A round table entitled Economic Diversification of Coal-Mining Regions: Challenges and Ways Forward took place in Dnipro (Ukraine) on June 14, 2019. The participants discussed challenges and opportunities for the just transition of coal-mining regions of Ukraine. This was one of the first meetings on this topic involving stakeholders from large energy businesses, local authorities from coal-mining regions, international donor organizations, academics and NGOs in Ukraine. Topics covered at the round table included cooperation with the European Commission’s Coal Regions in Transition Platform (CRiTP) as well as governance aspects of the coal sector and regional transformations. Yuliia Oharenko, an affiliate of GSI/IISD, presented the IISD report Real People, Real Change: Strategies for Just Energy Transitions.

 

In her presentation (in English, in Ukrainian) Yuliia spoke about IISD’s “Four C’s” framework for systematic analysis of coal phas­e-out (see Figure 1) and about Canada’s experience regarding just energy transition, particularly in the provinces of Ontario and Alberta. She also highlighted the experience of the Task Force on Just Transition for Canadian Coal Power Workers and Communities, which might be of special interest for policy-makers in Ukraine.

Results of the Task Force on Just Transition for Canadian Coal Power Workers and Communities

Following Ontario’s coal phase-out in 2016 the Canadian government announced a plan to implement a similar policy across the country by 2030, accelerating dates initially set in 2012. This policy decision will result in job losses and may have other direct and indirect impacts on coal workers and communities. Roughly 3,000 to 3,900 jobs might be lost as coal-fired generating stations and coal mines are closed. This will in turn have knock-on effects on associated enterprises and services, resulting in lost tax revenues for local budgets. Overall, 50 communities in four provinces will be affected.

Recognizing these impacts, Environment and Climate Change Minister Catherine McKenna established a special task force on April 25, 2018, to assist government in shaping a transition plan for phasing out coal. The Task Force consisted of 11 members representing labour and environmental organizations, academic institutions and energy companies. It organized eight public events with wide representation from stakeholders across Canada. The Task Force also visited 15 communities, five coal-fired power plants, two coal mines and one port to hear the concerns and fears of stakeholders and discuss possible solutions to address them. The Task Force released a report on the feedback they collected from coal power workers and communities and a separate report with recommendations for the Government of Canada.

The Task Force came up with seven principles for a just transition including the key message that “affected workers and communities must be at the heart of decision-making during the transition to a low-carbon economy.” The report included 10 practical recommendations for the federal government. These include the development, implantation and monitoring of a just transition plan for the coal phase-out under the leadership of a responsible minister, establishment of local transition centres in affected coal communities and funding a pension bridging program to manage the early retirement of workers.

Canada’s government has already taken up several recommendations of the Task Force. The 2019 federal budget incorporates special provisions including commitments on establishment of worker transition centres in affected communities, supported with CAD 35 million over five years, and also allocated CAD 150 million to an infrastructure fund to facilitate economic diversification in affected communities.

Ukraine’s First Steps Toward Just Energy Transition

Although coal phase-out was never an explicit target of the Ukrainian government, a dramatic decline in coal production has been observed over the last decades due to inherent sector inefficiency and constantly increasing production costs. At the same time, mitigation policies for the retraining of ex-miners and creation of new jobs were often underfinanced and had little effect. This situation should change if measures planned under the new Energy Strategy of Ukraine [in Ukrainian] “Security, Energy Efficiency, Competitiveness” are  implemented. In particular, it envisages the closure of unprofitable mines alongside environmental and social mitigation plans, which should include such measures as redundancy payments and retraining programs for ex-miners. Further, regional transition plans are to be developed in line with European best practices.

Certain promising steps have already been undertaken at the regional level, as several coal-mining towns signed the memorandum for cooperation between local authorities and NGOs in May 2019. The memorandum envisions establishment of a platform for sustainable development of coal towns. This partnership should foster welfare improvement through diversification of local economies, implementation of energy efficiency measures and development of social support programs for the most vulnerable households.

The example of the Canadian Just Transition Task Force shows that an open and transparent approach for building dialogue with affected communities and workers is crucial to gaining trust and support for a durable low-carbon transition. The Ministry of Energy and Coal Industry of Ukraine is considering establishment of an intergovernmental commission to address the social and economic issues of coal-mining regions. It is important that this commission include a broader scope of stakeholders such as labour unions and environmental NGOs—and has a mandate from the government to engage affected workers and communities and provide recommendations. The resulting feedback should then be taken into account when developing government policies and securing sufficient funds for their implementation.