coal

By James K. Rowe, Steph Glanzmann, Jessica Dempsey and Zoë Yunker - Canadian Centre for Policy Alternatives, November 2019

THE WORLD’S LARGEST PENSION FUNDS comprise over half of global investment capital. The Canada Pension Plan Investment Board (CPPIB) manages one of the country’s largest pools of investments, at $400 billion. How pension funds choose to invest has significant bearing on how we collectively address the climate emergency and the needed energy transition away from fossil fuels. In this report we ask: Is the CPPIB investing with the 1.5-degree Celsius limit on global average temperature rise in mind?

In April 2016, Canada was among 195 countries that signed the Paris Agreement, committing to “holding the increase in the global average temperature to well below 2 degrees Celsius above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5 degrees Celsius.”

Our major finding is that the CPPIB is not investing with the 1.5-degree limit in mind. Within its public equities portfolio, it has over $4 billion invested in the top 200 publicly traded fossil fuel reserve holders (oil, gas and coal). To stay within 1.5 degrees, these companies can extract only 71.4 billion tonnes of carbon dioxide, yet the companies the CPPIB is invested in have 281 billion tonnes in reserve, meaning they have almost four times the carbon reserves that can be sold and ultimately burned to stay within 1.5 degrees. Since reserves are factored into current company valuations, this means the CPPIB has invested billions of dollars in companies whose financial worth depends on overshooting their carbon budget.

This is a moral and ecological failure. It is also a financial risk. As energy generation shifts away from fossil fuels, investors who do not respond could be left with “stranded assets”—investments that are no longer profitable. In its 2019 Financial System Review, the Bank of Canada included climate risk in its analysis for the first time. Canadian fossil fuel companies and their investors are especially exposed to stranded asset risk since the majority of oil produced in Canada is high-cost, carbon-intensive bitumen from the oil sands. And yet, the CPPIB remains exposed to the biggest oil sands majors, with over $1.2 billion invested in Canadian Natural Resources Ltd., Suncor Energy Inc. and Cenovus. Canadian pension beneficiaries may therefore be particularly vulnerable to stranded assets and the financial risks they pose.

Read the report (PDF).

By Ian Hussey and Emma Jacksonn - Parkland Institute, November 2019

This report explains that Alberta will have little coal-fired electricity left by the end of 2023, six years ahead of the federally mandated coal phaseout deadline of December 31, 2029. This relatively rapid transition away from coal power is the result of numerous decisions made since 2007 by various provincial and federal governments, a few arms-length agencies of the Alberta government, and several large publicly traded corporations that produce electricity for the Alberta market. Our report aims to evaluate Alberta’s electricity transition to date against principles and lessons gleaned from the just transition literature.

Following the introduction, the report proceeds as follows. In Section 2, we provide an overview of Alberta’s coal power industry, communities, and workforce. In Section 3, we delineate key principles and lessons from the just transition literature. In Section 4, we present case studies on the three companies affected by the Notley government’s accelerated coal phase-out (TransAlta, ATCO, and Capital Power). We examine the Notley government’s transition programs for coal workers in Section 5 and for coal communities in Section 6. Section 6 also includes a case study of Parkland County, which is the municipal district in Alberta perhaps most affected by the phase-out of coal-fired electricity. In Section 7, we provide an analytic discussion of our research results by evaluating the government’s transition programs against the key principles and lessons drawn from the just transition literature. In Section 8, we outline our conclusions based on the research results.

Read the report (Link).

By Richard Halsey, Neil Overy, Tina Schubert, Ebenaezer Appies, Liziwe McDaid and Kim Kruyshaar - Project 90 by 2030, September 19, 2019

A just transition (JT) is a highly complex topic, where the overall goal is to shift to systems that are better for people and the planet, and to do so in a fair and managed way that “leaves no one behind”. A JT is about justice in the context of fundamental changes within the economy and the society.

