This podcast miniseries, “Just Transition in Action,” shares perspectives and insights from people around the world to illustrate what we’ve learned about how to shift toward a net-zero economy without leaving any workers or communities behind.
This episode takes us to Australia's Latrobe Valley, once home to the country’s most-polluting power plant. When the Hazelwood coal plant abruptly announced in 2016 that it would close in just five months, its employees feared for their future. Then the state government and the union worked together to come up with a plan.
"We road-tested those terms with workers, and basically they look at you quizzically and say, well, “Just transition? We’ve never seen any. Usually when things transition, we go out the back door and have to find a job.” And so it’s sort of like they’ll believe it when they see it. And I think that’s an entirely reasonable attitude, frankly."
– Tony Maher, General President, Australia’s Mining and Energy Union
"I understand climate change is real, I think pretty much all of our workers do. We don't begrudge that at all, we just believe that if we're going to lose our job, after providing cheap electricity for 100 years in our industry, that we should at least not become the collateral damage, we should be looked after."
– Mark Richards, Former Hazelwood Unit Controller, District Vice President of Victoria branch of Australia’s Mining and Energy Union
"What emerged over time was a social dialogue among the government, the power station company and unions, and while it may not have been perfect it did provide the opportunity for a constructive set of solutions to the situation there."
– David Waskow, Director, International Climate Initiative, WRI
Hello and welcome to the Big Ideas Into Action podcast from the World Resources Institute, and to the second in a special series looking at just transition. There are plenty of winners when we shift to low-carbon economies, but what happens to those who may be left behind? In this episode, we turn to Australia to find out the challenges thrown up when a coal power station shuts down.
Tony Maher 00:27
The big cost is not financing early retirements and redundancy schemes, the big cost is economic diversification.
Mark Richards 00:35
So where do we go in the future? It's hard. I mean, we've got another power station, Yallourn, the closure dates been announced as 2028. But what do we do when that has to shut?
David Waskow 00:44
Bringing together these stakeholders is so critically important, it can really provide the basis for a way forward to really make the transition work for workers and for local communities.
Nicholas Walton 00:57
Hello, I’m Nicholas Walton, and this is the second in a special WRI podcast miniseries looking at just transition and what happens to those whose lives, livelihoods and communities are left behind as we shift towards renewable energy. In this case study, we’re looking at the negotiations that accompany the closing of a coal-fired power station in Australia. We're doing quite a bit on just transition, including a special resource section of our website, where you can find out much, much more: go to wri.org/just-transitions. This series will include an overall podcast looking at the wider just transition issues, and three case studies. So now back to this case study, which is in Australia and regards the closing of a coal-fired power station. Here’s my colleague from WRI’s Climate program, Molly Bergen.
Molly Bergen 01:46
As a major producer of coal and liquified natural gas, Australia has one of the dirtiest fossil fuel footprints per capita. The country still burns coal to generate most of its electricity, which is unusual for a rich nation, and remains the world’s second-largest coal exporter (after Indonesia) — this despite the global need to stop burning fossil fuels as soon as possible to prevent the most dangerous impacts of climate change.
Yet as renewable energy prices continue to drop, fossil fuels are less able to compete, and more coal plants are closing. Among them is the Hazelwood coal plant in southeast Australia’s Latrobe Valley. Built in the ‘60s, Hazelwood once provided about a quarter of the electricity for the state of Victoria. Then in November 2016, workers were told it would shut down completely — in just five months.
Mark Richards 02:33
So we didn't really have a clue because the company was saying we're going to run until 2032, I think. Basically, an SMS was how I found out along with everyone else. The SMS was, you know, “turn up to a meeting, we've got an announcement.” First time ever. It's pretty obvious what it was.
Molly Bergen 02:50
Mark Richards was a unit controller at Hazelwood who lost his job when the plant closed.
Mark Richards 02:55
Unfortunately I was on the last night shift there. And we walked out the gate the following morning, which was April Fool's Day.
Molly Bergen 03:01
Many workers expected a phased closure, where the plant would close a few of its power generating units at once and give workers more time to find new jobs. Instead, they were left in the lurch with only a few months’ notice.
