Achieving a Just Transition
Amanda Doyle explains why the energy transition must be fair for workers in high carbon industries
THE world is on track1 for 2.9oC of warming by 2100 under current policies, with potential catastrophic consequences. The International Energy Agency (IEA) says2 that for the world to have a chance of meeting a net zero target by 2050, there can be no new oil and gas development and no new coal mines can be built. A separate report3 says that fossil fuel production must decrease by 6%/y globally between 2020 and 2030 to meet the 1.5oC target. Carbon Tracker has calculated4 that coal-fired power will need to fall by 80% from 2010 to 2030 and warned that coal risks becoming a stranded asset as renewables are now cheaper in many countries.
The transition away from fossil fuels – the energy transition – is generally expected to create significant levels of employment. One estimate5 calculates that an additional 8m jobs could be created in the energy sector by 2050. The Global Wind Energy Association predicts6 that more than 3.3m new long-term jobs will be created in the wind industry between 2021 and 2025. The International Renewable Energy Agency (IRENA) calculates7 that if Covid-19 economic recovery policies result in more investment in renewable technologies, then 5.5m new jobs could be created by 2023 compared to business-as-usual strategies.
Under the IEA scenario, 14m jobs will be created in clean energy by 2030; however, 5m will be lost, mostly around fossil fuel resources. The report says it will be vital to retrain workers and minimise the hardships from disruption. Herein lies the principle of a just transition. It is not simply a matter of balancing out the numbers of jobs lost in fossil fuel industries with the number of green jobs created. The energy transition needs to be fair to those currently working in high carbon industries. The Paris Agreement8 says that signatories should 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.”
A just transition needs to take advantage of transferable skills in the industry, and training and support needs to be provided to reskill those workers for the green economy. The impact on communities that rely on numerous heavy industries also needs to be taken into account.
Challenges of a just transition
There is the potential for both short-term and long-term disruption if the transition is not managed correctly. For example, around 250,000 jobs were lost9 in coal mining communities in northern England in the 1980s. This still has an impact today, with 43% of coal communities still being among the most deprived areas in Britain. Another example is the closure of the coal-fired Hazelwood Power Station in Australia in 2017 with only a few months’ notice. Two and a half years later, it was found10 that only one in three employees had found full-time work. An abrupt transition will lead to “stranded workers” and “stranded communities” as well as “stranded assets”. It is therefore imperative to involve both workers and the communities in decisions, as this is seen as key to obtaining public support in regions with high levels of employment in carbon-intensive sectors11.
The Just Transition Initiative, a collaboration between the Center for Strategic and International Studies (CSIS) and Climate Investment Funds (CIF), cautions12 that there is some resistance to just transitions among unions who see it as a mechanism for jobs losses, especially as unions are created to protect workers’ rights and livelihoods.
Retraining and upskilling workers in high carbon industries to work in greener sectors will be crucial, but there are many challenges to overcome in this area. Aldersgate Group notes13 that mid-career reskilling is difficult, particularly as qualifications do not guarantee a job. Training might also not be financially viable for people trying to support families, and salaries in the sectors such as hydrogen might not be comparable to the likes of oil and gas14. According to the UK Green Jobs Taskforce9, there is a risk that many small employers can’t afford to have large sections of their workforce absent due to training. It is also not cost efficient for those employers or training providers to have training for small cohorts of the workforce at a time.
The Green Jobs Taskforce also found that there is concern that employment in high carbon sectors could decline at a faster rate than new green sectors emerge, or in different locations. The Energy Institute revealed11 a concern that the skills gap is not being given enough attention, and this could become the biggest barrier – even more so than technology – on the pathway to net zero. It said that the energy transition requires a skills transition, a point also emphasised in an Institution of Engineering and Technology survey15 which found that 93% of engineering employers think that their staff don’t have the necessary skills to meet sustainability goals.
Global differences
While the principle of a just transition is the same across the world, there is no “one-size-fits-all” approach, as some countries and regions are more heavily dependent on jobs in fossil fuel industries, and emerging economies will likely lack the funding required to transition to green jobs.
UK
A report16 from Prospect found that 21.6 GW of coal and oil power plant capacity was decommissioned in the UK since the end of 2010 which led to an estimated 14,500 direct and indirect job losses. It calculated that the remaining fossil fuel power stations support around 10,000 jobs. These power stations also support billions of pounds of economic activity through local jobs and local spending. The report calls for a coherent and credible just transition framework for the UK power sector.
A survey17 of 1,383 UK offshore oil and gas workers by Platform, Friends of the Earth Scotland, and Greenpeace UK found that 91% hadn’t heard of the term “just transition”. Participants were asked which fields they would consider moving to, and the most popular were offshore wind, renewables, rig decommissioning, and carbon capture and storage (CCS). However, the report highlighted that workers wanting to move to the offshore wind industry have to pay for their own training, a lot of which overlaps with their existing training and experience from offshore oil and gas. It said that the UK Government needs to streamline certification qualifications to stop industries making workers cover the training costs.
The Green Jobs Taskforce cautions that the tight timeframes associated with establishing industrial clusters focused on hydrogen and CCUS could make recruiting and training challenging. However, the report also says that around 90% of the UK’s oil and gas workforce have medium-to-high skills transferability and are well positioned to work in other energy sectors.
EU
The European Commission has recently introduced the €17.5bn (US$20.6bn) Just Transition Fund, under which support will be available to all member states with the allocation depending on economic, social, and environmental criteria. Funds can be accessed by counties submitting a just transition plan covering the period up to 2030, but only 50% of the allocated fund will be provided to countries with no plans for climate neutrality by 2050. This means that Poland will not receive full support, therefore making a transition more difficult.
