Renewables and Community Renewal

Lessons from Denmark and Australia

By Dr Rob Salter, formerly Senior Research Fellow, Curtin University Sustainability Policy Institute

Introduction

The future of renewable power generation in Australia is bright indeed. Among developed countries Australia is unique in having such a combination of abundant space, sunshine and wind. This means it is unique in the entire world in having both an ideal physical environment for renewables and the skilled workforce, well-developed physical infrastructure, stable political system and access to global capital that go with being a developed country.

Australia is exceptionally well placed not only to meet its own power needs from renewables in the not-too-distant future, but also to export power to the world, and to turn a much greater proportion of its own minerals into processed products for domestic use and export, powered by cheap renewables.

The transition from fossil fuel to renewable power needs to happen as soon as possible, for several reasons. It is critical to achieving zero carbon emissions and averting dangerous climate change. Fossil fuels are also the main source of air pollution that is responsible for some 3,000 early deaths in Australia each year, twice the number who die in road accidents. And given that renewables are now the cheapest source of power, the sooner we adopt them the sooner we will see cheaper power for households, industry and government. In turn, reduced power costs for industry translate into lower costs for all locally produced goods and services, and a substantial competitive advantage for exports that have power as a major operating cost.

However, if not handled well, the transition process from fossil fuel based industries to those based on renewables will be unnecessarily disruptive, both socially and economically, disproportionately and unfairly affecting particular workers and communities. This could also delay the process, because the cost on these communities will most likely continue to generate the sort of political opposition to the transition that we are already witnessing. Such delays would be on top of those already caused by a politically created uncertain investment environment for renewables.

Thus, there are two separate imperatives: to switch to renewables nationwide as soon as possible; and to ensure that in the communities where fossil fuel energy generation industries close down, the transition is as fair as possible, and new industries are established in their place that generate employment with decent pay and conditions. This report considers both these imperatives, but, given that the first of these is well covered elsewhere, most of the focus is on the second imperative.

These new industries can be, but do not have to be, connected with renewable power generation. Given that the transition to renewables means that all industries will eventually be using zero carbon power, there is no long-term environmental advantage in the new industries in these localities being involved in renewable power generation, though there may be in the short-term. Renewables industries need to be set up where they can operate most efficiently, such as where there are optimum weather conditions and space (if they are generators), and in locations close to suppliers and customers.

However, there are many features of communities with energy-generating histories that lend themselves to a transition to renewable energy, such as a local acceptance of, or pride in, manufacturing and power generation industries, a workforce with not too dissimilar skills, education and training institutions, high voltage transmission lines and available land. And such a transition would enable community pride in being a ‘powerhouse’ for the wider society to be maintained.

Thus, assuming an overall context in which government policies are enabling a rapid transition to renewables across the country or in a given state, any government support being offered should be to establish any industries that can provide suitable jobs for retrenched workers. Commercial considerations will determine the location of any new industries, and these include proximity to customers, raw materials and suppliers, a trained workforce and necessary infrastructure. However, in cases where the benefits of one locality over another are small or non-existent, government support and assistance could make a difference, so it is certainly worth offering.

In this report renewables industries can be taken to mean any industries that generate, store, transmit or sell renewable energy, or that manufacture, assemble, import, store, transport, sell, install or maintain this generation or storage technology, or that train people in any of these areas. While some of these industries, such as those operating wind or solar farms, need space and so will probably not be in the exact localities of the fossil fuel based industries that are closing down, they may be in their hinterland. These fossil fuel based industries are those involved in coal-fired power generation and coal mining in the first instance, as these are the most polluting and the most threatened economically.

As well as the need for new industries to replace the fossil fuel based ones closing down, there is also the separate question of how the change process is managed: the income that retrenched workers receive during any transition period, the training they can access to prepare for employment in different industries, and the support they receive to deal with the serious practical and psychological issues they will face during the transition.

The report draws on the experience of transitions like this that have occurred in other countries, particularly in Denmark. And it starts by considering the example of Vestas, a Danish company that manufactures wind turbines, which has just set up a range of operations in Australia, including a plant assembling wind turbines in the old Ford factory in Geelong. Vestas recognises Australia’s huge potential for wind generation, and it brings to the task of helping to realise that potential extensive experience and knowhow, in partnership with local firms and institutions.

