Don’t forget the small communities when transitioning to renewables

February 22, 2022

The recent news that Origin, one of Australia’s leading energy producers, was bringing forward the closure of Australia’s largest coal-fired power station was welcomed by environmentalists across the country. It closely follows AGL’s announcement that it was expediting closures of many of its oldest fossil fuel sites.

At a time when the window for credible direct action on climate change is rapidly closing, this news signal that the Australian market has started to shift towards decarbonisation.

This is not unique to Australia. If anything, recent research shows that the rest of the world’s markets have been moving ahead of us for quite some time. Financially, fossil fuels are becoming less stable and are subject to increasing risk.

Indeed, an influential report published by Citigroup’s Taskforce on Climate-related Financial Disclosures (TCFD), found that the industry currently holds ​​stranded assets of more than $100 trillion in pipelines, ports, power plants, and ocean drilling platforms – assets which it believes are overvalued and represent significant risks to any investors.

Therefore, it is undoubtedly good news that the Australian market is finally starting to catch up to the decarbonisation trend. The announcement that billionaire Atlassian founder and Australia’s third richest person, Mike Cannon-Brookes had intentions to buy AGL and invest heavily in an early transition from fossil fuels to renewables by 2030, while exciting, is not the first foray made by Australia’s ultra-wealthy elite into the energy transition space.

In 2017, Australian resource giant Arrium announced that it was selling its famous Whyalla steelworks to British industrialist and billionaire Sanjeev Gupta, who promised to save the foundry and transition to using hydrogen instead of coking coal in production of his patented GreenSteel.

More recently, Andrew “Twiggy” Forrest announced that he was “throwing down the gauntlet” to Australia’s resource industry to follow him in investing in renewable energy, with an expected $1bn investment in creating a renewable hydrogen hub in regional Queensland.

There is little doubt that this investment is needed, and in some cases, well-intentioned.

However, while everyone in Australia will benefit from the transition to renewable energy, the costs of this transition will be unequally distributed. As I showed in a recent report, the loss of primary industries in the three areas most dependent on fossil fuel extraction (Mackay, Central Queensland and the Hunter Valley) will have devastating impacts on local economies and the communities that depend on them.

If we don’t have credible transition plans, these communities stand to lose $66 million in weekly wages for a total loss of $3.45 bn annually in three discrete regional communities. This loss is particularly acute as the next four of the largest five industries in these locations are all dependent on a primary industry employing workers who spend back into local retail, hospitality, and other consumptive businesses.

While some less scrupulous observers might interpret this as a reason to keep our collective heads in the sand and maintain fossil fuel jobs at all costs, the harsh realities of what these communities stand to lose is actually the opposite. What these communities need isn’t a denial of their realities or cosplay coal warriors: they need to have a seat at the table to ensure that they can live, work and thrive in the post-carbon economy.

This approach isn’t easy, but there is plenty of evidence to suggest this approach it worth it. Overwhelmingly, coal communities are in favour of transition, and no-one knows better what these regional communities need more than the workers, local businesses owners and community leaders who call them home.

A recent review of transition plans found that the best outcomes came when local communities were adequately involved in decision-making, and the approach was pre-emptive of changes rather than reactive to closures.

Closer to home, we already have a good model to build off and ensure that communities are centred in our transition plans and their associated decision-making processes: the Latrobe Valley Authority.

Established in 2017 following the closure of the Hazelwood power station near Morwell in Victoria’s Gippsland region, the Latrobe Valley Authority was created following a campaign led by local community members, trade unionists and environmental activists to save the valley. This state government authority has since led the way with community involvement at the forefront of its operations.

This body not only consults the community on decision-making, but it also provides resources and support for community led initiatives, from business creation to mine rehabilitation.

It is time we learned from both international and domestic examples, and begin to build more institutions that place community at the heart of decision-making. By creating a national Transition Authority that supports, coordinates and collaborates with regional bodies like the Latrobe Valley Authority, the government could go a long way to supporting community led transition plans.

Most of all, this shifts the focus from the well-meaning, but nonetheless profit driven billionaires back to the communities who will be affected by this transition. If the benefits of this transition are to be shared equally, then we must start by giving community members a seat at the table.

Shirley Jackson
The Age