Options for managing the transition away from coal fired power stations
Stakeholders to the inquiry commented at length on how a phased closure
of coal generators could be best managed. In particular, the need for the
development of a national transition plan was highlighted, integrating energy
and climate policy as well as coordinating the response to assist affected workers
Need for a national transition plan
Support for a consistent, long-term national transition plan was
widespread among submitters to the inquiry. Engineers Australia argued:
...the Australian government needs to create a transition plan
which outlines policy mechanisms to encourage the retirement of Australia's
highest emitting power stations, while also providing options for affected
workers and communities...Without a clear plan, Australia risks the potential to
lose a large portion of its generating capacity in a short period without any
alternatives in place, while at the same time undermining its Paris COP21
Engineers Australia submitted that this transition plan should outline:
how Australia will achieve its emission reduction targets through
the electricity generation sector, outlining a transition from fossil fuel
power plants to renewable and low carbon emission options;
a timeline for when Australia will begin the transition away from
major capacity fossil-fuelled power stations, and what generation options will
be used to replace them;
the obligation costs that the major fossil fuel power stations
will incur when exiting the market, outlining incentives to exit where
incentives for investors of new zero and low emission
technologies with policies to run alongside research and development, drawing
on market forces where possible;
changes to the electricity grid to accommodate more distributed
generation and management of supply availability and resilience; and
policies for increased reliability and resilience of Australia's
electricity system through a mix of generation and distribution applications,
energy storage solutions and smart-grid technologies.
In relation to transition planning, Alinta Energy stated:
An area for further thought and improvement to consider is in
the area of planning the transition to closure where orderly exit can be
greatly enhanced by an effective generator transition plan published in advance
for the entire market and an appropriate energy and renewable policy framework.
The Electrical Trades Union (ETU) argued that a national transition plan
is required to 'ensure that Australia's transition is managed in a fair and
just manner, where affected workers and communities are supported to find
secure and decent jobs in a clean energy economy'.
Some submitters and witnesses commented that the different climate and
energy policy settings pursued by various state and territory jurisdictions in
Australia increased complexity and uncertainty for market participants, and
that a more cohesive national framework is required. The Australian Energy
Without material changes to better integrate carbon and
energy policy in national frameworks, Australian energy customers will pay more
for their electricity, or potentially face more supply risk, in the transition
to achieving a cleaner energy system. A national carbon reduction mechanism
will provide more efficient and reliable national abatement outcomes than a
series of disconnected targets and schemes in individual jurisdictions.
The Australian Mines and Metals Association submitted that Australia
should develop a National Energy Transition Plan, including harmonised
renewable energy targets that ensures affordable, reliable and secure energy
and delivers just, stable, predictable and measured transitions.
Establishment of a statutory
authority to manage the transition process
Several stakeholders argued that establishing a new statutory authority
to manage this transition would be the most effective way to ensure a
consistent, long‑term national plan.
The Australian Council of Trade Unions (ACTU) recommended that the Australian
Government establish a national independent statutory authority, named Energy
Transition Australia (ETA), within the environment and energy portfolio, 'to
navigate the transition to a clean energy economy'. The ACTU outlined the
benefit of this approach as follows:
The key focus of the ETA will be to minimise the impact of
unplanned closures on workers and their communities through managing this
transition in a regulated manner and developing plans to ensure the ongoing
economic prosperity of affected regions. Given Australia's current energy mix
and the need for substantial investment in renewable energy, it is important
that this transition is managed carefully and in a manner that supports the
continued supply of electricity...
Creating a body that has the freedom, independence and
mandate to adopt a long term approach to managing this transition will help ensure
that decarbonisation occurs efficiently and fairly – without working people and
their families bearing the brunt of this transition and being plunged into
unemployment or insecure work through a sudden plant closure.
The ACTU argued that while a number of federal bodies have already been
established to advise on climate policy and support investment in renewable
energy, an independent authority to manage the overall transition process is
'an important part of the mix' to implementing a cohesive national policy
framework in this area.