The viability of Vestas’s Victorian operations, and of renewables industries in Victoria more generally, flows in no small part from policies implemented by the Victorian Government. This demonstrates another important lesson in the area of energy transition: when the Federal Government fails to put in place the necessary policies, state governments can substantially do so in its place.  

What the Danes are doing

Vestas in Australia

Danish company Vestas has installed more wind power than any other company in the world – over 66,000 wind turbines in more than 80 countries, generating a total of 102 Gigawatts of power.

This year the company established a wind turbine assembly and testing centre in the old Ford plant in Geelong, to supply wind farms at Dundonell and Berrybank in Victoria’s Western District, in partnership with local company Marand Precision Engineering.

It has also partnered with Deakin University’s Carbon Nexus to research improvements to carbon fibre that is to be used in wind turbine blades, which worldwide use more carbon fibre than any other product.¹

As well, wind turbine technicians will be trained through a Memorandum of Understanding with Federation University in Ballarat, and there will be a logistics and maintenance centre to house wind turbine components, and service support for the windfarms Vestas is supplying (see also here and here).

These new ventures have, to a significant extent, been made possible by Victorian Government policies: by its Renewable Energy Target, by local component requirements, and most importantly by a reverse auction to purchase renewable power at the cheapest price, a price that, when power is sold in the national energy market, is guaranteed to generators by the state government by a ‘contract-for-difference’ mechanism (explained later). Together, these policies have greatly expanded the market for renewable power generation and ensured local sourcing for some of the goods and services necessary for this generation.

While Vestas is not specifically committing to employing retrenched Ford workers, the fact that manufacturing, assembly and maintenance jobs in renewables industries are being created locally increases the chances of work in these industries for ex-Ford staff, as it does for retrenched staff from other local industries that have closed in recent times, such as the Alcoa aluminium smelter at Point Henry and the Shell oil refinery.

Substantial demand for renewables in Vestas’s home market, Denmark, has been a key part of the company’s success. In 2017, wind power provided 43 per cent of Denmark’s electricity. Wind power cooperatives, which gained much of their support from the country’s anti-nuclear movement, were an early driver of the development of wind power in Denmark, being responsible for 40 per cent of the country’s turbines in 2002. When you add other emissions-reducing policies such as high building efficiency standards, district heating, cogeneration and a price on carbon, you see why Denmark’s carbon emissions per capita are very low by developed country standards. While Australia produces on average 16.5 tonnes of CO₂ a year per capita, for Denmark the figure is 5.9 tonnes.

Lessons from Denmark and elsewhere when it comes to replacing old industries with new ones, and supporting retrenched workers in the transition

The Danish Government support’s for localities where major industries have closed down has to teach us. Such closures happen for a range of environmental, technological or commercial reasons, but whatever the reason it’s still necessary to replace these departing industries and to support workers and communities through this transition.

For example, following the closure of the Maersk company’s Lindø shipyard in Odense in 2012 at a cost of 8,000 direct and indirect jobs, the Danish Government allocated 37 million kroner (A$6.9 million) of its Business Innovation Fund for the establishment of the Lindø Renewable Energy Centre. This provides business incubation facilities for start-up companies, a test centre and other facilities to support the greening of business and the emergence of new green enterprises. This region of Denmark focuses on wind turbine production and operation, and the new Centre is the result of collaboration between the national government, three municipalities, the unemployment benefit insurance funds, private initiatives, and the European Globalisation Adjustment Fund, which also chipped in finance. It was considered that many former Lindø employees would be well-suited to work in the new enterprises.²

An earlier shipyard closure – in Nakskov, another Danish town, in the 1980s – had seen similar collaboration between government, social funds and the European Union to set up new industries in its place. In that case the transition was not to renewables industries (not so common at that time), but instead was chiefly to food, electronics and new metal products industries.

Support from the Danish Government and the European Union in these cases represented an explicit commitment to counter the growth of regional and local economic inequality. As a result Denmark, as of 2012, had the OECD’s lowest income inequalities across (intra-country) regions.²

Danish trade unions have an important role in these transition processes, negotiating redundancy arrangements and other matters.² This reflects the central place of unions in Danish workplace deliberations, a place accepted by government and employers that’s made possible by the workforce’s high level of union membership.

