Policy Report A Just Transition to a Renewable Energy Economy in the Hunter Region, Australia Anthea Bill, William Mitchell and Riccardo Welters (Centre of Full Employment and Equity) in collaboration with Jay Rutovitz and Geoff Evans1 June 2008 This Report was commissioned by Greenpeace Australia Pacific Centre of Full Employment and Equity The University of Newcastle, Callaghan NSW 2308, Australia Home Page: http://e1.newcastle.edu.au/coffee Email: [email protected] 1 Table of Contents Table of Contents............................................................................................................ 2 Terms of Reference......................................................................................................... 4 Executive Summary........................................................................................................ 5 1. Two scenarios for a renewable energy future for the Hunter ............................. 5 2. Local impacts of phasing out coal-fired power generation................................. 7 3. Revitalising manufacturing industry through green jobs.................................... 7 4. Community response: a just transition to green job creation............................ 10 5. Green industrial restructuring ........................................................................... 10 6. A just transition for coal communities.............................................................. 11 7. Investment in clean energy ............................................................................... 11 8. Green-labour alliances ...................................................................................... 12 9. Policy framework to enhance the Hunter as a renewable energy hub .............. 12 1. Introduction........................................................................................................... 14 1.1 Defining the region ....................................................................................... 17 2. A Just Transition to a renewable energy economy ............................................... 20 2.1 Overview....................................................................................................... 20 2.2 Community response: a just transition to green job creation........................ 20 2.3 Green industrial restructuring ....................................................................... 21 2.4 A just transition for coal communities.......................................................... 22 2.5 Green-labour alliances .................................................................................. 23 3. Challenges of downsizing the Hunter / Wyong coal-fired power generation industry ......................................................................................................................... 24 3.1 Overview....................................................................................................... 24 3.2 Existing theory on large scale industry downsizing ..................................... 24 3.3 Summary of literature on industry closure.................................................... 28 3.4 Predicted effects of downsizing the Hunter / Wyong coal-fired power generation industry.................................................................................................... 29 3.5 Other labour market consequences of downsizing the industry ................... 31 3.6 Summary of employment loss impacts of the ‘shut down industry’ scenario .... 35 4. Opportunities for the Hunter / Wyong region in switching away from coal-fired generation...................................................................................................................... 36 4.1 How much can energy efficiency reduce NSW electricity consumption?.... 36 2 4.2 Renewable energy supply ............................................................................. 39 4.3 Capital Investment ........................................................................................ 44 4.4 The employment effects of renewable energy.............................................. 44 4.5 Employment factors for renewable energy and co-generation ..................... 46 4.6 Direct employment in renewable energy and co-generation – results.......... 53 4.7 The employment effects of energy efficiency measures............................... 55 4.8 Energy efficiency – direct and indirect jobs ................................................. 56 4.9 Total employment in energy efficiency, renewable energy and co-generation 59 5. Policy framework to enhance the Hunter as a renewable energy hub .................. 62 5.1 Overview....................................................................................................... 62 5.2 Some key policy initiatives for the Hunter ................................................... 63 6. Conclusion: When challenges and opportunities meet: a just transition .................. 71 References..................................................................................................................... 72 Endnotes........................................................................................................................ 78 3 Terms of Reference This Report is the collaboration between researchers at the Centre of Full Employment and Equity, The University of Newcastle (Bill, Mitchell and Welters) and independent consultants Geoff Evans and Jay Rutovitz. The project was commissioned by Greenpeace Australia Pacific and the Terms of Reference were designed by Greenpeace Australia Pacific. The researchers at the Centre of Full Employment and Equity take responsibility for Sections 3 and 5 and the input-output modelling in Section 4 (indirect employment numbers in Table 24 and discussion). Geoff Evans is fully responsible for Section 2, and Jay Rutovitz is responsible for Section 4. Joint contributions have been made in Section 1 and the conclusion, Section 6. The specific Terms of Reference provided to the researchers at the Centre of Full Employment and Equity were Use input-output analysis to model the employment losses resulting from a closure of the coal-fired powered industry in the Hunter / Wyong region. Use data estimates of the direct jobs generated by renewable energy production (these estimates were provided by an independent consultant, Jay Rutovitz) in input-output analysis to estimate the total jobs generated by a switch to renewable energy electricity production. In undertaking this exercise the researchers were cognisant of the fact that the initial data estimates were based on occupational classifications broadly mapped into the ANZSIC structure. The resulting input-output analysis used the industries identified. A more complete study would clearly treat the renewable sector as a new entrant without existing linkages and gather new data on the exact nature and magnitude of these linkages through the input-output system. Develop some policy parameters to assist the Hunter region in the industrial restructuring from coal-fired power to renewable energy. 4 Executive Summary This Report demonstrates that there can be major benefits to the Hunter and adjacent Wyong region if there is a shift from coal-fired power generation to a renewable energy economy. These benefits include the creation of thousands of new secure, well-paid jobs in the research, design, manufacture, installation, maintenance and export of energy efficiency and renewable energy technologies. This Report estimates that a shift to a renewable energy economy in the Hunter / Wyong region would create between 7,500 and 14,300 new jobs - a net gain in jobs of between 3,900 and 10,700 jobs. The lower estimate is extremely conservative, as it assumes no Australian manufacturing in wind or solar energy. If manufacturing is established in the Hunter to service the NSW renewable industries, the lower estimate is 9,400 jobs, a net gain of 7,100 jobs. The Hunter / Wyong region could become a renewable energy hub, and in doing so revitalise the region’s manufacturing industry. There are costs in making a shift to a renewable energy economy and that is why there needs to be a just transition to such an economy. This Report estimates there will be 1,300 direct job losses in the phasing out of coal-fired electricity generation in the Hunter / Wyong region and 2,300 indirect job losses (a total of 3,600 jobs). A just transition policy recognises that people and ecology are both important. It recognises that ‘business-as-usual’ and high risk technological fixes to unsustainable economic activity are not credible options for confronting climate change. A just transition ensures that the costs of economic restructuring and the shift to sustainability do not fall on workers in targeted industries and their communities. A just transition in the Hunter / Wyong region requires government intervention and community partnerships to create the regulatory framework, infrastructure and market incentives for the creation of well-paid, secure, healthy, satisfying environmentally- friendly jobs with particular attention to appropriately meeting the needs of affected workers and their communities. The Report reflects the findings of other researchers, such as Diesendorf, Saddler, Teske and others, who have documented Australian energy scenarios, and identified that energy needs (including base-load power) can be met by extensive deployment of currently- existing energy efficiency, renewable energy technologies,