Both of these areas are extremely contested, consensus is hard to achieve, and people are generally resistant to change. A JT confronts “business as usual” and threatens powerful vested interests in certain economic sectors. In recent years, a vast amount of literature on the subject has been published, and in South Africa the conversation has picked up pace. The urgency of acting now is indisputable.

While a JT can apply to many sectors and industries, this publication focuses on energy. In addition to being a major contributor to climate change, environmental damage and impacts on human health, the energy sector (particularly Eskom), is facing significant challenges in South Africa. We fully acknowledge that energy is linked to other sectors such as transport, agriculture, water and land use, and that a just energy transition (JET) is a part of a wider JT. While the focus of this report is on one sector, we do so recognising that it is linked to other parts of a larger system in many ways.

Our approach was to look at what we can learn from international experience, to combine that with what has already been done in South Africa, and to make recommendations about how to move forward. This publication focuses on the shift from coal to renewable energy (RE), mainly for electricity generation. We are well aware that a movement away from fossil fuels (coal, oil and gas) is far more than just moving from coal to RE, but as discussed in Chapter 3, this particular transition is the obvious starting point in South Africa. The lessons and recommendations presented here can also be adapted to other fossil fuel sectors. While the focus of this study is on coal, a big picture perspective of the energy system is crucial. South Africa must adopt an integrated planning approach, for energy and other sectors.

Read the text (PDF).

By Robin Webster and Dr Christopher Shaw - Climate Outreach, September 2019

The idea of just transition first emerged in the 1970s, when US union leader Tony Mazzocchi1 proposed that people whose jobs were threatened by nuclear disarmament should be compensated for the loss. In the 1990s Mazzocchi broadened the argument to refer to workers in environmentally damaging jobs, whose employment is affected by new policies aiming to reduce pollution.

The International Trade Union Confederation (ITUC) now defines just transition as reducing emissions while ensuring “decent work, social inclusion and poverty eradication.” Its basic elements, according to ITUC, include public and private investment to create green jobs, advance planning to compensate for the negative impacts of climate policies and opportunities for retraining for people whose jobs are affected.

A wide range of groups - including environmental NGOs, labour justice groups and policymakers - have since adopted the idea and it is codified in international climate policy. The preamble to the 2015 Paris Agreement requires the international community to take into account “the imperatives of a just transition of the workforce and the creation of decent work and quality jobs” and the European Commission aims to bring more focus on “social fairness” in tackling climate change.

Just transition is an important concept; a tool for facilitating dialogue between different stakeholders and challenging the discourse of ‘jobs versus climate.’ As one report puts it, it has the potential to be “at the heart of a powerful narrative of hope, tolerance and justice; a narrative that is grounded in people’s actual lived experiences and aspires to guide collective action while simultaneously giving rise to tangible alternatives.”

It is also important from a pragmatic perspective. Recent events - including the Gilets Jaunes protest against a government proposal to raise fuel prices in France and President Trump’s championing of jobs in the US coal industry as a reason for pulling out of the Paris climate change agreement - demonstrate the need to seek social consent for the low-carbon transition, or risk it being undermined.

The term itself, however, is little used outside the policy and technical literature, and hardly used at all in the global South, where it may conflict with other strong cultural narratives - for example the need for poorer countries to develop and use more energy.10 In countries where the idea is more current, only a limited amount of research has been carried out exploring what the idea of just transition means to the communities it is meant to help.

Yet the idea of ‘social dialogue’ between governments, businesses, trade unions and civil society is at the core of just transition, according to many unions.12 Social dialogue means engaging in discussions about what transition means for people’s lives and sense of identity; for jobs, communities and place.13 If just transition is to move from pages of policy reports into reality, then attention needs to be paid to how to frame the dialogue between advocates of a low-carbon economy, and those who are likely to be most fundamentally affected.

Read the report (PDF).