In these kinds of transition processes, the industries that emerge may be very different to those that have closed down, and two examples from countries adjacent to Denmark illustrate this. The closure of a large shipyard in Malmö, Sweden, initially led to high unemployment in the city. There has subsequently been an economic revival, but much of the new employment has been very different from the old, for example, in cultural organisations and tertiary education. And in Germany’s Ruhr Valley, as coal mines have been closing in recent years, largely as a result of the German Government’s commitment to moving away from coal, the jobs that have emerged in their place have also tended to be very different: in tourism and the arts, as well as in green economy jobs like efficiency technologies, recycling and renewable energy. In the Ruhr Valley forced redundancies have been avoided through a highly managed and staged mine closure process involving transfers to mines not yet closed, voluntary retraining for other work, and generous voluntary payouts to those over fifty.³

What is need in these cases are retraining programs that enable retrenched workers to not just transition to jobs that are similar to their old ones, but to those that may be quite different. This might be funded by the employer closing down the enterprise, as was the case of Toyota when it closed its car plant in Altona North, Victoria, in 2017. Toyota, true to its global reputation for treating employees well, gave them five years’ notice of the plant’s closure and committed to support and fully fund the workers to train for the career change of their choice. Workers chose education or training in occupations as diverse as nursing, aged care, construction, logistics, engineering, law, aircraft piloting, landscape gardening, truck driving, forklift operations and small business management, and this was on top of redundancy payments of up to $200,000 under the award.⁴ This represents a significant expense for a private company to meet, and more companies need to take on this socially responsible role.

The Danish ‘Flexicurity’ approach is very relevant here. As a nation that is successfully operating in a competitive global economy, Denmark recognises that it is unrealistic to guarantee employees one particular job in perpetuity. Circumstances and opportunities change, and firms need to respond to these changes if they are to remain competitive – to expand, to contract, to shift locations, to become more efficient through new technology, and to change what they produce. But the Danish Government makes every effort to ensure that workers can find a job appropriate for them, and that in this transition process they have a steady income, they can access necessary retraining, and they can be supported in dealing with any practical and personal issues that arise.

This is what Flexicurity provides. Workers receive up to 93% of their previous income during the transition, and Denmark spends nearly eight times as much as Australia does on active labour market programs.² This means it has the capacity to do things well, to guide and fund education and training that effectively prepare workers for major career shifts, for example, a shift from shipbuilding to working in care for the elderly.²

In summary, while these sorts of industrial transitions in particular localities can throw up huge challenges, there are solutions to them that are fair and that ensure that individuals and communities can continue to thrive and be productive. It is the responsibility of both governments and industries that are closing down to ensure this can happen wherever such transitions occur.

Applying these lessons in Australia

Australia has, of all OECD countries, by far the greatest potential to produce renewable energy, given our sunshine, wind and space. We can become, as Ross Garnaut puts it, the world’s renewable energy ‘superpower’. In a lecture series, Garnaut describes how we will be able not only to meet all our own energy needs, but also to export renewables to the world, in the form of hydrogen shipped to East Asia, and via transmission lines to South East Asia and perhaps as far as South Asia. And beyond that, it will make commercial sense to turn the minerals we extract in Australia into processed products – into steel, aluminium, pure silicon (for the world’s computers and PV panels) and products from the copper, nickel titanium, cobalt, vanadium, lithium and other minerals we mine. As well, the production of ammonia by drawing nitrogen from the air will enable the production of fertilisers and various chemicals previously derived from fossil fuels. With all these products, energy is the largest operating cost in their production and Australia will have the most abundant and cheapest renewable power in the world. (Even though we will most likely also be exporting this power, the costs of transmitting it, and converting it to and from hydrogen, will make it significantly more expensive in these export markets, though it will probably still be the cheapest source of renewable power available in sufficient quantities.) All of this will not only contribute greatly to sustainable prosperity in Australia; it will also represent a significant contribution to building a zero-carbon world.

Already, two consortia have been formed to export Australia’s renewable power to the world. One of these, the Asian Renewable Energy Hub, plans to generate up to 15 Gigawatts of wind and solar power in the East Pilbara, about 80 percent of which will be converted to hydrogen and exported or used locally. Power generation is planned to commence in 2025 or 2026, and Vestas is one of the partners. The other consortium, Suncable, will generate 3 Gigawatts of solar power near Tennant Creek and export it via submarine cable to Singapore, to meet 20 percent of the island nation’s energy needs.

Cheap and plentiful renewable power not only makes the processing of our minerals here in Australia much more globally competitive; it also make other Australian manufacturing industries more competitive, so that many that currently cannot match foreign competitors, either in global export markets or here in Australia, will be more able to do so with lower power costs.

