Just transition planning for a managed wind-down of fossil fuels in BC

Resource development has long been central to BC’s economy. But commodity prices swing, industries consolidate and patterns of demand change over time. When they do, resource industry workers are often left holding the bag.

The price is often much more than just involuntary unemployment for laid-off workers, but also includes mental illness, increases in domestic violence and addiction. At the community level, this manifests as loss of income, declining home values and closure of small businesses and local service providers who relied on the income generated from the core resource industry. There is a knock-on effect on municipal finances and services, too.

As we contemplate the necessary phase out of fossil fuels by mid-century, we must acknowledge the potential of this transformation to disrupt worker livelihoods and resource communities around BC. Done well, a managed two- to three-decade wind-down period with thoughtful planning and just transition programs has the additional benefit of getting away from the boom-and-bust cycles typical of resource economies.

In recent years, just transition has shifted from the abstract to actual policy and transition packages for workers, funded by governments. Transition for communities reliant on coal extraction and coal-generated electricity is now a real experience, marked by genuine consideration of the long-term well-being of affected workers and their communities, and a commitment to invest in them.

Alberta is an interesting case in terms of concrete policies for just transition. As part of its climate planning, the former Alberta government commissioned an Advisory Panel on Coal Communities. The panel issued 35 recommendations in 2017, and the then-NDP Alberta government followed by tabling a $40 million multi-year Coal Workforce Transition Fund and a one-time $5 million Coal Community Transition Fund, funded out of carbon tax revenues.

The Alberta plan is a landmark. Measures cover:

• Income replacement—workers can receive up to 75% of previous weekly earnings (when combined with EI).
• Bridge to retirement—also up to 75% of previous earnings up to the point when employer pensions kicks in.
• Relocation assistance—Up to $5,000 for moves over 40 km away.
• Education assistance—a tuition voucher up to $12,000 maximum for post-secondary;
• Other counselling and employment services, and potential for “worker adjustment committees” to be created by employers and unions.
• Support for communities—a fund to support alternative economic development opportunities.

Across the Atlantic, a 2018 just transition deal between the Spanish government and unions representing Spanish coal workers has been praised as a precedent for responsible transition. In exchange for ending subsidies to Spanish mines that are no longer economically viable, the €250 million package includes: early retirement provisions covering about 60% of miners (age 48 and older or with 25 years of service); a buyout for younger workers valued at €10,000 plus 35 days pay per year of service; investments in restoration of old mining sites with priority for work given to former miners; other infrastructure upgrades in mining communities; and the development of community-level action plans, including energy efficiency and renewables.

The Ruhr Valley in Germany and the Limburg region of the Netherlands are also held up as model transitions. In addition to the basic components of just transition (income support, early retirement, retraining), key aspects of their plans included:

• Community-level initiatives recognizing the important role of local identity and community in ensuring successful transition.
• Engagement by all levels of government committed to developing high-wage decent work and to fund new infrastructure, education and training, and regional economic development.
• Planning to coordinate industrial decline in a staggered manner over the course of a few decades.
• Cooperation among companies, unions and workers, and multiple levels of government.
• Bottom-up processes of worker and community participation in the development a vision and strategy.

With a managed wind-down most of the heavy lifting can be accomplished through attrition, as existing workers hit retirement age. Ensuring decent and stable pension income is a central issue, including the combined income from public and private pensions. Some pension bridging arrangement may be required for workers close to but not at retirement age.

In many respects, given an aging workforce over two to three decades, the challenge is more an issue for fossil-fuel-reliant communities than it is for specific workers. Thus, just transition strategies must include efforts to maintain employment in those areas where jobs are likely to be lost. In this regard, remediation of old coal mines and oil and gas wells should be a major category of reinvestment. Already we have seen evidence of accumulating public liabilities associated with these abandoned or inactive sites. A Globe and Mail investigation in late 2018 found that 45% of abandoned sites in BC had “languished 10 years or more,” and some 17% for more than 20 years.

In terms of the regional dimension of BC’s fossil fuel production, the province could consider new investments around recycled steel production through electric arc furnaces, perhaps located in or near a coal mining community. BC will continue to need a lot of steel for new green infrastructure and other transition items—wind turbines, high speed rail, buses, bikes, etc. This could also open up opportunities for new BC-based secondary manufacturing of such steel-based products. Accessing these new jobs may require some retraining and skills upgrading, although many skills would be readily transferable (e.g., electricians).

BC should also be more focused on deriving additional value from renewable resource sectors, in particular forestry. The current crisis in the BC forestry sector includes some 4,000 jobs lost in 2019 due to vastly reduced timber supplies in parts of BC brought on by unsustainable logging, massive wildfires linked to climate change and growing numbers of dead trees due to insect attacks and pathogens (also linked to climate change). But forest management and concentrating on value-added production should mean that forestry can have a robust future in a climate changing world.

Finally, in addition to income and transition supports to individual workers, community supports and development need to be a major part of any just transition plan. Investments in community-led processes should be used to identify and fund alternative economic opportunities. This could include related business lines, remediation of old sites, new services (tourism, agriculture, retirement homes) and infrastructure upgrading. Areas disproportionately affected by the managed wind-down should receive a larger share of public re-investment funds.

In this regard, BC has an existing model in the Columbia Basin Trust (CBT) that could be applied to regions with a disproportionate burden from a wind down. Indeed, the East Kootenays, where most of BC’s coal mining takes place, is already within the geographic area of the CBT. The CBT was created in response to the flooding of river valleys in the Kootenays, an outcome of the 1964 Columbia River Treaty, which enables flood management and electricity generation on both sides of the Canada-US border. The CBT was established in 1995 with an endowment that is used to support economic and social well-being in the regional economy. It is a useful model for the next generation of transition.

This post is part of the Corporate Mapping Project, a research and public engagement project investigating the power of the fossil fuel industry in Western Canada, led by the University of Victoria, the Canadian Centre for Policy Alternatives (BC and Saskatchewan Offices) and Parkland Institute. This research is supported by the Social Science and Humanities Research Council of Canada (SSHRC) and the Minor Foundation for Major Challenges.