Technology and economics are shifting the energy landscape. Alongside the accelerating decarbonisation agenda of global finance, unanimous agreement to a global ‘phase-down’ of coal-fired generation at COP26 has pressured even China and India to begin to get on with it.
Australia is another big coal exporter, shipping about 80% of its thermal coal overseas. At 551 million tonnes of carbon dioxide in 2018 and rising, Australia’s six biggest mines produce more emissions than the entire domestic economy. Given the global context, there’s no denying that the industry is living on borrowed time.
The warning signs have been around for a while, with Australia’s coal-fired power stations already facing massive write-downs and early closures. Unable to compete with the plunging costs of electricity from renewable sources, these assets are increasingly losing money. Of the roughly 50,000 workers employed in coal in Australia, just over 10,000 are exposed to the immediate domestic decline.
Unfortunately, Australia’s leaders are only slowly accepting this reality after a long history of politicising regional communities, simplifying the various avenues of coal employment into a single unified mass and over-emphasising the economic dependence of the surrounding rural towns. Unsurprisingly, the issue is far more nuanced and the outlook far more optimistic than many would have us believe.
Of the roughly 50,000 workers employed in coal in Australia, just over 10,000 are exposed to the immediate domestic decline
That’s why Blueprint Institute has been hard at work mapping Australia’s coal industry in detail, and charting the best path forward, with lessons for all coal-impacted regions around the world.
Our recent report, From the ground up: A Blueprint for economic diversification in regional Australia, draws on an extensive review of what works and what doesn’t in domestic and overseas examples, to identify three critical imperatives for structural adaptation: empowering communities, renewing economies, and supporting workers.
The knowledge, networks, credibility, and on-the-ground capacity of local leadership are essential to drive productive diversification. In Australia, there are some examples of this model already at work, with the Latrobe Valley Authority (LVA) enjoying measurable success and broad local support. These outcomes have prompted domestic community groups like the Hunter Jobs Alliance to demand similar authorities for their regions.
Three years after the short-notice closure of Latrobe Valley’s 1,600MW, 53-year-old Hazelwood power station, the community-led institutional response had generated $99 million in private investment, and created more than 2,500 jobs, reducing unemployment in the Latrobe Valley below original levels. This success can and must be translated elsewhere.
That’s why we recommend empowering new local authorities to make the most of their community’s unique strengths through regular stakeholder engagement and thorough, data-driven research. In Australia, we’re suggesting local authorities receive an initial $20 million and funding drawn from 5% dividends of ongoing coal royalties. Rather than waiting until it’s too late, our research highlights the critical value of short, sharp, and early investment, a lesson that governments around the world might also heed as they seek to support their own effective transitions.
Although coal generators are losingvalue, their infrastructure doesn’t have to. Following inventive overseas examples like Becker’s data centre proposal in the United States, Australia’s AGL is already planning to convert its Liddell power station into a renewable energy hub for solar storage systems, grid-scale batteries, and a waste-to-energy facility.
To support similarly inventive plans, the Federal Government should match private investment up to $100 million per asset. The Government must also set up frameworks to help launch emerging industries. Renewable energy is the obvious priority, not to mention opportunities in critical minerals mining, carbon sequestration, and the enterprises that start-up incubators could drive.
In Australia, the proposed Hunter Renewable Energy Zone alone would bring $32 billion in private investment, 6,300 construction jobs, and 2,800 ongoing jobs to the region by 2030. Meanwhile, the Star of the South offshore wind project further demonstrates how real the opportunities for reemployment in renewables are. The project has liaised directly with Yallourn coal power station in the Latrobe Valley to connect workers to the 760 construction and 200 ongoing jobs generated.
Employers should bear as much responsibility as possible to arrange job transfers and to offer generous severance compensation, but well-designed income insurance, job search services, and retraining opportunities can be powerful short-term tools to achieve long-term reemployment outcomes. Alongside a variety of other interesting findings, Blueprint’s recent polling research, Voices from the regions, found that an average 81% of respondents favoured government-funded retraining for redundant coal workers across regions with coal assets.
By empowering communities, renewing economies, and supporting workers, any jurisdiction can successfully implement policies that are proactive, coordinated, targeted, diversified, and multiplicative. If we play this right, boldly seizing the opportunities, a new and more sustainable energy economy can offer, regional Australia, and all Australians, will be better off for it.
Liana Downey is the acting Chief Executive of the Blueprint Institute. This article first appeared in our Centre Write magazine Favourable climate? Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Pixabay]