Mark Richards 03:13
So most of the older workers at Hazelwood, they didn't want to work again or learn a new power station because it's quite a technical field. They'd be quite happy to leave a year or two early. Only about a year before the closure notification, I'd worked with the union to negotiate a redundancy package and we essentially managed to negotiate four weeks pay for each year of service, but it was capped at two years pay. So most of the older people were quite good about it, they weren't really disadvantaged. Obviously, if you're young, it was devastating — they just bought a house, they bought a car, being told by the company when they're hired “2030 and beyond,” and they’re closing in 2017. So that throws a lot of things up in the air.
Molly Bergen 03:56
The state government of Victoria set up a series of so-called “social dialogues” with the power station companies in the area and Australia’s Construction, Forestry, Mining and Energy Union. Here’s Tony Maher, the general president of the mining and energy division of that union.
Tony Maher 04:12
So we had to scramble to get government assistance to stimulate the local economy. But we needed something for the immediate workforce. And so that’s why we proposed a worker transfer scheme where jobs would be freed up at the neighboring power stations and mines by either early retirement or voluntary redundancy.
Molly Bergen 04:32
At the time, there were three other large power stations in the Latrobe Valley. By allowing older workers there to take early retirement with generous compensation packages, enough jobs opened up to hire about 90 of the younger workers who had lost jobs at Hazelwood. This was the first time this type of thing had been done in Australia.
Two years after Hazelwood closed, 74% of its former employees were listed as employed or otherwise not looking for work (including because of retirement). Of course, in an ideal world, every single worker affected would have been allowed to either transfer to a new job or retire early with benefits. Here’s Mark Richards again.
Mark Richards 05:11
The failing was that the company could have taken a lot more, and the company could have released a lot more older people. And I'd say the reason we didn't get more, more of those change-overs is the government didn't have enough teeth in any deal.
Molly Bergen 05:24
Besides the worker transfer scheme, the federal and state governments also pledged more than US$230 million in financial support for things like training workers in new skills and diversifying the economy in Morwell, the town closest to the plant. But so far, these community benefits have been slow to materialize.
Tony Maher 05:43
The big cost is not financing early retirements and redundancy schemes, the big cost is economic diversification. I don’t think there’s any substantial diversification yet. Government programs, they often put millions of dollars into infrastructure projects, which take a long time to get going. And they tend to be construction jobs, which last as long as the construction project. You need a framework plan for each region, and you need community involvement in that, and you need to accept that it’s going to cost a lot of money. Once they lose their big power stations and big mines, that’s an enormous slice of income to the communities, and something needs to replace that. But it’s something in these times of pandemic that we have to do anyway, everyone’s looked at their supply chains and thought “we’re overly reliant on products produced elsewhere” so there’s going to have to be multi-billion-dollar investment in manufacturing, well, we’ll solve two problems for the price of one. And the planning has to start now.
Molly Bergen 06:50
Tony sees Germany as a worthy model for Australia to follow when it comes to transitioning away from coal.
Tony Maher 06:56
If you look at the gold standard of transition, the German coal mining industry, they invested billions of euros to diversify the economies. They went into the chemical industry, into the steel industry, in the airline industry. And they planned for new sectors in those regions. And people believed those jobs were real because they could see them. And the other thing they did right in Germany was that if you needed some extra training, you did it before you got the sack. So you were released with training, which is a long way away from what happens in the English-speaking world. We’ve got a lot of work to do.
The difference is, Germany’s got a system of shared responsibility where a problem like this is seen as a shared problem, it’s not seen as a union’s problem or a worker’s problem or the community’s problem, it’s seen as a problem of govt, of business, whereas in other parts of the world, it’s “well, this industry’s closing, you’re on your own, see you later.”
Molly Bergen 07:52
In the past, you haven’t loved the terms “just transition” or “green jobs,” and I was wondering if you could elaborate a little bit about that.
Tony Maher 07:58
Yeah, well we road-tested those terms with workers, and basically they look at you quizzically and say, well, “Just transition? We’ve never seen any. Usually when things transition, we go out the back door and have to find a job.” And so it’s sort of like they’ll believe it when they see it. And I think that’s an entirely reasonable attitude, frankly.
