Coal-dependent countries around the world face two interlinked challenges: accelerating the phase out of coal to prevent catastrophic global warming, while sustaining economic prosperity and political support. As United Nations Secretary-General Antonio Gutteres recently said, keeping global warming close to 1.5 degrees requires all new coal investments to stop now, with coal phased out in Organisation for Economic Co-operation and Development (OECD) economies by 2030 and everywhere else by 2040.
Energy supply and the economic impact of the war in Ukraine have clearly made these tasks even tougher. But the war has also provided a powerful reminder of the huge strategic and environmental risks of fossil-fuel addiction. Quitting coal need not result either in economic crisis nor energy shortages. Not quitting coal will certainly lead to climate – and therefore economic – disaster.
Researchers have systematically reviewed the policies of nations well down the path of transitioning away from coal, providing guidance on what works.
Strong proactive and collaborative leadership
Governments quitting coal in a rapid, just 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, as well as providing strong financing and infrastructure support for the rapid expansion of renewable energy. Supply-side policies such as accelerating coal industry closures through the 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 that drive economic renewal and job creation.
The European Union (EU) remains strongly focused on phasing-out coal by 2030. More than €80 billion (US$92.9 billion) has been allocated to strengthen skills and job opportunities in coal-dependent regions. These funds will also help draw in billions of dollars in private-sector finance for clean energy infrastructure and technology.
German Chancellor Olaf Schulz recently proposed the German coal phase-out date be brought forward to 2030. The German Coal Commission, comprising government, business and union stakeholders, has suggested that €40 billion (US$46.2 billion) is needed to support coal-dependent workers and communities.
Spain has underpinned its ambitious coal phase-out and renewable energy goals with over €250 million (US$289 million) for “just transition” contracts covering early retirement, re-employment, environmental regeneration and green industry investment, and setting employment goals and strategies.
In Australia, the new Labor government of Prime Minister Anthony Albanese has backed its upgraded greenhouse-gas emissions reduction goal with a National Energy Transformation Partnership to coordinate and integrate national and state government energy transition investments. The government also announced an AUD$1.9 billion (US$1.2 billion) “Powering the Regions” fund to assist traditional and new industries in harnessing the economic opportunities of decarbonization across the country.
The best transition plan is also a plan for jobs
The economic and job creation potential of a well-managed transition from fossil fuels to renewables is now well demonstrated. Employment in renewable energy rose to 12.7 million in 2022, an increase of over 700,000 jobs. The Paris-based International Energy Agency (IEA) has estimated more than 30 million jobs could be created in clean energy, efficiency and low-emissions technologies by 2030. “There is a growing focus on the quality of jobs and the conditions of work in renewable energies,” reckons International Labour Organization (ILO) Director-General Guy Ryder. “The increasing share of female employment suggests that dedicated policies and training can significantly enhance the participation of women in renewable energy occupations and ultimately achieve a just transition for all.”
In Germany, collaborative planning and long-term investment in infrastructure, education, environmental technologies, and cultural and service industries have been an essential foundation for economic diversification and job creation in coal dependent regions such as the Ruhr Valley. In the United States, investment flowing from President Joe Biden’s Inflation Reduction Act will create over 550,000 new jobs in industries producing renewable energy. And in Australia, renewable energy think tank Beyond Zero Emissions has demonstrated that low-cost renewable energy could create new export earnings of over AUD$300 billion (US$203.4 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 crucially on communities and workers being convinced that governments and business are genuinely committed to the creation of secure high-quality jobs. The 2015 Paris Climate 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.”
International Trade Union Confederation (ITUC) General Secretary Sharan Burrow reminds us that 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.”
Canada strengthened support for closing all coal-fired power stations by 2030 by working closely with coal-dependent communities and providing integrated investment, infrastructure, training and employment packages. By listening closely to workers, Canada’s 2018 Coal Transition Task Force tapped deep local knowledge and built local support for its coal-exit target.
In Australia, increasing awareness of the inevitability of the closure of coal-fired power stations has strengthened support in coal-dependent communities such as the Latrobe Valley in Victoria and Gladstone in central Queensland for a far more proactive approach to creating new economic futures and opportunities.
“Local governments all over Australia in coal regions are taking the reins because they’re seeing change now,” says Amanda Cahill, CEO of The Next Economy. “We’re seeing mines that have been approved but not funded. We’re seeing early closures of power plants.” She adds: “The biggest question is, how do you diversify those regional economies? Gladstone is a really great example because there’s so many opportunities people are starting to explore. It’s not just the renewable energy…it’s what we could do with that renewable energy. It’s things like green hydrogen, it’s manufacturing renewable energy parts, it’s looking at land use differently. And this is what’s happening all over Australia.”