Nilar Industry Highlights – The Potential within a Shifting Job Market

The Potential within a Shifting Job Market

When the Paris Agreement was put in place, it validated the widespread consensus that global warming was too rapid to ignore, and CO2 emission reduction was imperative. The goals set from country to country were ambitious and aggressive, but they reflect the urgency of the situation and the desire to move forward. CO2 has risen approximately 20 ppm per decade since 2000, leading to rapid increase in the global average surface temperature. Fossil fuels have been one of the main causes of these greenhouse gas emissions. There have been multiple pathways proposed to accomplish the Paris goals, with the one consistency being that coal needs to be phased out. There are devastating effects on public health and the environment from mining and burning coal in addition to its effects on the global scale.

Phasing out coal and implementing “clean” energy seems straightforward on the surface. However, there are substantial and measurable implications that would need to be addressed. Closing a coal mine or processing plant to shift to a climate neutral economy has swift social and economic consequences. Town infrastructure tends to develop outward from the mine. This interdependency means a closure could bankrupt the local economy. There is a workforce with reliance on a single source of income or social assistance, making the closing of their livelihood devastating. One option that has been suggested is to invest in training to help move displaced coal workers into clean tech occupations. According to the US Bureau of Labor Statistics, a disadvantage is that the wages are not directly translatable, leading to a considerable wage gap. These are all factors that need to be considered within the energy transition.

Finding a way to make this phase out go smoothly has become a priority. In the European Union (EU), there was a decision made to emphasize the significance of this issue. The European Commission set up the Just Transition Fund, securing 17,5 billion Euros in the form of grants to support high carbon regions. There were multiple studies commissioned to examine different coal regions around the EU to gain an understanding of the needs for local employment and nearby communities. Though there were regional differences, overall, it was found that effective cooperation between the EU, national and local governments led to achievable smart investments in people and sustainable industries. There was the possibility to not only replace the jobs lost but also boost the local economy and benefit the environment.  The effect would not be immediate, taking at least 3 years but the perceived benefits would be enduring.

In the US, the new administration not only recommitted the US to the Paris Agreement, but also recently proposed a 2 trillion USD clean energy plan. Within the proposal, there were pledges to transition the six-figure fossil fuel jobs to equally high paying clean energy jobs. The current working landscape may not be able to sustain that promise but investment in the supply chain future will be the key. It would be essential to build a domestic supply chain for the growing renewable energy sector. In addition, there would need to be time spent in effective communication for regional buy-in due the political climate. There is growing optimism with these initial strategic moves will drive the US forward.

According to the International Renewable Energy Agency (IRENA), the renewable energy industry added half a million jobs worldwide in 2019 alone. There was still upward movement in 2020 despite the pandemic response. To ensure this momentum continues, each country will have to harness its renewable potential through education and training measures, labor market interventions and industrial policies embracing the regional capacities. The promising results seen so far in developed markets with job creation and local economy advancement can also be effective in emerging markets. IRENA indicated that there is a much larger employment potential with the creation of comprehensive policy framework. In the next three years, it was predicted that an ambitious stimulus program could create 5,5 million jobs in addition to the 11,5 million already within the industry. It is essential to prioritize the displaced workers from fossil fuel because of their considerable knowledgebase that can contribute to a reoriented, clean energy industry.

All the efforts towards economic recovery and environmental stability instill hope that one day the world will return to a sense of normalcy. However, it is clear that we should not want to return to normal. Now is not the time to be complacent. We want to come out the other side better. The movement in the job market is only the beginning. Embracing the energy transition and moving towards a more sustainable life will help us be better.