The Challenge Ahead for Australia’s Net Zero Economy Authority

Earlier this month, both houses of Parliament passed a Bill to establish a Net Zero Economy Authority (NZEA) to promote Australia’s economic transformation as the country moves towards a net zero emissions economy. As this transition from emissions-intensive industries continues, the NZEA has been established to ensure the regions and their workers are both supported and able to benefit through a just transition. How will the Authority achieve this, and how will it fit in with the plethora of jurisdictional and industry transition efforts already underway? We take a closer look.

Background

Australia is currently undergoing a transformation of its electricity system. With a commitment to reducing net greenhouse gas emissions to 43 per cent below 2005 levels by 2030 and net zero by 2050, Australia has been transitioning away from its emissions-intensive industries. This move will have significant localised impacts on the workers and communities who have traditionally hosted large-scale fossil fuel generation.

Alongside this transition, the Australian Government has unveiled its Future Made in Australia agenda, with the intent to maximise the economic and industrial benefits of moving to Net Zero and secure Australia’s place in the changing global economy. While this project may lead to potential economic opportunities, it also exposes Australia to a skilled workforce shortage, an issue that will grow as the transition continues.

These are not issues exclusively faced by Australia, as other countries have already rapidly begun to transition away from coal-fired generation. To coordinate on these concerns during the transition to net zero, many nations have moved to create new institutions. Some examples include:

• Germany’s Energiewende has involved the creation of a Commission for Growth, Structural Transformation, and Employment (Coal Commission) in 2018, which leads a national approach to an orderly transition.
• In Spain, the Just Transition Institute was founded in 2020 to develop and implement actual policies related to Spain’s Just Transition Strategy.
• The European Union maintains a Just Transitions Mechanism to address the social and economic effects of the transition.

These bodies have been established to set national plans and targets, channel resources, and support the regions most impacted by change.

A 2022 report published by the Australian Energy Council (AEC) looked at some of these international experiences alongside localised transition experiences that have already occurred in the country. From this, the report highlighted in Australia’s case, there was no silver bullet approach to the energy transition, rather a need for a whole-of-society effort tailored to the circumstances of each community.[i]

Net Zero Economy Authority

With the precursor Net Zero Economy Agency, and now the legislated Net Zero Economy Authority, the Federal Government has moved to follow international precedent and set up its own national body to coordinate a whole-of-society transition. 

The legislation passed earlier this month creates the Authority as a new government entity with the “mandate, functions and powers that enable it to ensure Australia’s transition to net zero emissions is orderly and positive”.

Specifically, the legislation establishes that the Authority would assist in:

• “Facilitating public and private sector participation and investment in greenhouse gas emissions reduction and net zero transformation initiatives in Australia, including in new industries;
• supporting workers impacted by the net zero transformation to transition to new opportunities, including through the Plan;
• coordinating net zero efforts across government and key stakeholders, and in key regions, to facilitate the achievement of Australia’s greenhouse gas emissions reduction targets and support Australia’s transition to a net zero emissions economy; and
• building community understanding, confidence and engagement with the net zero transformation.”

In addition, the NZEA is to work closely with the Department of Employment and Workplace Relations to administer the Energy Industry Jobs Plan. This plan aims to ensure a consistent approach to supporting workers during the closure of coal-fired and gas-fired power stations, minimise involuntary unemployment, and “maximise opportunities to transition directly to a suitable job, reducing the impacts on regional communities”.   

Challenges ahead

The path ahead to achieve these aims will not be easy. Unlike Germanys consistent and coherent strategy with its Coal Commission, indeed, up until recently climate policy on a national level has long been sporadic and disjointed, leading the States to entrench their own roadmaps for the transition. In the absence of a national plan or transition authority state governments have been actively setting up their own regional transition authorities in areas most affected by the closure of coal-fired generation and coalmines. This new NZEA will need to collaborate and coordinate with this range of already entrenched state-based authorities, including:

• Victoria’s Latrobe Valley Authority formed in 2016 following the announcement of the Hazelwood closure to support the Valley and the wider Gippsland area through the closure of its brown coal fleet.
• Western Australia’s Collie Delivery Unit set up to coordinate, oversee and promote activities and initiatives that bring about a just transition for the Collie region.
• Queensland’s Energy Industry Council has been established alongside the Energy and Jobs Plan and Job Security Guarantee to provide advice on new opportunities and pathways for workers and their communities.
• And New South Wales’s Hunter Expert Panel oversaw the distribution of Royalties for Rejuvenation program. The now Labor led state government has since proposed the establishment of Future Jobs and Investment Authorities.  

Alongside these, industry has not remained static in this area. As we have previously written, many just transition programs – covering each jurisdiction with coal-fired power generation – are currently underway in collaboration with state governments. For example:

• EnergyAustralia, has a “Power your future” Program, intended to support workers on the Yallourn Power Station once it closes in mid-2028.
• Origin Energy has a Future Directions Program which provides individual support plans for its workers in preparation for the eventual closure of Eraring.
• AGL has supported their workers following the closure of Liddell, providing employees with new work opportunities or guiding them through retirement. AGL likewise released a Climate Transition Action Plan in 2022.
• Synergy supports their employees through a Workforce Transition Program, providing tailored support, services and resources to their workforce for the anticipated closure of Muja and Collie power stations.
• Both Stanwell and CS Energy are receiving state government support through the Jobs Security Guarantee. CS Energy is likewise launching their Amplify Program for employees to build and develop skills in renewable technology.

The challenge here will be to effectively work with all these existing initiatives, harnessing the work already underway to fill coordination gaps, and ensure duplication is avoided. This will be no easy task. However, the AEC will look forward to working with the Authority to ensure workers and communities within industry and regional Australia will experience a just transition during this economic transformation.

[i] Strategen, ‘Just Transition: Navigating Australia’s Energy Transition’, November 2022.