The proposed new authority would be overseen by a tripartite advisory
board comprising industry, unions and government, and would be responsible for
reporting to parliament and the responsible minister.
Under the ACTU's proposal, the role of the new authority would be to:
oversee a planned and orderly closure of Australia's coal fired
manage an industry-wide multi-employer pooling and redeployment
scheme, where existing workers would have an opportunity to be redeployed to
remaining power stations or low-emissions generators; and
develop a labour adjustment package to support workers obtain new
decent and secure jobs, including by providing funding for workers to access
job assistance support, retraining, early retirement and travel and relocation
The ACTU noted that various models, including the Jotzo model, have been
proposed in relation to determining the order and timing of plant closures, and
proposed that the new statutory authority would be responsible for selecting
and administering the most appropriate mechanism to facilitate these closures.
The ACTU's proposal states that the new authority could also undertake a
review of the National Energy Market regulatory bodies
to ensure that the roles and activities of these agencies are consistent with
the low emissions modernisation of the electricity sector.
Developing region-specific plans
Additionally, the ACTU's proposed new authority would work with all
three levels of government in Australia to develop specific plans for regions
affected by the closure of coal fired power stations.
This would include:
mapping potential new industries to affected regions based on
competitive and other advantages as well as worker skills. As part of this
mapping exercise, infrastructure gaps should be identified and prioritised.
Developing and implementing specific industry and environmental
policies to attract new investment, the growth of new industries and the
creation of quality, secure jobs in affected regions. Such policies could
include additional renewable energy investment incentives, investment tax
incentives and the prioritised construction of new infrastructure.
WWF–Australia supported the ACTU's proposal, arguing that the
establishment of an oversight body to manage the transition process has been a
key to successful transitions in other international jurisdictions.
The Australian Greens introduced a bill into the House of
Representatives on 21 November 2016, which seeks to establish a statutory
authority, Renew Australia, to plan and drive the transition to a new clean
energy system in Australia. The functions of Renew Australia would include:
overseeing the implementation of new energy objectives to achieve
90 per cent renewable electricity generation in Australia by 2030; and
laying out a timetable for the planned closure of coal fired
power stations in Australia, with a default plan involving the closure of all
plants by 2030.
A 'just transition' for workers and communities
One of the arguments posed in favour of a strategic national plan to
retire coal fired power stations is that it reduces uncertainty for workers in
the industry and allows them to plan for a future without coal.
In the past fifteen years, there has been a push by labour organisations
and environmentalists across the world for what is termed a 'just transition'.
A 'just transition' is defined as linking 'ecological sustainability with
issues of work, equity and social justice'.
In discussing 'just transition' policies in Australia, Geoff Evans of the
University of Newcastle states that:
A just transition process recognises the needs of both
current and future generations for safe, secure and satisfying jobs. Participants
in a just transition seek to build collaborations rather than conflict, and in
particular, to avoid a false 'jobs vs. the environment' conflict. A just
transition is needed to ensure that the costs of change do not fall on
vulnerable workers and communities.
The ETU noted that prior to the Paris meeting, the International Labour Organisation
(ILO) had published guidelines on how to achieve a 'just transition' for
workers and communities.
The concept of a just transition was subsequently incorporated into the
preamble of the Paris Agreement, which states that Parties, in signing up to
the agreement will:
[Take] into account the imperatives of a just
transition of the workforce and the creation of decent work and quality jobs in
accordance with nationally defined development priorities...
