Emission reductions: implications for regional transitions

The latest paper in our series examining the options for broader decarbonisation of the economy has been released today. This paper looks at the implications of a 55 by 35 emissions reduction target and the transition to net zero for regional economies in the light of the progressive closure of coal power plants.

It recognises that there is a policy case for a focus on these regions, given that coal power plants (and in some cases associated mines) are major employers in those regions. Without support, there are risks to the economic well-being of not just the former plant workers but also the broader region due to a multiplier effect. This risk is somewhat, but not fully, mitigated by the fact that worker entitlements and the process of decommissioning and rehabilitating sites mean that the industry will be injecting substantial funds into the local economy for several years after the plant has ceased operations.

Case studies from around the world illustrate the difference in outcomes when there is a strong government focus on supporting those who have lost work and fostering new employment opportunities in an affected region. Some of the most widely cited success stories, such as Germany and Spain, have required billions of euros in support and programmes that last for decades rather than months or years.

There is a fairly positive example in an Australian context – the Latrobe Valley Authority, set up after the closure of Hazelwood, led to lower unemployment rates in the region 12 months after plant closure compared to the period just before.

The paper can be found here.