need to be considered when phasing out fossil energy use in order to achieve ambitious climate protection goals. On the one hand, it discusses decarbonization scenarios and phase-out paths for different types of fossil fuels compatible with the Paris Agreement, as well as their manifestation in different sectors and regions. It is shown that such transformation paths are technologically and economically feasible. Second, the paper deals with the political implementation of a fossil fuel phase-out. It becomes clear that there is no one-fits-all solution for a successfull implementation. However, an analysis of existing policies, processes and proposals with the aim of supporting the phase-out of fossil fuels helps to identify effective approaches and how they can be adapted to different regional contexts. A key factor for a successful fossil fuel phase-out is that it is done in a socially just manner. For this reason, potential positive and negative distributive effects of the phase-out on households and consumers on the one hand and on companies and owners of fossil fuels on the other hand is analyzed in the paper.