The focus of this report is not on the policy mechanisms that would see Australia adopt 100 per cent renewable energy as quickly as possible, as that is covered elsewhere – for example, in a report for the Australia Institute by Associate Professor Mark Diesendorf. Nevertheless, it is worth briefly mentioning what these policy mechanisms might be, and Diesendorf’s report provides a good summary. He begins by acknowledging that, although a price on carbon would be a very valuable part of an overall suite of policies, it is not feasible in the current political climate, and so he identifies other key policies, which include:

• Additional federal grants and loans for dispatchable renewables (such as solar thermal) and for storage (pumped hydro or batteries), as these currently have higher costs for the power they deliver but are essential if power is to meet demand at all times, as well as financially rewarding enterprises that provide batteries with very rapid response times.
• Significant additions and upgrades to transmission lines across the grid, and the clustering of renewable energy generators and storage facilities into Renewable Energy Zones to reduce the need for new transmission infrastructure.
• A system of incentives to retire the most polluting coal-fired power plants, whereby the plants bid the payment they would accept to close down, and the regulator selects the most cost-effective bid or bids, with the remaining plants then paying the plants that are closing, and the government incurring no cost.
• Encouragement of the New South Wales and Western Australian Governments to adopt measures implemented by other state governments, in particular, the reverse auctions with contracts-for-difference that are functioning in Victoria, Queensland and the ACT. Renewable energy generators bid to supply power at the lowest price, and this price is guaranteed to the winning bidders by the state government. If the price they receive in the national energy market is less than the guaranteed price, the government makes up the difference, but if the price is more than this then the generator pays the difference to the government. As a result of this policy and others, the ACT has now switched to 100 per cent renewable energy use, a little ahead of its 2020 target date.⁵

This last point highlights an important consideration: with inaction at the federal level, there is ample scope for state and territory governments to expedite the transition to renewables, and many are actively doing so, in the same way that they are in the United States given federal inaction there. Power generation and environmental protection are within Australian state governments’ constitutional powers, and they have great potential to make a difference through a range of policy mechanisms, as Diesendorf details.

Nevertheless, the Federal Government needs to demonstrate a real commitment to the transition to clean energy, and to spreading the good news about its economic, social and environmental benefits, instead of talking down renewables and carrying a torch for the coal industry.

Policies needed to replace industries closing down, and to support retrenched workers in the transition

There is a clear case for government assistance to communities affected by major industries closing down in regional areas, as there is no reason to believe that industry and employment there will simply recover through the free market, especially as there are fewer ‘agglomeration economies’ and alternative sources of employment in these localities. As likely or more likely outcomes from industry closures are economic decline, increasing unemployment (often long-term), depopulation, new industries employing people from outside the area, or any combination of these. Just looking at one of these outcomes – increased long-term unemployment – the social and economic costs of this are enormous. They go well beyond the costs of unemployment benefit payments, the loss of economic benefits from work that would have been done, and taxes foregone, to include social costs that can include, as a Brotherhood of St Laurence report on this matter details, “severe financial hardship and poverty, debt, homelessness and housing stress, family tensions and breakdown, boredom, alienation, shame and stigma, increased social isolation, crime, erosion of confidence and self-esteem, the atrophying of work skills and ill-health”. This is in addition to all the economic costs that in turn flow from these outcomes, including government costs in responding to them, and the cost of work skills lost to society. Also, when communities have fewer employed adults, growing children have fewer models of successful employment to emulate, and fewer contacts through which work can be obtained or job options explored.

Industries involved in fossil fuel production that are most likely to close down in the next few decades, most notably coal mining and coal-fired power generation, are in regional areas, and so they fall into this category of industries that we cannot just rely on the market to replace.

As we have seen, there are two aspects to government assistance in this situation: helping to get new industries established in these communities, and ensuring that there is a just transition for retrenched workers, with income maintenance through the transition period, appropriate retraining opportunities to enable the switch to new jobs and even new occupations, and other practical and psychological assistance.

In terms of how governments can best assist in the process of establishing new industries, the Danish precedents show the importance of measures such as extending funds to start-ups, providing vocational and management training, improving local infrastructure and the physical environment, and providing business incubation facilities and a renewable energy test centre.

Government assistance can also involve bringing relevant parties together (businesses, unions, educational institutions, sources of finance, community organisations, local government) to consider ideas for new enterprises and how these different parties might be able to contribute to them. It can publicise opportunities that may not be widely recognised, such as emerging markets, products or technologies, or sources of finance. Different levels of government, as appropriate, can ensure that there are the necessary education and training institutions, courses, physical infrastructure, land and the possibility of planning permits.

