Jim Stanford is an economist and the director of the Centre for Future Work in Vancouver and author of a new report for Environmental Defence, Employment Transitions and the Phase-Out of Fossil Fuels.
Like most industries in Canada, fossil-fuel businesses have suffered painful job losses during the COVID-19 pandemic and resulting recession. Plunging global prices and steep reductions in capital spending have led to major job cuts. Fossil-fuel industries (including oil, natural gas, coal, and related activities) lost 17,500 jobs in the 12 months up to September.
Unlike other sectors, however, few of those lost fossil-fuel jobs will ever come back – even after pandemic restrictions are eased. Several oil companies have already announced permanent staff cuts and downsizing. They know the pandemic merely accelerated a structural change in global energy that was already evident. Amazing advances and cost reductions in renewable-energy technologies, including wind, solar electric vehicles and renewable hydrogen, mean fossil fuels cannot compete on cost, let alone sustainability. And worldwide progress in emissions reduction continues as more countries and companies commit to net-zero targets.
It is now undeniable: fossil fuels will disappear from most uses in the foreseeable future. And fossil-fuel industries will never again be an engine of economic growth and job creation in Canada.
Conventional wisdom portrays Canada as fundamentally dependent on extraction and export of natural resources – and fossil fuels are presently the biggest of these “staple” products. In hopes of delaying the inevitable, fossil-fuel lobbyists make exaggerated claims of their importance to the labour market, and predict economic disaster if their businesses are not protected and subsidized.
The statistical reality, however, is very different: fossil-fuel jobs constitute a very small portion of overall employment in Canada – less than 1 per cent. Their importance was already fading rapidly before COVID-19 hit. From 2014 through 2019, fossil-fuel industries lost 33,000 jobs, and their already-small share of total employment fell by one-quarter. Yet over the same period, Canada’s overall labour market strengthened steadily – achieving a record-low unemployment rate in 2019.
The phase-out of fossil fuels will occur over decades, and that gives us time to plan for effective and fair employment transitions. We can enlist the normal mechanisms of change and adjustment that occur all the time in Canada’s diverse, fluid labour market, including retirements, voluntary entries and exits, interregional mobility, and job creation in growing industries.
At least four million Canadians change their employment status every year, entering or exiting the labour force, changing jobs or careers, starting work or retiring from it. In that context, managing the phase-out of the remaining 150,000 fossil fuel jobs over a 20-year period is neither unprecedented nor impractical.
The sooner we start planning for this transition, the easier it will be. For example, most existing fossil-fuel workers will retire over the next two decades, because they are older, on average, than the typical worker. By planning ahead, that natural turnover can take care of most of the gradual downsizing required. Senior workers in various locations can be encouraged to retire with incentives. Younger employees can keep working as the industry downsizes. Experience in other jurisdictions (such as Germany’s 20-year shutdown of black-coal mining) proves this can occur without a single involuntary layoff.
The most challenging aspect of the transition will be supporting regional communities that currently depend heavily on fossil-fuel jobs. Even there, however, the challenge is not as daunting as often claimed. More than half of those jobs are located in large cities, where diverse alternative opportunities are available. There are 17 smaller census-defined communities in Canada where fossil-fuel jobs currently account for more than 5 per cent of total employment. Those communities can and must be supported with ambitious incentives for regional diversification, retraining, and relocation. The overall cost of these programs would be small relative to other energy investments, and spread over many years.
The phase-out of fossil-fuel industries is already occurring in Canada, and around the world. We aren’t doing any favours for workers in the industry by pretending we can stop it. Denying and delaying the inevitable, pretending the good times of earlier booms can somehow be reincarnated, will make the ultimate pain worse. Then, when an inevitable reckoning is forced upon us by global markets (which stop buying our carbon-based fuels), the dislocation will be sudden, destructive, and out of our control.
It is both more compassionate and more effective to get ahead of this transformation. And the first step is to acknowledge that it is happening.
CONTRIBUTED TO THE GLOBE AND MAIL
The Globe and Mail, January 18, 2021