The global move away from fossil fuels will cost two in three workers their jobs across regions such as the Hunter Valley and central Queensland over the next three decades, according to a report that argues the impact will be even worse without investor support for a fair transition.
Leaving workers in those regions – home to the coming federal election’s most critical swing seats – to fend for themselves will result in even worse outcomes, costing as many as 75 per cent of the existing workforce their livelihoods.
Either way, the industry’s job exodus is expected to be about three times the 27,500 jobs lost by late 2017 when Ford, Holden and Toyota closed their factories.
The findings, released today in a provocative report based on research by EY Australia for the influential Investor Group on Climate Change, suggests that the move to net zero emissions is both inevitable and throws up huge opportunities for new jobs and economic growth, but only for countries that “get ahead of the curve”.
“Governments, companies, investors and all other stakeholders must act to minimise hardship for affected workers in fossil fuel sectors and communities where jobs will be lost, and ensure they are not overly disadvantaged or left behind,” said Rebecca Mikula-Wright, the group’s chief executive.
The group’s members are made up of some of Australia’s biggest investors, including AustralianSuper, BlackRock, Pimco and AMP Capital, and currently manage more than $2 trillion in assets.
The report, which comes less than 100 days before the much-anticipated United Nations climate summit in Glasgow, urges Australia to lift its climate commitments and develop concrete plans for the transition towards greener energy – something the Coalition government insists it must do before making a firm commitment to net zero by mid-century.
Modelling by EY outlines two pathways for Australian workers who stand to suffer the most because of the looming changes.
Under what it calls an “orderly scenario”, which involves co-ordinated action and support for those most affected as global fossil energy demand falls 42 per cent by 2040 – sapping demand for coal – GDP will fall by about 2 per cent by 2050 and 4 per cent by 2100.
About 66 per cent of the existing workforce across Australia’s coal belts will need to shift to another industry every decade between 2020 and 2040.
As ugly as those numbers look, according to the investor group the “do-nothing, disorderly scenario” is even worse.
Delayed climate action followed by a sudden shift away from fossil fuels would mean the toughest part of the transition gets pushed back to the period between 2030 and 2050.
In that world, there will be only a slight decrease in global demand for energy from fossil fuels this decade, followed by a 70 per cent plunge over the next 20 years.
Decline in GDP
The cumulative hit to GDP will be a fall in output of 7 per cent by 2050, and 10 per cent by 2100. About 75 per cent of the workforce will need to change jobs between 2030 and 2050.
“The transition to net zero will require government, corporates and investors to work together to unlock the opportunities across our economy,” said Mathew Nelson, global leader of EY’s climate change team.
“It is incumbent on all stakeholders to smooth the path towards a net zero economy, otherwise jobs, shareholder capital and livelihoods will be needlessly put at risk.”
Mr Nelson said investors can help manage a “just transition” through their allocation of capital.
“By focusing on disclosure and better accounting for social impacts, investors will also be well placed to maximise the long-term value of their portfolios as we move to net zero emissions.”
The report identifies four communities that will be most affected if global demand for coal and gas falls in coming decades: the Pilbara, Queensland’s Bowen-Surat basins, the Hunter Valley and Victoria’s Gippsland.
It concludes that across most of those communities it will be difficult for their relatively low-qualification workforce to adjust without more learning and development opportunities.
More than 70 per cent of the workers across those four regions work as technicians, trade workers, labourers, and drivers.
“Each of these factors, particularly the lower tertiary education levels and highly concentrated occupations, increase the transition risk exposure and give impetus to the need for an orderly and planned transition to mitigate these factors,” the report’s authors write.
Source: Australian Financial Review