In Australia there have been many such assistance programs delivered in different localities. Andrew Beer has extensively researched regional programs in the period 2000-2012 – identifying 135 of them, mostly Federally funded.⁶ These programs, and the closures or downturns to which they were responding, have covered a range of industries in manufacturing, mining, agriculture and food processing, and a range of precipitating circumstances, such as: global competition, the strength of our dollar, too many firms in the market, inefficiencies, drought and overfishing. And in the two decades before 2000 we saw some industry plans, for whole industries rather than specific regions, most of them dealing with industry contractions brought about by tariff reductions in steel production, shipbuilding, heavy engineering, car manufacturing, and textile, clothing and footwear manufacturing.

Research of Beer and Terry Clower sheds light on the forms of assistance that are most likely to be effective for regional programs.^6,7 Drawing on their insights, it might be said that an effective program has the following characteristics:

• It is carefully targeted geographically and does not invest outside the targeted area.
• It promotes coordination and integration of initiatives and of the different parties involved, including the different levels and departments of government.
• It does not focus just on the economic viability of new enterprises, but also on broader wellbeing, socio-economic and environmental factors.
• It provides assistance early, even before old enterprises have closed down, drawing on European practices of proactively and systematically monitoring the performance of regional economies so that it is possible to recognise early when assistance is required.
• At the same time it is realistic about how long it can take for new enterprises to be viable without assistance (which is often longer than the period for which they are funded).
• It mobilises local leadership, recognising that assistance programs and enterprises can fail when decision-makers are located outside the region, or when there are not enough locals with time to volunteer.
• It ensures that there is sound governance of assistance programs, and adequate transparency.
• It is accessible for small and large businesses, without barriers such as minimum capital investment requirements that may be too high for small businesses.
• It favours loans over grants (though perhaps permitting both) because loans return funds to the program.
• It links local efforts to centralised resources.
• It helps to build new occupational skills, including through education and training programs, as well as seeking to make use of existing skills.
• It is thoroughly evaluated, and seeks to link everyday practice to knowledge, so that the two can enhance each other.

A study by John Daley and Annette Lancy for the Grattan Institute cautions that government assistance can only be useful when there is underlying potential for new industries to be economically viable, and they argue that this is very much related to locality. To be viable, localities need to be already growing, or within about two hours’ drive of capital cities, or close to the coast, where Australia’s population tends to congregate. They argue that providing assistance for economic development in remote or declining regions has not been successful, and so it would be better to allocate the funds to localities with more chance of success.

This seems a reasonable argument, and the good news for the main localities where coal is mined or used for power generation is that they meet one or more of Daley and Lacey’s criteria (for example, the Hunter Valley, Port Kembla, the Latrobe Valley, Collie in WA, Gladstone and other places on the Queensland coast).  Moreover, it is important to bear in mind not just current industrial activity but also future activity, and the bright future that Ross Garnaut predicts very much applies to these areas. As he notes, “In these places the established electricity networks set up to take coal based power all over the state can bring back renewable energy to processing facilities at the node”, in other words, to nodes that can process Australian minerals using cheap renewable power, as well as in some cases exporting these processed products to the world. However, this might not happen for some years, further strengthening the argument for government support in the interim to maintain industrial capacity in these localities. If we take the Daley and Lancy and the Garnaut arguments together, and use an analogy, these localities are like the first patients to be attended to in a triage process – a concept originally employed to deal with those wounded in battle. Treatment won’t be a lost cause, but they may not recover without it. They are the category in the middle, which is likely to recover if assisted.

Finally, meeting the needs of these communities in transition requires that the income and other needs of retrenched workers be properly attended to both during and beyond the transition process. We have seen how in Denmark the unemployed can be paid up to 93% of their income while they seek other work, with a heavy emphasis put on retraining, in which there is a high public investment. In Australia, there are very meagre unemployment benefits; while redundancy payments, though mandated under Federal law, are for a maximum of 16 weeks (for nine years of service) and do not cover temporary or casual workers.

