IEA (2021), Recommendations of the Global Commission on People-Centred Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/recommendations-of-the-global-commission-on-people-centred-clean-energy-transitions, License: CC BY 4.0
Experience shows that mitigating adverse economic effects entails long-term programmes that focus on workers and communities. Energy industries and their supply chains are often geographically concentrated and can represent the social, economic and cultural underpinning of entire communities. A targeted and local approach is needed to help communities adjust to and benefit from the transition.
- In line with Paris Agreement targets and coal phase-out plans, several countries, including Spain, Germany and Canada, have enacted just transition programmes that promote employment opportunities and other community support measures in impacted mining regions. For example, Spain’s Just Transition Agreements offer support to local industry, retraining for green jobs, and environmental restoration.
- The UK published the North Sea Transition Deal in March 2021 that includes a joint commitment from the government and oil and gas companies to invest up to GBP 16 billion by 2030 to support local economic diversification and jobs, including in areas such as upstream decarbonisation, CCUS and hydrogen, as well as skills training.
- The EU Just Transition Fund was created as a financial instrument to help member governments address asymmetric job shifts, particularly in coal mining regions, through long-term support mechanisms.
- Members of the US Congress are trying to revive an advanced energy manufacturing tax credit with half of the money set aside for eligible entities to locate advanced energy manufacturing facilities in coal communities to bring jobs with similar skillsets to these areas.
Such supports require significant investments, which are not equally affordable to all governments, and may require financial assistance.
In order to mitigate negative impacts on local jobs, skills retraining and upskilling should be prioritised, with the requisite investment and engagement with educational institutions. More granular skills data will be needed to match workers with jobs in the new economy. Education for younger people in clean energy fields should also receive stronger focus, to train the workforce of the future.
- France launched a EUR 50 million fund to retrain foundry workers making cast-metal auto parts as its car industry shifts toward production of electric vehicles.
- Digital upskilling, in particular, will be important for clean energy jobs of the future, as Italy has demonstrated with the launch of a national coalition for digital skills and jobs in 2020 to roll out digital training programmes to close skills gaps.
- Canada has committed CAD 35 million to support skills development and economic diversification in coal regions impacted by the energy transition. The government is also undertaking training and re-tooling across the country to build a skilled workforce to support anticipated energy efficiency sector growth.
- The European Master in Renewable Energy was developed by the European Renewable Energy Research Centres and a consortium of universities to train people for skills in renewable energy fields.
Spain just transition strategy
The Spanish government announced the closure of coal mining operations by 31 December 2020 and the redirection of mining subsidies to restructuring coal mining regions. The policy was the result of a deal between the government, unions and the industry to direct EUR 250 million in investments to affected areas. Toward this end, Spain’s 2019 Just Transition Strategy establishes a framework to regulate aid for coal mine closures, aid for exceptional costs and aid to boost mining areas. The work is spearheaded by the Just Transition Institute through Just Transition Agreements with impacted regions. Addressing the detrimental impact of coal mine closures on labour markets is a focal point of the framework and includes measures to promote the development of projects that generate employment and support the construction of related infrastructure, while encouraging the hiring of unemployed workers due to the cessation of mining activities.
Germany’s closure of hard coal mines in the Ruhr and Saar regions
As economic conditions became increasingly challenging for Germany’s hard coal sector, the federal government in the 1990s pursued a tailored engagement strategy with local governments, employers and trade unions that led to an orderly closure of coal mines in the traditional coal-producing regions in western Germany. Since the late-1950s, international competition placed increasing economic pressure on the industry, leading to significant job losses. The government intervened to develop economic restructuring plans for the regions. From the late 1980s, the government pursued a regionalised structural policy that provided opportunities and inputs from local stakeholders. Following a 2007 decision to end all hard coal subsidies in 2018, an agreement was signed between state and federal governments, trade unions and coal companies to ensure a just transition away from coal in the area and a socially acceptable adjustment process. The implementation of social compatibility took place through measures such as voluntary wage reductions, early retirement, relocation of some workers, retraining, redeployment with decent pay, and large public investments to underpin economic diversification. The last coal mine in Germany closed in 2018.
Canada’s just transition strategy
In 2016, Canada committed to the phase-out of conventional coal-fired electricity across the country by 2030. However, nearly 50 communities in four provinces still rely on thermal coal mining and coal power for local employment and taxes. In addition to creating a multi-stakeholder task force to advise the government on a just transition for impacted coal communities (see case study under Recommendation 3), the government committed CAD 185 million to transition initiatives, including CAD 35 million for the Canada Coal Transition Initiative to support skills development and economic diversification, and CAD 150 million to support infrastructure projects and economic diversification in impacted communities. In July 2021, Canada launched public consultations to gather diverse views on proposed just transition legislation, which would complement existing federal efforts on climate change mitigation and adaptation, so that Canada’s transition to a low-carbon future protects and improves the well-being of workers and communities across the country. Proposed legislation could include people-centred just transition principles that put workers and communities at the centre of the government’s climate policy decision-making and a Just Transition Advisory Body to provide government with advice on regional and sectoral strategies. A “What we Heard” report will be published upon the conclusion of consultations.
UK North Sea Transition Deal
The UK’s offshore oil and gas sector has been an important pillar of the country’s economy and energy security for many decades. It is estimated to support around 147 000 direct jobs and through supply chains. The offshore oil and gas industry has supported the UK’s target to reach net zero emissions by 2050 based on the sector’s Roadmap 2035. As part of the government’s climate change strategy, it reached an agreement with the North Sea oil and gas industry to manage the economic transition and transformation of the region. The deal includes public and private investments of up to GBP 14-16 billion by 2030 in clean energy technologies, a voluntary commitment by the sector to source 50% local content for energy transition projects by 2030, and supporting up to 40 000 direct and indirect jobs as part of efforts to decarbonise offshore oil and gas production. The commitment to employment will include reskilling of the existing oil and gas workforce. Technologies that will be promoted based on existing skills, infrastructure and expertise in the North Sea include CCUS, hydrogen and offshore wind.
