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Getting Off Coal Economic and Social Policies to Manage the Phase-Out of Thermal Coal in Australia

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Getting Off Coal Economic and Social Policies to Manage the Phase-Out of Thermal Coal in Australia Getting off coal Economic and social policies to manage the phase-out of thermal coal in Australia Discussion paper John Quiggin University of Queensland May 2020 ABOUT THE AUSTRALIA INSTITUTE The Australia Institute is an independent public policy think tank based in Canberra. It is funded by donations from philanthropic trusts and individuals and commissioned research. We barrack for ideas, not political parties or candidates. Since its launch in 1994, the Institute has carried out highly influential research on a broad range of economic, social and environmental issues. OUR PHILOSOPHY As we begin the 21st century, new dilemmas confront our society and our planet. Unprecedented levels of consumption co-exist with extreme poverty. Through new technology we are more connected than we have ever been, yet civic engagement is declining. Environmental neglect continues despite heightened ecological awareness. A better balance is urgently needed. The Australia Institute’s directors, staff and supporters represent a broad range of views and priorities. What unites us is a belief that through a combination of research and creativity we can promote new solutions and ways of thinking. OUR PURPOSE – ‘RESEARCH THAT MATTERS’ The Institute publishes research that contributes to a more just, sustainable and peaceful society. Our goal is to gather, interpret and communicate evidence in order to both diagnose the problems we face and propose new solutions to tackle them. The Institute is wholly independent and not affiliated with any other organisation. Donations to its Research Fund are tax deductible for the donor. Anyone wishing to donate can do so via the website at https://www.tai.org.au or by calling the Institute on 02 6130 0530. Our secure and user-friendly website allows donors to make either one-off or regular monthly donations and we encourage everyone who can to donate in this way as it assists our research in the most significant manner. Level 1, Endeavour House, 1 Franklin St Canberra, ACT 2601 Tel: (02) 61300530 Email: [email protected] Website: www.tai.org.au ISSN: 1836-9014 Contents Key points ......................................................................................................................... 1 Introduction ...................................................................................................................... 3 1. Transition is inevitable, a fair and orderly transition is not ......................................... 4 Thermal and metallurgical coal .................................................................................... 5 The global transition from thermal coal ....................................................................... 5 The global transition from metallurgical coal .............................................................. 7 2. Thermal coal in the Australian economy ...................................................................... 8 Workers in the coal mining sector................................................................................ 8 Wages ......................................................................................................................... 10 FIFO and employment turnover ................................................................................. 11 Wages and unionisation ............................................................................................. 12 Workers in electricity generation ............................................................................... 13 Employment in renewables ........................................................................................ 14 Communities ............................................................................................................... 15 Government revenue ................................................................................................. 17 Aggregate Economy .................................................................................................... 17 3. Planning for a fair and orderly phase-out .................................................................. 19 Moratorium on new coal mines and thermal power stations ................................... 20 A phased program transition to renewable electricity over the period to 2030 ....... 20 Electrification of transport ......................................................................................... 20 Transition for workers ................................................................................................ 21 Assistance to communities dependent on coal mining ............................................. 23 4. Examples of successful and unsuccessful transition .................................................. 26 Further decarbonisation ............................................................................................. 27 Concluding comments .................................................................................................... 29 References ...................................................................................................................... 30 Key points The evidence of a climate emergency is now undeniable. Any coherent response requires a rapid phase-out of coal-fired electricity generation. That also implies an immediate halt to new thermal coal mines and a gradual closure of existing thermal coal mines. Successful implementation of such a policy requires a strong and concrete commitment to facilitating employment transitions for workers in the industry (including to alternative jobs and/or support for early retirement), and equally strong and concrete measures to promote alternative sources of development and employment for regional communities dependent on coal mining. Thermal coal mining is not a major employer in Australia's overall labour market, and most employees in the industry have skills that make them employable in a wide range of industries. Moreover, no-one is proposing to “shut down” the industry overnight. A sensible, staged plan for getting off coal, with plenty of notice to affected workers and communities, and with concrete measures to facilitate an orderly transition, could certainly achieve this inevitable shift in Australia's economy with a minimum of economic and social dislocation. Indeed, given the highly uncertain prospects for this industry even in the absence of necessary climate policies, many coal-dependent workers and communities will be better off under a compassionate, proactive transition program than by simple carrying on with “business as usual”. Because of reliance on FIFO operations, only a small number of communities, mostly in central Queensland, depend critically on coal mining to provide livelihoods for their residents. Specific place-based policies for these communities must be developed. Specific policies associated with an orderly, effective, and fair phase-out of thermal coal would include: An immediate moratorium on new thermal coal mines, including those at an early stage of pre-construction such as the Adani Carmichael mine. A phased program of closure for existing thermal coal mines over the period to 2030. A phased program of closure of coal-fired power stations over the period to 2030. A commitment to (renewable) electrification of transport and a co-ordinated program of investment in necessary infrastructure. Measures for further decarbonisation of the economy, including the rapid expansion of renewable electricity generation (to replace the portion of Australian electricity currently provided by coal-fired facilities) and development of a hydrogen industry based on electrolysis and sourced from renewable electricity. Getting off coal 1 Strong rights to redeployment, no forced redundancies, early retirement incentives, and income protections for people who end up in alternative but lower-paying jobs. A transition fund to assist workers with specialised coal-related skills in retraining or moving to other parts of the mining sector, and the creation of a transition authority with adequate funds and decision-making powers to guide and support transitions in fossil-fuel-dependent regions. Targeted development of utility-scale solar PV and associated transmission infrastructure. An end to FIFO mining operations in areas where a local workforce is available. Elimination of other exploitative practices including the use of labour hire and excessive overtime. Support for unionisation and protection of working conditions in the renewables sector. Getting off coal 2 Introduction The consequences of global failure to decarbonise the economy have been dramatically illustrated by the smoke haze that surrounded major Australian cities from spring through summer, including Sydney, Brisbane and Canberra, and by the hundreds of bushfires which generated that smoke. At least 20 people died, thousands of homes and other buildings were destroyed, millions of hectares burned, and uncounted numbers of wild animals killed. The long term effects of smoke exposure will lead to hundreds, perhaps thousands, of premature deaths in the future (Quiggin 2020). The failure of the Australian government to reduce emissions here, and its promotion of thermal coal exports abroad, have played a significant role in that failure. Taking account of Australia’s own emissions of carbon dioxide and those arising from the burning of coal produced in Australia, this country, with less than 0.3 per cent of the world’s population, is responsible (partly or wholly) for 3–5
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