Can you switch to renewables without sacking coal workers?

The town where Wendy Farmer was born no longer exists. It was literally dug up for coal in the 1980s when mining in Victoria’s Latrobe Valley expanded. As a schoolkid, she took tours of the old power stations, of their towers belching out the planet-warming emissions that stripped the blue from the sky. “We were taught that it was just steam – and the power stations make the weather,” Farmer says. “But it was Victoria’s backbone, it powered the whole state. There’s a lot of pride still in those old stations and mines.”

Then 2014 came and the fire at the Hazelwood coal mine. It burned for 45 days, blanketing the valley in smoke and sending Farmer’s husband and other workers to the emergency room. Despite assurances by authorities at the time that the air was safe, multiple inquiries have now linked premature deaths in the local community to the haze. The fossil fuel industry was already known to be driving global warming but now longstanding health concerns hit home, too. “And I began to really see [our community] needs a future beyond coal,” Farmer says. “It’s not good for us.”

Energy cannot be created or destroyed, just changed from one form to another, says the First Law of Thermodynamics. The switch from powering the world with fossil fuels (coal, oil and gas) to renewable sources such as solar, wind and hydrogen is already under way.

Renewables are now largely cheaper than these old power sources and that means more mines and legacy power stations will close in coming years. The question is: how fast and what happens to the workers when they do?

Almost everywhere industries have collapsed, workers have been left in the lurch, from manufacturing and coal today to the cotton mills of the previous century. But when Germany shuttered its black coal industry in 2018, it did it without sacking a single worker, under a model known as “just transition”.

So how did the Germans pull it off? How is the power shift going across Australia? And why has “just transition” become a dirty word dividing both Labor and union meeting rooms?

What is happening to fossil fuel jobs?

In 2016, Donald Trump won his unlikely election at least in part by declaring an end to “the war on coal”. In office he stripped away environmental regulations on the industry and instead injected it with more federal money. And yet, by the end of his term, US coal-fired energy capacity had fallen faster than in any other presidential term in history. By 2019, coal miner pay cheques were bouncing as mining giants such as Blackjewel and Murray Energy shut mines and filed for bankruptcy en masse.

“The trend that’s happened here … there’s no slope,” energy economist Robert Godby told the US journal Energy News in April 2019. “It’s like the elevator is not just plunging down the elevator shaft; the cable broke and we’re just going straight down.”

As the world’s window to stop burning fossil fuels shrinks to a handful of pivotal years, demand for coal is plummeting and not just in the US. Rival clean energy technologies are more reliable than ever and fossil fuel industries are increasingly propped up by huge government subsidies. Many banks are now refusing to finance projects altogether.

Big global players such as China, the European Union and likely soon the US under President-elect Joe Biden, all plan to decarbonise their economies by the middle of the century. Speculation is even growing that some of Australia’s trading partners, such as those in the EU, may consider imposing a carbon tax at their borders. Australia’s youngest coal-fired power station, Bluewaters in Western Australia, bought by a Japanese company for about $1.2 billion less than a decade ago, has already been written off as worthless by its owners.

“No company should be surprised … We are going to see a seismic reallocation of capital,” Larry Fink, the billionaire boss of the world’s largest investment fund, Blackrock, told a conference in November.

Australia has grown wealthy from its natural resources and its mining industry is one of the most skilled in the world. It is now the third-biggest exporter of fossil fuels behind oil-rich Saudi Arabia and Russia and the first for coal, meaning many countries with limited domestic supplies rely on our coal. But this cuts both ways, wrote academic Judith Brett in a recent Quarterly Essay – leaving Australia’s relatively undiversified export profile vulnerable to the world’s waning appetite for fossil fuels as well as shifting trade winds such as China’s new war on Australian coal.

And the rise of automation has already gobbled up a slew of extraction and power station jobs across the world, too. In Queensland, where mining giant Adani is opening one of the world’s largest untapped coal reserves, a local perception that the project would create a jobs bonanza is said to have helped tip the federal election for the Coalition in 2018. While Adani said it would create 10,000 jobs, it has since admitted the number is more like 1500 at most, many of them short-term.

