1. INTRODUCTION EMPLOYMENT EFFECTS IN THE AUTOMOTIVE SECTOR The 55% reduction in GHG emissions by 2030 might threaten employment stability in sectors affected by the climate transition. 11 In particular, as a consequence of CO2 emission targets for cars and vans established by the European Commission, the automotive sector is shifting production to electric vehicles(EVs). The effects of the transition of the automotive sector are expected to be felt along the entire value chain in the manufac­turing of engine components, given that the production of an electric engine counts only 20 moving parts, while an internal combustion engine involves 200. 12 Therefore, value-chain disruptions and employment effects are ex­pected, although the net impact is not straightforward. equipment manufacturers(OEMs) decide and manage to shift to EVs and hybrid vehicle production domestical­ly, ensuring investments in reskilling the workforce to be employed in the new production processes. In particular, the possibility of creating new job opportunities within bat­tery manufacturing would dwindle if lithium-ion batteries were to be imported. Consequently, policy interventions are crucial to address the transition of the automotive in­dustry in the right direction. In the short run, investments must create employment opportunities. The European battery-manufacturing supply chain, which is expected to be the target sector for new job opportunities, should be properly supported. In the long run, competitiveness has to be coupled with investments in infrastructure, R&D and workforce training. “ Policy interventions are crucial to address the transition of the automotive industry in the right direction. In the short run, investments must create employment opportunities. „ As reported by the Institute for Employment Market Research(IAB), the Institute for Economic Research(IFO) estimates job losses of 600,000 direct and indirect jobs because of the electrification of powertrains in Germany. The IAB estimates that technology-driven job losses in Germany, where the automotive industry is a leading sec­tor of the economy, could be as high as 114,000. Because of the electrification of powertrains by 2035, most job losses will occur in vehicle construction. Fortunately, the manufacturing of lithium-ion batteries(used in EVs) is ex­pected to absorb part of the job losses in the automotive industry. In addition, investments in reskilling workers and in powertrain production capacities are expected to take place. 13 However, this compensation effect will not be ob­served equally across countries. In particular, the impact on employment would depend on whether the original ENVIRONMENTAL INEQUALITY EFFECTS Other than employment creation or destruction, another challenge posed by the climate transition is that it can reinforce environmental inequalities. In fact, in many instances, industrial pollution damages a territory in such a way that the area becomes a“left-behind” place. Particularly in“sacrifice zones”, an apparent employ­ment–health trade-off emerges whereby such“bad jobs” are the only possible source of income for many resi­dents, with noxious industrialisation creating economic dependence(see the Glossary). 14 Such unfavourable preconditions pave the way for a potentially unjust cli­mate transition, given that:(1) environmental and health damages deriving from polluting industrial activities are unevenly distributed; 15 (2) sacrifice zones are usually in­habited by low-skilled and low-income communities; 16 and(3) low-skilled workers are also at the tail end of income distribution. As such, policies that address sacri­fice zones and place-based are particularly relevant from a just-transition perspective. “ Industrial pollution damages a territory in such a way that the area becomes a"left-behind" place. „ 10 POLICY CHALLENGES AND POLICY ACTIONS FOR A JUST CLIMATE TRANSITION FIVE RECOVERY PLANS IN COMPARISON