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Sharing the challenges and opportunities of a clean energy economy: Policy discussion paper A Just Transition for coal-fired electricity sector workers and communities

By staff - Australian Council of Trade Unions - November 2016

The ACTU is primarily concerned with workers, their rights, their welfare and their future. A just and civil society is one where everyone shares in the wealth of the nation but it is also one where economic costs are equally shared.

Transitioning an industry is a massive economic and social disruption. History shows that this has often been done poorly in Australia, with workers and communities bearing the brunt of such transitions - suffering hardship, unemployment and generations of economic and social depression.

Research in the textiles, clothing and footwear (TCF) and car manufacturing industries shows, for example, that only one third of workers find equivalent full time work following their retrenchment, while one third move into lower quality jobs (lower wage, lower job status or into part-time and casual work) and one third are locked out of the labour force altogether.

International experience however shows that a transition can be done equitably, achieve positive outcomes for workers, save communities and forge new areas of industrial growth and prosperity.

Australia is currently facing one such transition in the coal-fired electricity sector. If Australia manages this transition well, the nation would have a structured and equitable approach that could apply to any industry undergoing similar change in the future.

At last year’s Paris climate conference, Australia alongside 194 countries, committed to limit global warming to less than 2°C above pre-industrial levels. As part of this historic agreement, unions successfully achieved recognition of the need for a ‘Just Transition’ that supports the most affected workers obtain new decent and secure jobs in a clean energy economy.

While Australia’s international obligations will require a range of complementary policies that focus on emission reduction across a number of sectors of the economy, as the largest contributor to Australia’s emissions, effective reform of the electricity sector has been identified as a key step in tackling climate change.

Download (PDF).

An Energy Revolution is possible: Tax havens and financing climate action

By Patrick Hearps and Sam Cossar-Gilbert - Friends of the Earth, September 2016

This report is the technical report that supports Friend of the Earth International’s summary report with recommendations and general analysis, also entitled ‘An energy revolution is possible’.

The aim of this analysis is purely to calculate an investment cost of providing several regions of the developing world with 100% renewable electricity, and to compare those amounts with government revenue lost through tax havens globally, in order to highlight the need for economic and climate justice.

Read the report (PDF).

The Sky’s Limit: Why the Paris Climate Goals Require a Managed Decline of Fossil Fuel Production

By Greg Muttitt, et. al. - Oil Change International, et. al., September 2016

In December 2015, world governments agreed to limit global average temperature rise to well below 2°C, and to strive to limit it to 1.5°C. This report examines, for the first time, the implications of these climate boundaries for energy production and use. Our key findings are:

  • The potential carbon emissions from the oil, gas, and coal in the world’s currently operating fields and mines would take us beyond 2°C of warming
  • The reserves in currently operating oil and gas fields alone, even with no coal, would take the world beyond 1.5°C
  • With the necessary decline in production over the coming decades to meet climate goals, clean energy can be scaled up at a corresponding pace, expanding the total number of energy jobs.

One of the most powerful climate policy levers is also the simplest: stop digging for more fossil fuels. We therefore recommend:

  • No new fossil fuel extraction or transportation infrastructure should be built, and governments should grant no new permits for them
  • Some fields and mines –primarily in rich countries –should be closed before fully exploiting their resources, and financial support should be provided for non-carbon development in poorer countries
  • This does not mean stopping using all fossil fuels overnight. Governments and companies should conduct a managed decline of the fossil fuel industry and ensure a just transition for the workers and communities that depend on it.

In August 2015, just months before the Paris climate talks, President Anote Tong of the Pacific island nation of Kiribati called for an end to construction of new coal mines and coal mine expansions. This report expands his call to all fossil fuels.

Read the report (PDF).

Breathing in the benefits: How an accelerated coal phase-out can reduce health impacts and costs for Albertans

By Benjamin Israël, Kim Perrotta, Joe Vipond, Leigh Allard, and Vanessa Foran - Pembina Institute, September 2016

With the phase-out of coal power announced by the provincein November 2015, Albertans stand to avoid significant health impacts caused by coal pollution. By extension, afurtheraccelerated phase out of coal power facilities would both hastenand amplify those avoided health impacts.The health benefits and costs savings in avoided health outcomes would be significant, and should be consideredin the government’s planning of the coal phase-out from now to 2030.