Fossil fuel jobs in Australia are highly paid, attracting younger workers compared with those overseas where mining has been in decline for longer, and so presenting a particular problem for a transition out of coal and gas. But they still make up a sliver of the nation’s 12-million-strong workforce. In 2019, for example, there were about 38,000 people working in coal mining.

In Australia, most talk of an energy transition centres on thermal or brown coal, which is burned to make electricity. Coal-fired power stations employ about 8000 workers, many of them in trades, with transferable skills. In mines, some employees are office workers but a large number are machine operators with more specific qualifications who would likely need retraining to move into new careers.

The phase-out of black or coking coal, which is used to make steel, may take longer, according to an analysis by University of Queensland economist John Quiggan for the Australia Institute, but he argues Australia could follow countries such as Canada in shutting down thermal coal by 2030. While a chorus of experts says that a renewables-led rebuild is the best path out of the pandemic recession for the sunniest and windiest continent on Earth, the Morrison government is also investing in new gas projects as a “transition fuel” away from the high-polluting coal until, it says, renewable power storage improves.

Old industries give way to new ones all the time but the coal jobs on the line also tend to be in regional areas. When mines and plants close, whole towns can be devastated – maintenance and equipment firms will shut, sometimes followed by shops and schools. Real estate prices can collapse, populations age and shrink and local tax bases evaporate.

Mining’s increased reliance on fly-in, fly-out worker models may be starting to dilute this effect in some towns but many, such as the Hunter region of NSW, remain vulnerable. “The whole community needs a plan to recreate itself, not just the workers,” Farmer says.

What does ‘just transition’ mean?

Four years ago, ethicist Simon Longstaff and a vanguard of prominent Australian experts handed the Coalition government an eight-point blueprint for transitioning the energy sector “fairly” to renewables. Nothing happened. But in the regions, as mines and power stations continue to close, the understanding that there isn’t a plan has begun to crystallise.

Now, Longstaff says, people are worried “and they should be”. But he says that the idea that coal miners, even generations of workers, are intractably wedded to the fossil fuel industry misses the point of their concerns. “What they’re really saying is, ‘I need a job, I need a way to provide for my family and have meaningful work.’ They’re saying, ‘Don’t leave me behind’.”

The term “just transition” was coined by North American unions in the 1990s as concerns about abrupt closures grew. The basic premise is that, as a shift from fossil fuels to renewable power is necessary for the common good, just as those industries have provided for the common good before the threat of global warming was understood, those workers and communities most affected should not be penalised.

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When fossil fuel work dries up, research suggests that about a third of all workers go onto similar jobs, a third find work but take a dip in pay or job security and a third retire and never work again. Already about 26,000 Australians work in renewables and many workers have already made the leap across from coal, including in the Latrobe Valley. But switching over is not always straightforward. Often the clean energy jobs are in construction and so shorter-term, or in rooftop solar and energy efficiency retrofits.

The sector’s rapid expansion has also drawn concern from unions about working conditions – and pay is still usually a step down, sometimes even half that of a miner’s average $130,000 salary. In the case of Port Augusta, long the heartland of coal and steel in South Australia, the closure of old power plants saw the community rally around new solar projects – but so far one of the biggest to get off the ground, the Bungala solar farm, hasn’t hired as many locals as hoped.

Of course, the end of coal does not mean the end of mining. Australia’s lesser-known minerals such as lithium, nickel and cobalt are now needed to build green technology. Some coal towns, meanwhile, are reforging their economies around agriculture, tourism and electric car manufacturing as well as clean electricity. In Latrobe, Farmer says some former Hazelwood workers have retrained in nursing and aged care.

For a transition to really be “just”, it must be orderly, Longstaff says. That means consultation and, usually, early retirement packages for older workers as well as a suite of retraining and job-matching support for younger ones. “You have to plan it before you begin, you sit down with the communities affected and say, ‘What do they need?’. That’s not to say everyone just gets a big pension either.”