Ms Ged Kearney, President, Australian Council of Trade Unions explained the
principles of 'just transition' as follows:
From our perspective, the key principles underpinning a just
transition include: equitable sharing of responsibilities and fair distribution
of the costs across society; institutionalised formal consultations with
relevant stakeholders, including trade unions, employers and communities at
both national and regional levels; the promotion of clean job opportunities and
the greening of existing jobs and industries through public and private
investment in low-carbon development strategies, and, alongside that, organised
economic diversification policies for those communities at risk; formal
education training, retraining and lifelong learning for working people; and
social protection measures—that is, active labour market policies; access to
health services and social insurances, among other things; and respect for and
protection of human and labour rights. We believe that, in signing the Paris
Agreement, the federal government has an obligation to responsibly plan and
manage the transition to a clean-energy economy in a way that puts working
people and their communities first.
In its submission, the Construction, Forestry, Mining & Energy Union
(CFMEU) stated that:
...if Australia is capable of having climate policy that
requires all or most of the electricity sector to be low or zero greenhouse gas
emission, then it should also be capable of planning for the social impacts
that arise from that. Governments have a duty to manage the impacts of their
The Australian Manufacturing Workers Union submitted that in regions
affected by coal station closures, the government must take steps to support
investment which attracts businesses able to utilise the existing skills base
of affected workers:
For example, solar-thermal power provides a renewable source
of base-load energy generation and requires a much larger workforce than
solar-radiation power generation. Many of the skills required to maintain and
operate such a power station are very similar to those required in a coal fired
power station. In addition, manufacturing businesses would be well suited to
many of the affected regions because they require employees with very similar
skills to power station workers.
Attracting new businesses to these areas and assisting
existing small and medium sized businesses to grow is the missing piece of the
federal government's usual approach to address the problems created by the
closure of a major employer. This approach supports workers, their families and
their communities by creating quality jobs that provide decent work in the
The committee took evidence from witnesses with experience managing the
current transition of the coalmining industry in Germany. Mr Norbert Maus of
the RAG Corporation explained to the committee that a decision was made in
2007 that the coalmining industry in Germany would 'most likely' end by 2018:
We had a total of 11 years, of which nine have passed, to
prepare and work towards this. We talked with our colleagues; we talked with
everybody; we held all the necessary discussions to make clear to everybody
that the political decision to end coalmining by 2018 had been taken. Of
course, in 2007 we had the figures around how many people would be eligible for
early retirement and, if they were not, what we could do, how many people were
in fixed term contracts and so on. Our focus has always been on the people, to
make sure that we help them and support them. We will now work till the end of
2018 within the funding that we have and we will continue to produce coal until
then. I am very happy with the way we have implemented the process so far.
The ETU stated that, historically, industry transitions had not been
carried out well in Australia:
Transitioning an industry is a massive economic and social
disruption and is something that has been done poorly to date in Australia.
History shows that workers and communities often bear the brunt of such
transitions suffering hardship, unemployment and generations of economic and
In particular, the experiences described in Germany can be contrasted
with the recent announcement of the closure of the Hazelwood power station. On 25 May 2016,
ENGIE's chief executive officer Ms Isabelle Kocher stated before a French
senate committee that ENGIE was planning to gradually withdraw from coal fired
power generation in its international operations. Ms Kocher told the
French senate committee that:
For the Hazelwood
plant, we are studying all possible scenarios, including closure, or a sale if
the state of Victoria tells us that it cannot meet power‑generating needs
without this plant.
After Ms Kocher's comments were published in the Australian media, ENGIE released
a media statement which emphasised that any decision on the future of the
station must be made by the ENGIE Board with approval from the ENGIE and Mitsui
shareholders. ENGIE stated that this decision was yet to take place, and that
business would continue despite the difficult trading conditions.
From May to November 2016, it was unclear whether ENGIE would move to
close the plant. Victorian Energy Minister the Hon Lily D'Ambrosio, stated in
May 2016 that she had been told that 'there are no immediate plans to shutdown
or sell off Hazelwood'.
However, on 24 September 2016, it was reported that ENGIE was expected to hold
a board meeting in mid-October in order to finalise a decision regarding the potential
closure of Hazelwood.