While the provincial government has announced a coal phase-out, they have not yet released a transition schedule. This analysis assesses the relative benefits of an accelerated stepwise transition away from coal, as proposed by the Pembina Institute,versus the back-loaded phase-out that otheranalyses haveposited.

In 2012, when the federal government finalized its coal regulations that —in effect —reduce electricity generation from coal plants, Environment Canada(as it was called at that time)estimated considerable health impacts would be avoided, usinghighly regarded modelling techniques. Logically, thesesignificantbenefits from reducing coal necessarily mean that the use of coal for power generation causesconsiderablehealth impacts in the first place.

By extrapolating the health benefit results from Environment Canada’s analysis, this report highlights the full impact of coal-fired generation in Albertaand indicates attainable benefits associated with the province’s coal phase- out.When the federal government weakened its proposed coal regulations back in 2012 in response to lobbying from some coal generators, allowing coal plants to continue unabated longer than first proposed,it left health savings on the table. Alberta can now grasp these savings byaccelerating our transition away from coal-fired electricity.

Read the report (PDF).

Life After Coal: Pathways to a Just and Sustainable Transition for the Latrobe Valley

By Anne Martinelli, et. al. - Environment Victoria - September 2016

The Latrobe Valley has a proud history of supplying the electricity that powers Victoria. But coal-burning power stations are ageing and –responding to climate change – the world is moving rapidly to cleaner energy sources. In this shifting context, the Latrobe Valley faces inevitable change. The question is: how will that change be managed?

With recent news that Hazelwood power station may close as early as in April 2017, there is a narrow window of opportunity to ensure that the Latrobe Valley prospers during the transition to a cleaner economy, rather than suffers as it did during previous economic changes.

A ‘just transition’ is a framework for managing the shift towards such new economies, with a focus on inclusive participation for those affected and a fair distribution of the costs and benefits of change.

This report explores what a just, and well-managed, transition process for the Latrobe Valley might look like. As experience from around the world has shown, when industrial change does arrive it can come very quickly, and being unprepared is costly.

In South Wales, UK, where there was little transition planning prior to the 1980s coal-mine closures, the damaging economic and social consequences have been profound and long-lasting. By contrast, Rochester, New York, which started planning its transition two decades before the city’s main employer – Kodak – collapsed, the situation has been more positive.

The first closure of one of the four large coal-burning power stations in the Latrobe Valley could be as early as 2017, and the rest could quickly follow. Tangible action and funding to develop an alternative economic future is required now.

For the Latrobe Valley to successfully achieve a just transition, two equally important processes must occur: (1) an orderly and planned transition away from coal; and (2) a collaborative and inclusive transition towards a sustainable local economy.

Read the Report (Link).

Advancing Equity in California Climate Policy: A New Social Contract for Low-Carbon Transition

By Carol Zabin, Abigail Martin, Rachel Morello-Frosch, Manuel Pastor and Jim Sadd - UC Berkeley Labor Center, September 13, 2016

California’s leadership role in climate policy has once again been confirmed by the passage of Senate Bill 32 (Pavley, 2016), which commits the state to the ambitious target of reducing greenhouse gas emissions to 40 percent below 1990 levels by 2030—staying the course to an 80-percent reduction by 2050. A central issue in the SB 32 political debate, as well as the many related policies that preceded it, is the impact of climate policy on equity: how to ensure that low-income and working-class Californians do not dis-proportionately bear the costs and are included in the benefits of California’s transition to a low-carbon economy. This report presents a Climate Policy Equity Framework to assist California decision-makers interested in reducing greenhouse gas emissions in ways that promote economic, social, and environmental equity. We suggest that policymakers, regulators, community groups, advocacy organizations, and business interests should develop a “social contract” to manage a transition to a low-carbon economy that both maximizes the benefits of low-carbon economic development and minimizes the risks to working people and disadvantaged communities. This social contract can strengthen the broad political coalition needed to stay the course on the state’s ambitious greenhouse gas reduction goals, particularly in the face of accelerating greenhouse gas emission reductions and a legal challenge to the constitutionality of California’s cap-and-trade system. The Climate Policy Equity Framework can then guide policy development and program implementation to reflect and support the social contract.