Opponents to government intervention often speak of letting the market decide but others insist the shift to clean energy is now inevitable. And when there is no dialogue or formal support, the fortunes of workers on the losing side can be left entirely to big corporations squeezing the last drop of profits from a region.

In the Latrobe Valley, the owners of Hazelwood, Australia’s dirtiest power station, swore the plant wouldn’t close right up until the very day before they announced its end in 2016 – giving workers such as Farmer’s husband just five months notice to replan, in some cases, the rest of their lives.

When concerns are not addressed early, and alternatives mapped out, Longstaff says a quiet rage can build in a community – one he likens to the frustration that saw the working class vote for Brexit and a Trump presidency overseas.

“We shouldn’t be afraid of new technologies like [renewables], it could be one of the biggest boons to humanity and [Australia] in millennia. But when people aren’t looked after, when there’s no plan, they will turn against the change and the benefits it brings in new technologies and job opportunities.”

How are other countries making the shift?

In Britain in the 1980s, when the rich coal seam that had helped drive the Industrial Revolution started to peter out, the Thatcher government abruptly shut down mines, trapping whole regions in intergenerational poverty and joblessness. Two decades on, the coal and steel-making in Germany’s Ruhr valley which had helped Europe recover from two terrible world wars were facing a similarly bleak future. But instead, the German government stepped in with a staged 10-year closure, now considered the gold standard of “just transition”.

When The Age and The Herald visited the region in 2019, social historian Professor Stefan Berger said the scope and cost of the undertaking were hard to exaggerate. Working alongside communities, unions and the major employers under a slogan loosely translated as “no one left underground”, the government re-nationalised the industry and then set a timetable for closures. It repurposed existing government subsidies into pensions for older workers and retraining packages for those looking to transition. Five thousand people were kept on to work on land remediation, funded by a $355-million annual “eternity fund”, as the region was transformed through new infrastructure and research institutes. No miner lost their job. Today, Germany is running a similar phase-out of thermal coal by 2038.

Berger put Germany’s success in part down to its unique industrial culture, one built deliberately on co-operation after the horrors of World War II. Michael Mersmann from the German mining union IG BCE helped lead the transition and has since consulted with Australian unions. He was blunt about our prospects: “One of the biggest problems Australia has is there is no existing relationship between employers, trade unions and states … You are rather heading towards a conflict, not a consensus.”

Negotiating early was key for Germany and also Spain, which has seen success guaranteeing jobs under its own “no worker left behind” transition plan. In the developing world there has been a push to help countries leapfrog over fossil fuels entirely when building their economies. Solar and wind are often more practical in Africa than setting up sprawling grid connections for coal and gas. In India, Indonesia and China, these old technologies have already arrived large-scale but big shifts are under way.

Experts stress that where just transitions have worked, government intervention has been critical. In Australia, where the green energy revolution has so far been led by private enterprise, communities and state governments, many say the federal government should follow Scotland and the European Union in crafting a top-down national plan. “They need to lead this,” Longstaff says.

Will there be a ‘just transition’ in Australia?

Not necessarily. Though the idea has been woven into the fabric of the international Paris Agreement and endorsed by Australia’s Council of Trade Unions, it is not universally embraced in this country. And it has now sparked a fierce divide among unions and Labor MPs alike, at least on the messaging.

Tony Maher, president of the CFMEU’s mining and energy division, says the goal of a just transition is important “but the term has become so degraded” it’s now near impossible to discuss what it really involves. “We see anti-coal campaigners dutifully adding ‘just transition’ to their demands and, that box ticked, they can maintain their rage to shut down the industry as soon as possible.”

He says the closure timelines already set by power stations should be used to plan investment and co-operation between government, industry and unions. “It’ll take commitment … We haven’t seen anything like it yet.”

