Yahoo Finance Jack Mintz: A 'just transition' out of energy? Ask the people of Hanna about that
The talk of the town in Calgary this week is the briefing note for the federal ministerial presentation to the House of Commons Natural Resources Committee June 1. The “just transition” that “Creating a fair and equitable Canadian energy transformation” describes will put at risk legions of well-paying jobs in the industries likely to be particularly hard hit. Just how many are at stake is made clear on page 68, which deserves to be quoted in full:
“We expect that larger-scale transformations will take place in agriculture (about 292,000 workers; 1.5 per cent of Canada’s employment), energy (about 202,000 workers; one per cent of Canada’s employment), manufacturing (about 193,000 workers; one per cent of Canada’s employment), buildings (about 1.4 million workers; seven per cent of Canada’s employment) and transportation sectors (about 642,000 workers; three per cent of Canada’s employment), to help meet the Government’s emission reduction targets.”
That’s over 2.7 million jobs at stake in the most affected sectors — almost 14 per cent of all jobs in Canada. The speaking notes prepared for Seamus O’Regan, the federal labour minister, try to put job-killing in a better light as “ensuring an equitable and prosperous future for workers and communities to take full advantage of the transition to a net-zero future.” Good luck with that.
The concept of “just transition” emerged from the U.S. labour movement in the 1970s, when unions pushed for worker training and community “superfunds” in response to job-killing environmental regulations. Years later, environmental and social advocacy groups joined with unions to link “just transition” with correcting other social ills like global warming, inequality and racism.
The federal document’s agenda is to replace lost jobs with jobs that are sustainable jobs, but not necessarily well-paying. Oil and gas workers earn salary and benefits equal to $98 per hour in the oilsands or $78/hr in petroleum and coal manufacturing (based on 2021 data). Replacing those with anything similar will be hard. Jobs in the critical minerals sector are closer to the mark, at $65/hr, but still represent a big income hit for oil and gas workers. The federal government extolls the virtues of clean-tech jobs but they average only $48/hr, not much more than the average Canadian worker earns ($41/hr).
When lost in a just transition fog, politicians in some countries feather-bed their own public service with laid-off workers whether they’re needed or not. Canada’s non-military federal employees averaged an extraordinary $75/hr in 2021, so the income would at least be in the ballpark. But in the long run being paid handsomely for zero-value “work” isn’t even good for the “workers.”
What policies do “just transition” folk advocate instead? The left-of-centre World Resources Institute suggests six specific measures: income support during the transition, help with local development, training for “decent” work, knowledge sharing and supporting labour standards and collective bargaining (i.e., unions).
Some of these suggestions seem sensible but will they create sustainable replacement jobs paying good incomes? Ottawa expects to spend $37 million a year over the next five years to assist coal workers and communities in Alberta, Saskatchewan, New Brunswick and Nova Scotia. But the efforts are directed at one-time expenditures such as research funds on transition strategies, transition centers to help laid-off workers find work or training, union-based apprenticeship programs and local development plans. Don’t expect these programs to create sustainable, well-paying jobs.
Consider the experience of Hanna, Alta., a town of 2,500 with a coal mine and coal-fired power plant. When Alberta’s NDP government started phasing out coal electricity in 2017, the mayor knew the impact would be devastating, with 10 per cent of the population expected to lose their jobs. Planners hoped and prayed for replacement jobs in agriculture, oil and gas and renewable energy. The federal government recently provided $837,417 for a transition centre, adding to $456,000 from the province.
Did it help? You can check the data yourself on the Alberta government website and see Hanna’s disastrous economic record. Its employment rate fell from 63 per cent in 2016 to 54 per cent in 2021, the lowest level in 40 years. Its unemployment rate rose from 4.7 per cent to 10 per cent. The number of people on employment insurance also more than doubled. Building permits dropped dramatically: from over $6-million worth in 2017 to just $1 million in 2021.
You get the picture. There has been no just transition for Hanna. Once an industry that generates high value-added activity is gone, whatever other activity there may be can’t pick up the slack. A basic principle is at work here: comparative advantage. A jurisdiction can succeed when it has a distinct advantage in a competitive world, as Hanna did in coal and still does to a certain extent in agriculture and oil and gas — but they’re now on the chopping block, too, given Ottawa’s emissions plans. Hanna has no particular talent in renewable energy, which cannot replace the high-paid jobs the town has lost.
What happened to Hanna will happen to many parts of Canada in a “just transition” dictated by government fiat. No wonder workers in the resource-based provinces are hopping mad. If their future is anything like Hanna’s recent past, it’s bleak indeed.
Editor’s note: This column has been updated to clarify that the employment numbers quoted in the second paragraph represent total employment in industries most likely to be hit by federal carbon policies, not estimates of forecast job losses. An editing change may have led to misunderstanding. The document being quoted has been available on the Open Canada website since September.