By Benjamin Stemer - Global Green, August 20, 2019

Over the past few decades, global concern surrounding the rapid change in our Earth’s climate has consistently risen, to the point that many U.S. states are taking independent and decisive action for the welfare of the environment, their citizens, and the global population as a whole. Colorado is just one example of this trend which favors a reduction on energy produced from coal, and an increased emphasis on renewable alternatives. On May 28th 2019, Colorado signed into law the “Just Transition from Coal-based Energy” which incentivizes the early termination of coal plants, while simultaneously providing financial support for any citizens who may be negatively impacted by the early closing of these coal plants. 

With an issue as complicated and misunderstood as climate change, finding and implementing realistic and timely solutions for our climate crisis has proven to be extremely difficult. However, Colorado is not intimidated by the scope and seriousness of this subject and, as a result, they have moved beyond simply discussing this issue through the passing of their decisive policy titled the “Just Transition from Coal- based Energy”. According to the Institute of Energy Economics and Financial Analysis, with the introduction of this bill, Colorado is setting a strong example for other states to follow (1). This new law creates a Just Transition Advisory Committee, which consists of directors from the Department of Labor and Employment, the Colorado Energy Office, The Department of Local Affairs, representatives from the Governor’s office and the State Senate, as well as 12 local representatives, including three coal workers, three coal community representatives, two members from disproportionately impacted communities, and two experts on economic development and/or workforce retraining. The purpose of the Just Transition Advisory Committee is to create a plan that will provide benefits for impacted workers, make grants available for communities heavily reliant on the coal industry, and offer additional support for anyone impacted by the early closing of coal plants all across Colorado. One highlight of this bill is that any costs associated with supporting impacted workers and communities will be paid for through a process of voluntary securitization of investor-owned coal plants (2). If you’re like most people, you might not have any idea what the process of securitization entails, so let me explain.

By Rachel M. Cohen - In These Times, July 24, 2019

This past May, Colorado’s Democratic governor Jared Polis signed a series of new environmental bills into law, with the enthusiastic backing of the state’s labor movement. Legislation ranged from expanding community solar gardens to establishing a “Just Transition” office for coal-dependent communities.

Organized labor in Colorado hasn’t always been an ally in the fight against climate change, but beginning in 2018, a Democratic messaging bill that called for 100 percent renewable energy by 2035 forced local unions to start having some tough conversations.

“Republicans controlled the Senate, so the bill had no chance of passing, but it forced the conversation on our end as to what do we need to do to get behind these bills in the future, instead of just blocking them or delaying,” explained Dennis Dougherty, the executive director of the Colorado AFL-CIO, which represents approximately 165 unions representing more than 130,000 workers. “It was really the first time we asked ourselves, well what’s our game plan?”

In February 2018, Colorado activists launched a state-based affiliate of the Peoples Climate Movement, a coalition of community, faith, youth and environmental groups focused on promoting an equitable response to climate change. Dougherty, who worked for years as a federal mediator before joining the labor movement, soon became co-chair of the Colorado coalition. “This was the first time labor has really stepped out in leadership on climate,” he told In These Times.

What followed were a series of organized talks between unions and environmental groups. With resources from its parent organization, the Peoples Climate Movement Colorado even hired a skilled facilitator from the Institute for the Built Environment at Colorado State University to help guide its conversations. The work culminated in a Climate, Jobs and Justice Summit last September.

Democrats won a majority of seats in the state Senate after the 2018 midterms, giving them trifecta control over Colorado politics, and the ability to pass many climate-related bills this year. Those bills included two pieces of legislation advocates hope can serve as a model for climate, jobs and justice organizing in other states.

One is HB-1314, which establishes a Just Transition Office in the Colorado Department of Labor and Employment. The first-of-its-kind office, which will have both a dedicated staff and an advisory committee of diverse stakeholders, is charged with creating a equitable plan for coal-dependent communities and workers as the state transitions away from fossil fuels. The goal is to mitigate the economic hardship that will accompany this energy transition. A draft plan is due by July 2020, and by 2025, the state will start administering benefits to displaced coal workers, and provide workforce retraining grants to coal-transitioning communities like Pueblo, Larimer, Delta, Morgan and others.