EU Just Transition Fund
To support the European Green Deal, the Just Transition Fund was established to provide financial support to regions, sectors and communities facing more severe socio-economic challenges from the transition to cleaner forms of energy. The fund provides grants to impacted regions so they can pursue economic diversification as well as provide greater job opportunities for workers. Areas of focus will include digital connectivity, clean energy technologies, emissions reductions, the regeneration of industrial sites, the reskilling of workers and technical assistance. The fund will be implemented in close cooperation with member governments, who must submit territorial just transition plans to the European Commission that outline measures aimed to address the economic and social impacts of the transition in a given region. For the period 2021-2027, the Just Transition Fund will have a total budget of EUR 17.5 billion, which can be supplemented by member states with funds from the European Regional Development Fund and the European Social Fund Plus. The Just Transition Fund is one pillar of the broader EU Just Transition Mechanism that aims to trigger targeted support of EUR 65-75 billion over 2021-2027 to regions impacted by the energy transition.
US advanced energy manufacturing tax credit proposal
US Senators Joe Manchin (D-WV), Debbie Stabenow (D-MI) and Steve Daines (R-MT) in March 2021 introduced the American Jobs in Energy Manufacturing Act of 2021 to incentivise local manufacturing of advanced energy technologies, with a focus on rural communities that have seen reduced economic activity from a slowdown in manufacturing activity and traditional energy sectors. The bill proposes to offer 48C Advanced Energy Manufacturing Tax Credits to energy manufacturers that reinvest in rural areas negatively impacted by sectoral decline. The tax credit, if passed, is designed to stimulate local investments in communities impacted by the energy transition, create local jobs and build local supply chains. A previous version of the 48C tax credit (30% investment tax credit) was included in the American Recovery and Reinvestment Act of 2009 for clean energy technology facilities, and triggered the construction of an estimated 130 manufacturing facilities across 43 states. .
French fund to retrain foundry workers in auto industry
In April 2021, France launched a EUR 50 million fund to retrain foundry factory workers as it shifts its internal combustion-based automotive industry toward the production of electric vehicles. The French government will contribute EUR 30 million and car manufacturers EUR 20 million. France currently has 355 foundry factories employing about 30 000 workers, with half of them linked to the automotive industry. A prospective study by the French metallurgy observatory on jobs and skills in the automotive sector will be complemented by an analysis of the skills gaps between declining jobs and new jobs, in order to offer tailored training to employees who may suffer job losses, with a specific focus on regional and local employment workforce dynamics.
National Coalition for Digital Skills and Jobs in Italy
The Italian Ministry for Technological Innovation and Digitalisation launched the National Coalition for Digital Skills and Jobs in April 2020. In total, 24 national coalitions are active in the European Union as of 2021. The programme stems from another Italian plan that bolsters digital upskilling at all levels, “Repubblica Digitale”. The coalition’s purpose is to provide training and educational opportunities in the digital sector to prepare citizens for the digital transition. As emerging jobs in clean energy transitions will require new skills, it is crucial that governments create incentives for digital jobs. Over 200 initiatives are in place for those who want to improve their digital skills, including self-development tools such as online courses, e-books and self-assessment kits; initiatives for skilling, upskilling and reskilling; innovative training and workshops with universities and research centres; and raising awareness of digitalisation. Italy is also training 10 000 “digital enablers” to promote digital skills locally and meet the target of providing basic digital training to 70% of the population by 2026.
Canada skills training for the energy transition
As part of its Budget 2018, the government of Canada committed CAD 35 million (EUR 24 million) over five years to the Canada Coal Transition Initiative, which supports skills development and economic diversification activities for workers and communities impacted by the low carbon transition. In the area of energy efficiency, the government is working with partner organisations on opportunities for targeted investments in training and upskilling/re-tooling to build a skilled workforce to support current and anticipated energy efficiency sector growth. Some supported projects provided virtual training to Canadians at discounted rates during the Covid-19 pandemic, as well as free online training and instructional materials, to help ensure there are enough qualified workers to support energy audits, retrofits and net-zero home construction. The government also launched the CAD 298 million Skills for Success Program that will help create 90 000 job training opportunities for foundational and transferable skills training. The training will support all Canadians at all skills levels, which will better prepare them meet demands for job skills in the current and future labour market. The government is also investing CAD 225 million in the Future Skills initiative over four years and CAD 75 million per year ongoing to ensure that Canada’s skills development policies and programmes are responsive to the evolving needs of jobseekers, workers and employers. This includes priority areas of action, such as the transition to a low-carbon emissions economy, as identified by the Future Skills Council.
European Master in Renewable Energy
The European Master in Renewable Energy was developed by the European Renewable Energy Research Centers and a consortium of universities to train people for skills in renewable energy fields. Created in 2002, this Master’s degree is intended to respond to the job market’s growing demand for renewable energy expertise, and is accessible to graduate students from scientific disciplines or with relevant work experience. Universities offer different specialisations, such as in photovoltaics, wind energy, grid integration, solar thermal and associated renewable storage, ocean energy, and sustainable fuel systems for mobility. For the academic year 2019-2020, 59 students participated in this Masters programme, acquiring practical or research experience in the field.