Melbourne: Coal-dependent countries around the world face two wickedly interlinked challenges: accelerating the phase out of coal to stop the planet warming, while sustaining economic prosperity and political support.
A swift transition from fossil fuels to renewable energy is increasingly inevitable, says the International Energy Agency, but it’s not happening fast enough for the world to reach net zero emissions by 2050. For that to happen, new coal power investments need to stop. And existing coal industries need to be rapidly phased out.
Quitting coal need not end in economic crisis, nor energy shortages. Not quitting coal will certainly end in climate and therefore economic disaster.
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Researchers have systematically reviewed the policies of nations well down the path of transitioning away from coal, providing guidance on what works.
Be proactive, collaborate and break down silos
Governments quitting coal in a rapid and orderly manner have commonly employed a proactive, collaborative and well-coordinated mix of demand and supply-side policies.
Key demand-side policy levers include carbon pricing mechanisms; reducing energy consumption and improving energy efficiency. And providing strong financing and infrastructure support for the rapid expansion of renewable energy.
Supply-side policies such as accelerating coal industry closure through removal of subsidies and through direct regulation, taxation and export licensing are also vital.
Regulatory actions to overcome the negative impacts of coal on air quality, health and environmental outcomes often play a key role. So too do mission-oriented industry policies driving economic renewal and job creation.
Germany’s Ruhr Valley saw employment in coal-based industries fall from over 800,000 in the 1960s to close to zero. Collaborative planning and long-term investment in infrastructure; education; environmental technologies; and cultural and service industries was an essential foundation for economic diversification.
Germany is committed to a coal power phase-out by 2038, and the German Coal Commission, comprising government, business and union stakeholders has suggested 40 billion (US 46.2 billion) is needed to support the transition out for coal dependent workers and communities.
Canada strengthened its political support to close all coal-fired power stations by 2030 by working closely with local communities and workers. It provided integrated investment, infrastructure and training packages. By listening to workers, Canada’s 2018 Coal Transition Task Force found deep local knowledge and built local support for its target.
Spain combined its ambitious coal phase-out and renewable energy targets with over 250 million (US 289 million) for Just Transition’ contracts covering early retirement, re-employment, environmental regeneration and green industry investment and employment goals and strategies.
The European Union is pushing its coal phase-out along with more than 80 billion (US 92.9 billion) in support, in part to aid affected regions, but also for projects that will upskill or deliver new job opportunities. It’s also leveraging billions of dollars in private sector finance for clean energy infrastructure and technology.
The best transition plan is also a plan for jobs
The economic potential of a well-managed transition away from fossil fuels is now well demonstrated. Extensive research evidence shows renewable energy and low emissions industries can create millions of new jobs far more than lost in the phasing out of fossil fuels.
UK Conservative Prime Minister Boris Johnson has a plan to create 440,000 new jobs in low- emissions industries within the next ten years. Meanwhile, US President Joe Biden’s Clean Energy plan has an even more ambitious target of 10 million similar jobs.
In Australia, renewable energy think tank, Beyond Zero Emissions, demonstrated the potential for low-cost renewable energy to create new export earnings of over A 300 billion and over one million new jobs.
The challenge is ensuring those national level economic gains extend to coal-dependent regions, where workers and communities are too often left behind.
Bring workers and communities with you
Broad public support for replacing coal depends most of all on communities and workers being convinced that governments and business are genuinely committed to the creation of secure high-quality jobs.
The fine print of the Paris Agreement asks committed countries to take into account the imperatives of a Just Transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities .
As International Trade Union Confederation General Secretary Sharon Burrow notes a just transition will not happen by itself. It requires plans and policies. Transformation is not only about phasing out polluting sectors, it is also about new jobs, new industries, new skills, new investment and the opportunity to create a more equal and resilient economy .
Understand and respect national and regional differences
To say those that have passed peak coal production can deliver others with a blueprint for transition overlooks the diverse economic and social histories of each country and region.
Coal quitter countries such as the US, UK, Germany, Spain and Canada have had access to relatively cheap alternatives. And are able to finance new energy infrastructure and support for workers and communities in coal-dependent regions.
Coal-dependent countries such as China, India and Bangladesh also need to manage rapidly growing energy demand. They face budgetary challenges in financing renewable energy and supporting regional communities. That is why developed economies have a strong practical as well as ethical case to help fund developing economies to achieve a rapid and orderly transition.
Coal exporting countries including Australia, Colombia and Indonesia also face tough challenges in generating alternative sources of export income. And overcoming the power of vested interests. There is increasing evidence however of the potential for low-cost renewable energy to underpin new low emissions export industries such as green steel and green hydrogen.
Making it happen
How do nations turn the rhetoric of just transitions into reality while sustaining economic prosperity and maintaining political support? By delivering on the following.
- Proactive and collaborative political leadership
- Respectfully engaging coal communities and womrkers
- A well co-ordinated mix of demand and supply-side policies
- Adequately funding re-employment and retraining programs
- Economic renewal and diversification policies building on regional strengths
- Mobilising investment at the scale required to create high-quality jobs in just and resilient zero-carbon economies.
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