Joel Fitzgibbon, the Labor member for Hunter who lost a significant portion of his vote to a One Nation coal miner at the last election, also has little time for talk of a just transition. He told the Herald and The Age recently he believes the coal sector has decades of life left in it and that Labor should support its traditional blue-collar base. Local CFMEU official Peter Jordan says his members want the union to “do whatever it takes” to save the industry and their jobs.

Lawyer Bronya Lipski, herself a “proud [Latrobe] Valley girl”, now helps other coal towns fight for fair transitions at Environmental Justice Australia. She agrees you cannot walk into such communities and “tell them they’re killing the planet by putting food on their tables, let’s end coal overnight”. “We’ve all worked in it or known someone who has. That’s my dad. That’s my grandpa.” But on the ground in these towns, she says, there is no denial that the industry’s end is fast approaching. “It doesn’t matter if you’re in Morwell or Lithgow or Rockhampton, everyone is facing the same decline. It’s become bitter because there’s no plan.”

Labor’s Environmental Action Network and the Australian Manufacturing Workers Union have helped form the Hunter Jobs Alliance, which advocates for a just transition in all but name. Labor’s Pat Conroy, who holds the seat neighbouring Fitzgibbon’s, says workers mistrust the term “because Australian governments have never managed transitions well”. But he stresses that decarbonising the economy is in everyone’s interests. “Communities in carbon-rich areas [such as the Hunter and Latrobe valleys] cannot be sacrificed to that effort, they have to be supported. Seventy-five per cent of our coal-fired power stations are working beyond their expected lifespans. The companies have told us they are going to close, they’re not going to be replaced with new coal. Any other view is grounded in an alternative reality.”

How could it work in Australia?

Australia’s energy shift is already widely discussed behind closed doors by government and industry figures, says Amanda Cahill of Next Economy, which consults with governments, communities and companies on transition. “But they say things like, ‘We can’t talk about it [publicly] … the polling doesn’t say we can talk about it yet’.”

First, she says, the federal government should admit that it cannot control foreign demand for our resources. “The markets are already moving,” she says. “Acknowledging that is not hastening it.”

From there, governments could work with communities to redeploy workforces. With dates and timelines in place, she says expectations can be set for the private sector and alternative investment in the area sought.

Conroy points out that former coal regions come with the port facilities, workforces and grid connections needed for future heavy industry, such as hydrogen power and green steel manufacturing.

Lipski says a truly just transition must remediate the land, too, describing the asbestos dumps, coal ash dams and the “dirty big holes” left in the landscape when sites close. Cleaning them up can often create a jobs boom in itself, as it did in Germany. “You’ve got to give people something they can use once industry has packed up and left,” Lipski says.

While Hazelwood’s closure is often held up as an example of what not to do, in the end experts say it wasn’t a catastrophe. The day the news came from the bosses, the Victorian government pledged $266 million to transition the region, including business incentives, new infrastructure projects and retraining. The fix was reactive and “slow to get started”, Farmer says, but, four years on, unemployment is bang on the state average and most of the affected workers are in new jobs. The valley, previously hit hard by the privatisation of power stations, has seen its housing market pick up, not crash, as clearing skies above Hazelwood draw people in.

“The valley hasn’t lost its identity,” says Farmer, whose husband, like many older workers, decided to retire early and leave new jobs to the younger ones. “I’m sure some of them would have liked to get another $150,000 [gig] straight away but is it really fair for [a transition] to be pay-for-pay, that’s not always practical. Maybe the trade-off is they’re in jobs that better suit them, where they can spend more time with their families.”

Coal dust still lands on Farmer’s vegetable patch most days, blown in by one of Victoria’s three remaining coal-fired power stations at Yallourn. Its owners say it will keep running until 2032 but workers expect the doors to close much earlier. “Everyone says they don’t want to be another Hazelwood,” Farmer says. “But, again, they’re not talking to workers.”

Still, Farmer is optimistic about the blue skies ahead for the valley.

“We could be a hub for renewables, or for food and agriculture. You know, we were farmers long before we were miners. It’s up to us now.”