A special report by Euractiv18 notes that while many richer western countries have a significant amount of renewable energy capacity, countries in central and eastern Europe are more likely to be reliant on coal. Even with a higher allocation of funds, there will be reluctance to move away from jobs in fossil fuels. For example, the report notes that Bulgaria’s biggest coal-reliant region is the country’s second most economically advanced region, and EU support might not be enough to encourage a transition to jobs in green sectors. The Euractiv report also says that public consultations leading up to the submission of plans are inadequate, with not enough meaningful engagement with people living in regions relying on polluting industries. It said that this will have consequences for social acceptance.
South Africa
South Africa relies on coal for around 80% of its electricity. Despite the power outages and pollution caused by an aging fleet of coal-fired power stations, there is resistance to moving to cheaper renewable energy due to the impact it would have on vulnerable communities reliant on mining. A case study19 by the CIF notes that a just transition in South Africa would be extremely complex and would need to acknowledge a range of interests and adopt a broad perspective on local, national, and international levels. The lack of access to affordable electricity in vulnerable communities would need to be addressed, and the concerns of coal-reliant communities need to be taken into account. Skills planning needs to be improved to reskill existing workers for new technologies and processes. At an international level, South Africa will need support from international climate finance in order to undertake a just transition.
Australia
In Australia, the energy transition is progressing well, with around 25% of energy being generated with renewables in 2019, but the country’s reliance on coal-fired stations and coal exports leave it vulnerable to disruptive change, according to a report10 from the UN Global Compact Network Australia (GCNA). It warns that if there are a number of short-notice closures of power stations or mines in the next few years it will have a devastating effect on regional communities.
Deloitte Access Economics calculates20 that the Australian economy will lose trillions over the next 50 years if it does not act on the climate crisis, with A$3.4trn (US$2.5trn) lost from the economy and 880,000 jobs lost by 2070. However, if Australia does act it would add A$680bn to the economy and create 250,000 jobs.
The next steps
Most reports and policy documents make recommendations to governments and industries with regard to the key issues that need to be addressed to ensure a just transition, with common themes emerging across most of the literature. These include engaging the local community, enabling workers to participate in decisions, improving job security, removing barriers to entering the renewable energy industry, planning early for closures of high-carbon facilities, establishing a just transition authority, establishing funds for a just transition, new employment and training portals, and establishing business and skills plans for the transition. The Just Transition Initiative notes that increasing focus on just transitions has also highlighted gaps in knowledge, and it gave some examples of areas needing further research and engagement. For example, a lot of the literature on the just transition sets out principles and aspirations but does not provide a plan to implement these. More research is also needed on worker retraining and skills development as there are many unknowns regarding what types or training and assistance is most effective. Given the importance of engaging communities, detailed case studies will need to be performed on various social dialogue structures to identify best practices. There is also a lack of case studies in many regions such as sub-Saharan Africa (except South Africa), Central Asia, and Latin America. Case studies also tend to focus on coal rather than power plants, oil production, and refining.
Ultimately, if the energy transition is also a just transition, then there will be numerous economic benefits as we meet the challenge of net zero emissions. In coming issues and online, The Chemical Engineer will be profiling careers in non-fossil fuel sectors. IChemE is also establishing a Sustainability Hub that will provide members with free-to-access training courses that will help chemical engineers improve their sustainability understanding and competence. Find out more at: https://bit.ly/3fkWii7
References
1. Climate Action Tracker (2021), https://bit.ly/2WLeDyl
2. IEA, Net Zero by 2050 (2021), https://bit.ly/3jtYBRh
3. The Production Gap Report: 2020 Special Report, https://bit.ly/3lnk9BC
4. Carbon Tracker, How to Waste Over Half a Trillion Dollars: The Economic Implications of Deflationary Renewable Energy for Coal Power Investments (2020), https://bit.ly/3C4tHHn
5. Pai, S et al, 2021, One Earth, 4, 1026
6. GWEC, Wind Can Power 3.3 Million Jobs Over the Next Five Years (2021), https://bit.ly/3yq7GAQ
7. IRENA, Renewable Energy and Jobs: Annual Review 2020, https://bit.ly/2V6Hj4w
8. Paris Agreement (2015), https://bit.ly/3ie4LoZ
9. BEIS, Green Jobs Taskforce report (2021), https://bit.ly/3j8hcSy
10. GCNA, Just Transition: Implications for the Corporate Sector and Financial Institutions in Australia (2020), https://bit.ly/3foPJLh
11. Energy Institute, Energy Barometer 2021, https://bit.ly/3rNIelY
12. Just Transition Initiative, Just Transition Concepts and Relevance for Climate Action (2020), https://bit.ly/37lydTD
13. Aldersgate Group, Upskilling the UK Workforce for the 21st Century (2020), https://bit.ly/3ikwlRI
14. The Engineer (2020), https://bit.ly/3liKu3C
15. IET, IET Skills for a Net Zero and Green Recovery: 2020 Survey, https://bit.ly/3Ch5pdw
16. Prospect, A Just Transition Plan for the UK Power Sector (2020), https://bit.ly/3ljKTmf
17. Platform, Offshore Oil and Gas Workers’ Views on Industry Conditions and the Energy Transition (2020), https://bit.ly/3lnJz1Q
18. Euractiv, A Just Transition? The Barriers to Central and Eastern Europe Making the Leap from Coal (2021), https://bit.ly/3xtzRxv
19. Climate Investment Funds, Supporting Just Transitions in South Africa (2020), https://bit.ly/3rLIC4F
20. Deloitte, A New Choice: Australia’s Climate for Growth (2020), https://bit.ly/3foFFSG
Recent Editions
Catch up on the latest news, views and jobs from The Chemical Engineer. Below are the four latest issues. View a wider selection of the archive from within the Magazine section of this site.