Nicholas Walton 08:21
You’re listening to a special WRI podcast miniseries looking at the issue of just transition. Now back to Molly Bergen.
Molly Bergen 08:30
The experience at Hazelwood has revealed just how important it is to get the timing right in order to adequately support workers through the plant closure and transition to new jobs. Here’s Mark Richards again.
Mark Richards 08:42
So one of the biggest things that absolutely has to be done is you can't make a new industry to replace one you're killing off before that happens. You have to prep it, but you can't have it open before the other one shuts down. Otherwise, all you do is you get new employees and the employees getting shut down don't get a job. It's about timing.
Molly Bergen 09:01
Another challenge is that as the number of fossil fuel power stations shrinks, so does the opportunity to move workers to other plants. So what happens then?
Mark Richards 09:10
So where do we go in the future? It's hard. I mean, we've got another power station, Yallourn, the closure dates been announced as 2028. But what do we do when that has to shut? You can't just transfer people to, you know, the last two remaining power stations. Sooner or later that process dries up.
Molly Bergen 09:25
Fortunately other plants seem to be learning some of these lessons — and the union continues to play a central role in this process.
Tony Maher 09:32
Beyond Hazelwood, we’ve negotiated with AGL, the owners of the Liddell power station in the Hunter Valley. They gave us seven years notice, and we’ve negotiated a deal where there will be no forced retrenchments, everyone will be found a job at a neighboring station that they own, or at the Liddell site, which they will convert into solar, wind, pumped hydro, a small gas back-up, and so there will be some jobs there and they’ll retrain people for that. So it’s dependent on, basically a deal between the company and the union.
Molly Bergen 10:05
These days, Mark works with Tony at the Mining and Energy Union, and remains committed to helping workers find a new place for themselves in a changing economy where they feel valued.
Mark Richards 10:15
I have 40 solar panels on my roof. So I understand climate change is real, I think pretty much all of our workers do. We don't begrudge that at all, we just believe that if we're going to lose our job, after providing cheap electricity for 100 years in our industry, that we should at least not become the collateral damage, we should be looked after. You know, if you go to another job on a wind farm, for example, it pays less than a third the wage of what you did in the previous job, and it’s nowhere near as technical or as interesting. But having said that, if, if that was a job and kept me in my local area, my local footy team and sports clubs, well, I think I'd take it, but what it needs is that payment topped up. So you know, my lifestyle doesn't change and the community doesn't get shortchanged over the whole process.
Molly Bergen 11:00
As renewable energy prices continue to drop and make coal power less profitable, more coal plants in Australia are opting to move up their closure dates. And while this is great news for reducing carbon emissions, that won’t be something we should expect workers to celebrate if they aren’t taken care of in the process. We asked David Waskow, who leads WRI’s international climate initiative, for some parting thoughts on what we can learn from the Hazelwood closure.
David Waskow 11:24
Unions in the area pressed on the question of how to address the impacts on workers due to the closing of a coal-fired power station. And what emerged over time was a social dialogue among the government, the power station company and unions, and while it may not have been perfect it did provide the opportunity for a constructive set of solutions to the situation there. And that included developing a set of training programs and also actually local economic programs, such as for energy efficiency. This involved the company, the power station company, and so it really does provide an example — and we’ve seen it elsewhere with Enel in Italy, for example — of the private sector actually engaging and participating to develop training programs and other support for workers, local economic community development, and so forth. And so bringing together these stakeholders is so critically important, it can really provide the basis for a way forward to really make the transition work for workers and for local communities.
It also takes work to really follow through. I think that’s one of the questions that needs to be addressed in the Australia case is that there’s follow-through that needs to happen as well, funding needs to flow, the programs need to be put in place, and so getting the various actors together is critical but so is making sure that there’s real implementation of what has been agreed.
Nicholas Walton 12:58
And that was David Waskow from WRI’s climate team, ending this second episode in our podcast miniseries on just transitions, with reporting from my colleague Molly Bergen. We’ll be collecting these podcasts from Molly in a resource section at wri.org/just-transitions. Stay tuned, and thanks for listening.