But what is climate equity? How can it be defined in a way that promotes both good jobs and prioritizes those communities that are hardest hit by climate change, multiple environmental hazards, and socio-economic stressors? What key criteria can then be used to develop and assess policies such as renewable portfolio standards, incentives for energy retrofits, cap and trade, transit-oriented development, low-carbon fuels and vehicle deployment, and much more? And finally, when faced with trade-offs between different equity criteria or tensions between environmental justice and labor interests, how can decision-makers maximize equity outcomes?

To answer these questions, this report proposes a “Climate Policy Equity Framework” that operates at three levels to:

  • Articulate equity principles and goals to guide policy design;
  • Present key criteria to analyze how close a particular climate policy or program comes to meeting these equity goals; and
  • Propose indicators that point the way to mechanisms and strategies to advance climate equity.

We then apply these equity criteria to assess progress on environmental justice, economic equity, and public accountability goals, using the limited data currently available. Our assessment highlights positive developments, remaining challenges, and the data gaps that must be filled to facilitate more complete assessments in the future. We also apply the criteria and indicators to two specific climate policy arenas—energy efficiency and renewable energy—to illustrate how to improve the equity outcomes of specific climate policies and programs. Finally, we present a preliminary set of recommendations to illustrate some concrete opportunities for equitable climate initiatives.

Read the report (PDF).

Beyond a Band-Aid: A Discussion Paper on Protecting Workers and Communities in the Great Energy Transition

By Arjun Makhijani, Ph.D - Institute for Energy and Environmental Research and Labor Network for Sustainability, June 10, 2016

This discussion paper presents a strategy for protecting workers and communities that may be threatened by the current and future transformation of the U.S. energy system. It is derived from the recognition that recent technological developments have made solar and wind energy, in combination with efficiency, cheaper than continued reliance on fossil fuels. An economical transition to an energy system that is nearly emissions-free is possible. The transition will provide enormous benefits, both in terms of climate protection and to workers and communities. The new energy system will be cleaner, and more resilient. Air pollution will decline. Solar and wind energy require essentially no water at a time when stress on water resources is becoming an ever larger economic and ecological issue.

Notwithstanding these benefits, significant issues of justice will be raised by the transition to a clean energy future. Even though large numbers of new jobs will be created, there is no guarantee that workers and communities which lose existing jobs will have them replaced by new ones. Indeed, unless proactive policies are in place, many current workers in fossil fuel industries will become unemployed. The communities they live in will be disrupted by loss of tax revenues.

Too often these downsides are disregarded because they seem insignificant compared to the benefits of energy transition and climate protection. But no job is insignificant if it is your job; and it will be of little comfort to low-income households if utility bills go down on average, but theirs do not.

Some proposals for transitioning to clean energy include assistance programs for workers who lose their jobs. But often these are little more than extended unemployment compensation and training for jobs that may or may not exist. Often they would be both too little and too late – more like putting a Band-Aid on an accident victim than a well-considered plan to keep people from getting run over. And they disregard some of the most devastating impacts of energy system change, like the loss of the local tax base that often funds critical community services like libraries and parks and provides supplemental money for schools and for fire and police departments.

“Beyond a Band-Aid: A Discussion Paper on Protecting Workers and Communities in the Great Energy Transition” proposes direct investments in local economies dependent on fossil fuel jobs before devastating economic disruption begins. And it proposes a strategy to protect low-income consumers from the effects of that tax increase. However, this discussion paper does not cover the more general longstanding problem of energy affordability for low-income households. Tens of millions of households face high home energy bills, often exceeding 10 or even 20 percent of income. IEER has examined this issue in detail in an energy justice study specific to Maryland and proposed a three-pronged solution that is broadly applicable: limiting bills of low-income households to 6 percent of gross income, increasing energy efficiency, and providing universal solar access to low-income households.

