Coal mine closures need careful social engineering

In late 2015, the UK’s last deep coal mine in North Yorkshire closed, bringing an end to centuries of high-volume coal mining in the country that had helped kick-start Britain’s Industrial Revolution.

It is a transition that could be repeated in countries with large coal workforces such as China, Indonesia and South Africa, as the world shifts towards green energy sources to reduce pollution and limit rising global temperatures caused by climate change.

Once-thriving coal towns in the Welsh valleys, such as Newport, which now imports coal into its port, still struggle with the impact of high levels of unemployment and poverty that resulted from the closure of coal mines in the 1980s and 1990s.

The problem of coping with job losses and social dislocations created by such closures is only going to become worse, with the International Energy Agency estimating that about 1m coal mining jobs could be lost by 2050 — representing about 20 per cent of the world’s current total.

That has led analysts and researchers to talk about a “just transition” that will provide support for communities and miners who lose their jobs because of the reduced use of fossil fuels.

The term was first used by labour unions in the US in the 1970s, when polluting industries were threatened by legislation.

If not properly handled, the loss of jobs due to the energy transition could create a backlash similar to the opposition to globalisation that has marked Brexit and the election of US President Donald Trump, according to Ajay Gambhir, a researcher at the Grantham Institute at Imperial College in London.

“It is not inconceivable that a significant backlash of a similar nature could result from the disenfranchised workers and communities created by the downsizing or complete closure of fossil fuel-intensive industries such as coal mining,” he says.

A successful mine closure programme is one that minimises social conflict

The threat of a marked decline in coal demand has already led Mr Trump to rally supporters by vowing to support the US coal industry, which only employs about 66,000 people in the country. Yet despite the relatively small number of jobs directly involved, the closure of coal mines can have a widespread impact on local communities, according to an imminent report from the World Bank.

Such jobs are concentrated in certain regions and are an important source of local revenues: in some states in India, for example, coal makes up almost half of local revenues. Over the past half century, more than 4m coal workers have lost their jobs in Europe, the US and China because of the greater use of competing fuels such as nuclear or natural gas, as well as renewables.

“In all mine closure case studies, job losses and the subsequent socio-economic impacts borne by families and communities in coal-dependent regions are significant,” says Riccardo Puliti, senior director of the World Bank’s energy and extractive industries global practice. “Decades later after a mine has shut down, many coal-dependent regions continue to lag socially and economically.”

Large job losses in coal mining are already happening in China, the world’s largest producer, as President Xi Jinping vows to fight air pollution. The rest of Asia is likely to follow, according to the World Bank.

Future demand is likely to be met by production from the lowest-cost mechanised coal mines, such as those in Australia, according to industry analysts. They are typically more mechanised than mines in countries such as Indonesia, which tend to be smaller scale.

Governments need to prepare for closures by helping to engineer new job opportunities for redundant workers and support schemes for families and communities, according to the World Bank.

All case studies of successful transitions have involved an active role by government, says Mr Gambhir.

As an example, the government of Alberta in Canada has set aside C$45m ($34m) to support its vow to end coal-fired power generation by 2030.

Another deal struck in Spain this month between the government and mining unions is also designed to win broad social support for a programme of pit closures. The €250m Plan del Carbón deal will see the closure by 2023 of all Spanish mines that are no longer economically viable — largely because of the withdrawal of subsidies.

A spokesperson for IndustriALL, a global coalition of unions involved in the mining, energy and manufacturing sectors, said the deal “sets a precedent for responsible transition through social dialogue”.

But such amenable management of further job losses in the sector is not guaranteed. “A successful mine closure programme is one that minimises social conflict by mitigating impacts on affected workers and communities,” says Mr Puliti. “This is not an easy task.”