On 3 November 2016, ENGIE announced that it would close Hazelwood by the
end of March 2017. Mr Alex Keisser, Chief Executive of ENGIE in Australia,
stated in a media release that:
Hazelwood is now more
than 50 years old. It has been a wonderful contributor to the National
Electricity Market but we have now reached the point where it is no longer
economic to operate ... ENGIE in Australia would need to invest many hundreds of
millions of dollars to ensure viable and, most importantly, continued safe
operation. Given current and forecast market conditions, that level of
investment cannot be justified.
Mr Keisser said that a number of options had been assessed, such as
revamping the existing infrastructure, repowering with different sources of
energy, or reducing the number of operational units. However, this was found to
be economically unviable and the station's eight generators would be closed by
31 March 2017.
An open letter was also issued to the public by Mr Keisser, which recognised
the impact that closure would have on workers and the neighbouring communities.
The letter stated:
At this time, our
priority is to support our people as we prepare for closure. Departing ENGIE
employees will receive all their entitlements, including a redundancy package.
They will also have access to a range of support services.
In relation to the closure process, ENGIE's letter stated:
While this decision
will obviously have an impact on the local community, I assure you we will work
with governments, regulators, unions and regional residents to ensure an
orderly closure, including comprehensive rehabilitation of the mine and
remediation of the power station site.
ENGIE also foreshadowed the possibility of the sale of the
Loy Yang B coal fired power station in the Latrobe Valley, which
provides up to 17 per cent of Victoria's power supply.
At the committee's public hearing in Melbourne, residents from the
Latrobe Valley highlighted the impact of this uncertainty has had. Mr Ron Ipsen,
Vice President of Voices of the Valley, told the committee:
We are finding that a lot of the distress in the workers and
within the community is around uncertainty, and we believe that the only way
around that uncertainty is—the opposite of uncertainty—vision.
Mr Ipsen outlined for the committee the plan that his organisation was
working on for the Latrobe Valley community:
We have worked on a plan. We sat down and figured out what
the elements were that were needed for transition. They include new industries.
On those new industries, we have built further new industries. We are looking
at tackling the renewable energy target for Victoria. We are going to ask the
state government for 10 per cent of the renewable energy target. We are going
to ask them for $10 million to build a solar panel factory. We want to produce
770,000 solar panels in the valley. We want them Australian made. We want them
made in the valley. We want to build transition panels for a transition. We
want to transition the community. It takes 50,000 houses to produce 200
megawatts, which is one Hazelwood unit. We cannot do eight Hazelwood units, but
we reckon we can do one. We reckon, if we get the union and the green movement
behind us, we can build our virtual power station. If we have our research, our
incubators and the usual sort of 'catch the workers and retrain them', we
reckon we can have a go. That is pretty much what the plan is.
The committee was informed by Repower Port Augusta that an almost
identical scenario has played out following the closure of the Alinta-owned
power stations in Port Augusta in May 2016:
The closure of the Port Augusta power station was announced
with no plan to support the community to transition. Six months on from the
closure the community is still to receive significant support from Federal or
Since 2011, members of the Port Augusta community have pushed
for solar thermal plants with storage to be built in the region creating new
jobs and delivering on-demand clean power. This is a plan that should have been
in place before coal closure was announced.
The experience of the Port Augusta closure emphasises the
need for a national plan for the phase out of fossil fuels that is accompanied
with serious transition packages for local communities and workers.
The ETU also referred to transitions proposals in the UK, which would
see workers move to the renewable energy industry. The '1 Million Climate Jobs'
report was compiled by the UK's Trade Union Group against Climate Change and
the group subsequently lobbied the government to hire a million people to do
new climate jobs via an integrated National Climate Service:
Whilst the report is must broader than a transition plan for
workers, a critical component is that under the plan anyone who loses a job in
an old high carbon sector like mining, oil, power stations or car sales must be
guaranteed a permanent job in the National Climate Service at the same rate of
pay. UK labour Leader Jeremy Corbyn has endorsed the plan and committed to it
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