Looking beyond the transition period, concern has been expressed about pay and conditions in the renewable energy sector, especially relative to those in fossil fuel based energy industries. According to Adam Wieladek from the Australian Metal Workers Union, jobs installing panels in solar farms in particular are largely unregulated, with many workers, some of them back packers, being supplied by labour hire firms. This makes the sector very vulnerable to exploitation and breaches of Occupational Health and Safety laws, and so federal and state governments need to be vigilant and to ensure that workers’ rights are being safeguarded.

However, there is also room for optimism. Jim Stanford from the Centre for Future Work, in a submission to a Senate Select Committee on the Future of Work and workers, argues that the quantity and quality of jobs in Australia depends, among many other things, on the development of new industries that are capital intensive, use advanced technology, require a skilled workforce and are oriented towards export markets. In such industries employees have bargaining power because of their skill levels and the importance of these industries to the economy. If we look at the whole range of industries that Ross Garnaut predicts will flow from the renewable energy revolution in Australia, it is highly likely that many of them will meet Jim Stanford’s criteria, particularly those involved in converting energy to hydrogen and transmitting energy overseas, and those involved in zero carbon processing of Australia’s minerals into steel, aluminium and many other products. These will be new industries, which means new jobs, and they will be skilled jobs in capital intensive, economically important industries, so they are highly likely to offer good pay and conditions.

However, when this is not the case, government action is required. Retrenched workers are not responsible for the circumstances that lead to business closures, and they are not responsible for the employment opportunities that follow. A fair deal for them would see them supported during the transition process with a fair and adequate income, appropriate retraining, and help with any practical or personal issues they may face at this time, as well as good pay and conditions in their future employment. And this has international backing, with the notion of a just transition built into the Paris Agreement on action on climate change, to which Australia is a signatory, and into ILO Guidelines for a Just Transition.

Some steps towards these objectives

Efforts are being made to ensure a just transition in existing fossil fuel energy localities, through both advocacy and government action, and two examples illustrate this.

Firstly, an ACTU report, A Just Transition, argues for a strong interventionist role for government in such localities. It seeks to learn from the experience of other major industry transitions in Australia, such as the closure of textile, clothing and footwear industries and car manufacturing, in which approximately one third of retrenched workers went on to get jobs of equal value, one third got work that was lower paid, part-time or casual, and the remaining third became unemployed or retired. A Just Transition advocates:

• Creating new industries in the clean energy economy in affected regions as much as possible, where necessary filling infrastructure gaps to make this happen.
• Job placement and information services, job retraining (with the option of starting this before retrenchment), financial and personal support, and travel and relocation support.
• Consultation with all stakeholders as a key part of the process.
• Inclusion for consideration as potential new industries those industries that are not in the energy sector but can still contribute to climate change abatement, for example, those related to sustainable transport, construction, agriculture and forestry, and those increasing energy efficiency, as well as mine land rehabilitation.
• The creation of a coordinating agency, which the report suggests be called Energy Transitions Australia, to ensure an integrated approach across all areas and all bodies involved.

Secondly, the Victorian Government is attempting to implement sustainable economic development in the Latrobe Valley, mainly energy related, through a suite of programs that involve:

• Publicising opportunities for investment there.
• Putting forward a strategy for investment in energy generation technology, for skills development and for action in other key areas.
• Supporting the development of a Gippsland Hi Tech Precinct.
• Promoting partnerships between industry, research institutions, education providers, communities and government.
• Promoting existing and possible future energy industries in the region, including solar PV and solar thermal, on- and off-shore wind, bioenergy, hydrogen and geothermal.
• Helping businesses to improve energy efficiency.
• Providing solar PV subsidies for low-income households.
• Funding a Community Power Hub to support community-based renewable energy projects.
• Promoting the potential for businesses and cooperatives to supply components, products and services to support renewable and other industries.
• Highlighting the availability of skilled local workers, and of training facilities.
• Providing grants, subsidies and loans for a range of purposes related to sustainable economic development.
• Seeking to ensure that there is a joined-up government approach in all these areas.

These initiatives were connected with the closure of the Hazelwood power station by its French owner, Engie, in early 2017 with less than five months’ notice. In response to this, the State Government established the Latrobe Valley Authority (LVA) and engaged unions, Engie, other power station owners, local government and community organisations in discussions about a way forward. From this emerged initiatives to assist affected workers and their families: a Worker Transition Service involving the LVA, the local unions and training providers in providing one-on-one transition services and skills development for those affected; financial support for retraining; training support for contract and supply chain workers subsidized by the Federal Government;  a “Worker Transfer” scheme to open up job opportunities for Hazelwood workers by launching early retirement schemes at other local power stations; and regional revitalization through a “special economic zone” (as described above).