Read the report (PDF).

International Oil Companies: The Death of the Old Business Model

By Paul Stevens - Energy, Environment and Resources, May 5, 2016

The future of the major international oil companies (IOCs) – BP, Chevron, ExxonMobil, Shell and Total – is in doubt. The business model that sustained them during the 20th century is no longer fit for purpose. As a result, they are faced with the choice of managing a gentle decline by downsizing or risking a rapid collapse by trying to carry on business as usual.

Most commentary on the IOCs’ problems has focused on the recent fall in oil prices and the growing global commitment to tackle climate change. Important though these are, the source of their predicament is not confined to such recent developments over which they have no control. Their problems are more numerous, run deeper and go back further. The prognosis for the IOCs was already grim before governments became serious about climate change and the oil price collapsed.

Read the report (Link).

Alpha, Arch, Peabody Energy: Bad Business Decisions are the True War on Coal

By staff - Public Citizen, May 2016

Over the past year, three of the United States’ major coal companies filed for bankruptcy: Alpha Natural Resources in August 2015; Arch Coal in January 2016; and Peabody Energy in April 2016.3 Although these companies and their trade association allies have often blamed environmental regulations for their precarious financial state, the truth is that debt-fueled acquisitions hobbled their finances at a time when market conditions were rapidly souring. Namely, Alpha Natural Resources, Peabody Energy, and Arch Coal bet big on future Chinese coal demand growth in 2011, going into debt to finance major expansions into metallurgical coal production during the year it was at peak price, only to see markets decline soon after the transactions were complete. At the same time, top executives were awarded record financial compensation, while slashing employee benefits and laying off workers.

Read the report (PDF).

What Keeping Oil in the Ground Can Do for Economic Inequality

By Yessenia Funes - Yes! Magazine, March 15, 2016

Our lifestyle is inextricably linked to fossil fuels. We pay the industry to heat our homes and power our cars. Though driving might be optional where public transit is available, heat is not during harsh winters. We know about the effects on the climate of burning oil, gas, and coal for energy, but we don’t know what turning our backs on them will do to our economy. Some worry that closing our oil refineries and shutting down our mines would throw the market into a dangerous vortex. That doesn’t need to be the case. A successful energy transition could actually benefit the economy and reduce inequality.

The economy relies on a number of things, including spending, manufacturing, trade, and personal income. The availability of fossil fuels has largely driven these for 150 years. “[Oil] is the world’s first trillion-dollar industry in terms of annual dollar sales,” environmental author Jack Doyle wrote in 1994. In North Dakota, a major oil- and gas-producing state, an oil boom created the $53.7 billion gross domestic product the state sees today.

But booms often have downsides. When the journal Energy Economics compared six states that produced the vast majority of the West’s crude oil and natural gas, it saw per capita income decrease by as much as $7,000 in counties whose incomes relied most on such development. Also, the crime rates and percentage of adults without a college education increased in those counties. The study offers possible explanations, including an increasing reliance on nonlocal workers and changing wage structures.

The oil and gas industries are the largest industrial sources of volatile organic compound emissions—2.2 million tons a year. These chemicals cause smog, which can increase the risks of asthma and premature death. The industry also produces cancer-causing pollutants: benzene, ethylbenzene, and n-hexane, which are emitted during the refinement process.

Low-income communities of color disproportionately bear this health burden and are also least likely to have access to health care, including preventive medicine, checkups, and prescription drugs. The inequality of care only widens the income gap by adding more financial pressures to an already stressed group.

What about jobs? Extractive industries currently employ nearly 200,000 Americans and pay some employees as much as $42.90 an hour. These jobs are a valid concern. The U.S. unemployment rate is finally down to about 5 percent. Surely we don’t want all those people put out of work.

That won’t happen if we launch the renewable energy sector in sync. Economists at the University of Massachusetts Amherst’s Political Economy Research Institute (PERI) have studied this topic since the early 2000s. Their research shows how a transition to renewables can lead to a post-carbon world and a fairer economy.

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