By Daniel Aldana Cohen, Kate Aronoff, Alyssa Battistoni, and Thea Riofrancos - Common Wealth, 2019

Climate politics are today bursting to life like never before. For four decades, market fundamentalists in the United States and United Kingdom have blocked ambitious efforts to deal with the climate crisis. But now, the neoliberal hegemony is crumbling, while popular climate mobilisations grow stronger every month. There has never been a better moment to transform politics and attack the climate emergency.

When the climate crisis first emerged into public consciousness in the 1980s, Margaret Thatcher and Ronald Reagan were consolidating a neoliberal doctrine that banished the most powerful tools to confront global heating— public investment and collective action.

Instead, neoliberals sought to free markets from democratically imposed constraints and the power of mass mobilisation. Thatcher insisted that there was no alternative to letting corporations run roughshod over people and planet alike in the name of profit. Soon, New Democrats and New Labour agreed. While the leaders of the third way spoke often of climate change, their actual policies let fossil capital keep drilling and burning. Afraid to intervene aggressively in markets, they did far too little to build a clean energy alternative.

Then the financial crisis of 2008 and the left revival that exploded in its wake laid bare the failures of the neoliberal project. An alternative political economic project is now emerging—and not a moment too soon. As the Intergovernmental Panel on Climate Change put it, keeping global warming below catastrophic levels will require “rapid, far-reaching and unprecedented changes in all aspects of society.” In other words: public investment and collective action.

Fortunately, movements on both sides of the Atlantic have been building strength to mount this kind of alternative to market fundamentalism. On the heels of Occupy Wall Street and Black Lives Matter, Bernie Sanders’s 2016 Democratic primary campaign breathed new life into the American left and its electoral prospects. Jeremy Corbyn’s election as leader of the Labour Party, spurred by a vibrant grassroots mobilisation, gives those of us in the U.S. hope: if New Labour could give way to Corbynism, surely Clintonism can give way to the left wing of the Democratic party. In the U.K., drawing on tactics from the Sanders campaign, Momentum has developed a new model of mass mobilisation to transform a fossilised political party. It’s restoring the dream that formal politics can be a means for genuinely democratic political organising. In turn, U.S. leftists are learning from Momentum’s innovations.

The vision of the Green New Deal that has taken shape in the United States in the past few months is in many ways a culmination of the U.S. left’s revival. The Green New Deal’s modest ambition is to do all that this moment requires: decarbonise the economy as quickly as humanly possible by investing massively to electrify everything, while bringing prodigious amounts of renewable power online; all this would be done in a way that dismantles inequalities of race, class and gender. The Green New Deal would transform the energy and food systems and the broader political economy of which they are a part.

Read the report (PDF).

By Julia Prochnik - Natural Resources Defense Council, April 24, 2019

Utility securitization can be a prescription for lowering energy costs and reallocating funds previously committed to expensive fuels and reinvesting them in lower cost clean energy infrastructure. Securitization is also a useful financing tool to help fund a Just and Equitable Transition to clean energy infrastructure.

Securitization is a financing tool that has existed in the financial sector for decades and is a special type of utility bond offering that gets funds from private investors at a very low interest rate. It can be used to replace more expensive capital and costs that utilities pass on to customers.  Securitization provides a lower cost to customers. 

Legislation is needed, in Colorado and elsewhere, to guarantee a regulated dedicated rate and an unavoidable charge with Public Utility Commission oversight to ensure that the bonds are paid in full.  This dedicated rate along with other conditions allow for high credit score on the bonds to get the lowest interest rate from investors and therefore the lowest costs for customers. 

For example, when a utility says they need to securitize something, they are looking into refinancing their costs of raising capital at a secured lower bond rate, just as you would with decreasing interest charged on a credit card. The regulated utility can then repurpose the money raised into a variety of cleaner operations and transition funds. 

A Just and Equitable Transition builds from the indigenous and labor movement to create a just transition.  Adding equity expands the policymaking to include diverse community voices and help make change livable for all impacted.