Between them, the ACTU report and the Victorian Government programs for the Latrobe Valley represent examples of government and civil society activity, of a focus on a just transition and on economic development in communities in transition, and of public advocacy and action on the ground. It’s too early to say how successful these will be, but they show that the need for an effective transition is being addressed in at least some quarters.

As discussed with Nixon Apple, an industry and economic advisor and currently a member of the Clean Technology Investment Committee, there are still significant challenges. Coal mining and coal-fired power generation communities often have a limited range of industries, so greater industrial diversity is desirable, and it is important not only to establish new enterprises but also to help existing ones to upgrade and to expand their range of activities. As already mentioned, many jobs in fossil fuel based industries are high wage jobs, whereas many in renewables industries are not, and the same is true of tourism, an industry emerging in many regional communities. A problem Australia-wide is that, by OECD standards, a very low proportion of our exports are in the areas of advanced manufacturing or advanced services, and these are industries in which pay rates are much higher. For example, while Germany’s exports of advanced manufactures equal 25.9 per cent its GDP, and exports of advanced services equal 4.7 per cent of its GDP, and for Sweden the figures are 15.0 and 9.0 per cent respectively, the figures for Australia are a paltry 1.4 and 1.1 per cent respectively. The industry policies required to tackle this problem are beyond the scope of this report, but it is to be hoped that the likely growth of industries that export energy and process our minerals for exports powered by cheap renewable power, described earlier, will help to redress this.

Conclusion

Australia and the world stand to gain a great deal from the transition in our country to 100 per cent renewable power, which of course means the closure of power stations that use fossil fuel, starting with coal. But the cost of this should not be borne disproportionately and unfairly by retrenched workers and communities in the localities of these transitions.

As we have seen, it may sometimes be the case that the transition in these localities consists of renewables industries replacing those connected with fossil fuel production, given that these different energy-related industries may draw on similar types of infrastructure and skills. It’s good if this can happen, because these communities can then continue to be the powerhouses of the broader societies of which they are part. But it doesn’t have to be this way, for either environmental, economic or social reasons. What is important is that the switch to renewables occurs as quickly as possible in Australia, and that in these transition localities new industries and good jobs replace those that have closed down – industries and jobs that will in the not too distant future be renewably powered.

When Germany made the decision to get out of coal mining, it closed down all the mines in the Ruhr Valley in a staged process. Seventy-seven year old Heinz Spahn had been a miner there for 26 years. Reflecting on the industry’s closure, he had this to say: “Eventually the [coal] legacy will die out, and that makes me sad. But I have made my peace with it. I am very happy that the Ruhr region has become so green and healthy. I am glad the youth today will have a better childhood than I did.”

Here in Australia it is up to all of us collectively, through our governments, to draw on evidence from home and abroad – from Denmark and elsewhere  ̶  to ensure that this better future encompasses everyone, including those communities at the centre of the transition.

References

¹ Discussion with Peter Cowling, Vestas Country Head, Australia New Zealand, 30 May 2019.

² Andrew Scott, Northern Lights: The Positive Policy Example of Sweden, Finland, Denmark and Norway, Monash University Publishing, Clayton, 2014.

³ Nick O’Malley, “How to make a clean exit from coal”, Sunday Age, 14/7/19.

⁴ Danny Samson, “Why Toyota’s retrenched workers still Love the company”, Financial Review, 12/7/2017; discussion with Dr Danny Samson, University of Melbourne, who researched this retrenchment process.

⁵ The point was also made by Adam Wieladek, National Research and Planning Officer for the Australian Metal Workers Union, that the Australian Energy Finance Corporation could arrange reverse auctions at the national level as well, and that these could include requirements for local content and apprenticeship training. (Personal communication, august 2019.)

⁶ Andrew Beer, “Structural adjustment programmes and regional development in Australia”, Local Economy, 2015, Vol 30(1), pp. 21-40. 

⁷ Andrew Beer and Terry Clower, “Mobilizing leadership in cities and regions”, Regional Studies, Regional Science, Volume 1, 2014, Issue 1, pp. 5-20.

Header photo: Wattle Point Wind Farm, South Australia. _{Credit: Bush Philosopher - Dave Clarke; Creative Commons license CC BY-NC-ND 2.0}

_{[Opinions expressed are those of the author and not official policy of Greens WA]}