By Marla Orenstein and Janet Lane
Published in JWN Energy
Part of the Navigating Net Zero: COP26 Series. “Navigating Net Zero is JWN Energy’s framework for curating conversations and content related to Canada’s climate opportunities and challenges in a transition to a low-carbon economy. In this special series in advance of COP26, we have asked nine individuals to reflect on where Alberta and Canada fit within a global climate leadership nexus and offer perspectives on navigating collaboratively. Today, Marla Orenstein, director, Natural Resources Centre, and Janet Lane, director, Human Capital Centre at the Canada West Foundation explore the notion of ‘just transition.'”
October 18, 2021
For hundreds of thousands of Canadians, the transition towards a low-carbon economy is set to be incredibly difficult. The transition is predicted to result in a loss of between 312,000 and 450,000 jobs among workers employed by or providing support to the oil and gas sector and its supply chain. This is a staggering number of jobs gone at potentially great economic and social cost. But there are actions government, organizations, communities and others can take to significantly lessen, if not eliminate entirely, the sting.
There are numerous examples of workers and communities languishing for extended periods after the main economic engine left town. Think of the “Rust Belt” in the United States following the decline in manufacturing, North Rhine-Westphalia in Germany as a result of the coal-phase out, and — within our own borders — Newfoundland and Labrador after the cod moratorium. The ill effects often last for decades; northeast England still hasn’t recovered its prosperity from when coal mining died in the 1980s.
Clearly, if Canada does not learn from past examples and its own history, the imminent energy transition could prove to be just as devastating economically and socially, and particularly so for certain regions including Alberta, Saskatchewan and Newfoundland and Labrador. As Canada works towards a low-carbon future, governments and other organizations must pay close attention to determining what elements are required in Canada’s just transition framework to ensure workers, communities and companies are offered a prosperous economic and social future.
Further reading: Submission | Comments on the People-Centered Just Transition Discussion Paper (Marla Orenstein, Nayantara Sudhakar and Janet Lane)
Here, too, there are some examples to draw on — honest attempts to achieve this goal — that may not have been perfect but that provide some important lessons in terms of what those elements might be.
One example is from East Kentucky, always an economically poor region, where tens of thousands of the best jobs in coal mining and related support sectors have been lost over the last decade. Federal funding has enabled local community governments and organizations to implement a process to replace those jobs.
The process included the creation of a comprehensive asset map of the region and the development of detailed competency profiles and preferences of the area’s workforce. Available, accurate, county-level labour market information was crucial to the development of these profiles. With this data in hand, the local economic agencies looked into which industries might be attracted to East Kentucky if they could be guaranteed a deep talent pool.
They are succeeding.
The region is geographically close to major employers in the aeronautical and automotive sectors. Economic development agencies and local education and training providers instituted programs that would enable workers to fill gaps between their existing competencies and those needed for jobs with potential employers in these sectors. One program at the new eKentucky Advanced Manufacturing Institute provides a seamless transition for former coal workers into metalworking trades needed in the aerospace sector such as CNC operators, technicians and machinists.
Meanwhile, they also worked hard to recruit employers. One East Kentucky (OEK), the largest agency involved, advertises that the region is home to an impressive number of skilled workers whose education, experience and technical background would easily transition into the aerospace sector. With the data they have amassed they can also go on to say that 74 skill sets are required in the aerospace sector, and that the regional labour pool has 7,700 individuals who possess one or more of those skill sets.
Now, OEK boasts that Kentucky has seen a 183 per cent increase in aerospace products and parts manufacturing since 2012.
It is worth noting too that with support, some of the companies in the coal mining supply chain were able to pivot their production and their existing employees to provide new services — enabling jobs to remain local, and management structures and relationships within the company to remain intact.
A second example worth looking at is the U.K. In March, the U.K. government announced the North Sea Transition Deal — a 30-year transition plan in which North Sea oil and gas production winds down as other energy services — such as hydrogen and CCUS — ramp up. The plan not only promises to support oil and gas workers and the full industry supply chain through the transition to a net zero economy, it also sets out the path to accomplish the transition and provides certainty for people, regions, companies and investors.
To maintain jobs in the same location as current oil and gas jobs, the government is establishing “Super Places” — net-zero energy hubs that will co-locate hydrogen, CCUS, and renewable energy projects in regions of the U.K. that already have established oil and gas industries, such as northeast England and Scotland. This will both avoid the relocation of workers and provide quality jobs.
To ensure that the jobs and money will go to U.K. suppliers and workers, the sector has agreed to voluntary targets of 50 per cent U.K. content, and 30 per cent local technology over the lifecycle of future clean energy projects. New project approvals will be contingent on meeting these targets. And finally, the supply chain isn’t left out either — the deal includes specific commitments from both government and industry to support transition of the full supply chain.
The examples of East Kentucky and the North Sea Transition Deal carry plenty of takeaways for Canada’s own “just transition.”
Federal funding is required. So is deep collaboration across government, industry, community organizations and others. Data is key — sufficient community-level information to support evidence-based decision-making. Family-supporting jobs need to be replaced in the same regions that are losing them; it’s not good enough to create a similar number of jobs across a much larger geography. And finally, to be successful, governments need to focus on supporting individuals, communities and existing companies — all three contribute to the success of an economic transition.
The process isn’t simple, and also requires an extensive amount of resources, both people and time, to be dedicated to the effort. But the potential payoff is large, and the problems — economic, social and political — of getting it wrong are even larger.
Many thanks to Brendan Cooke and Nayantara Sudhakar for their research support.