Just Transition

Can oil and gas workers adapt to a green energy future?

By Suzy Thompson

There were times when I was taking home about $3,500 a week.” That was in the oil sands, during the boom before 2014. Lliam Hildebrand was a young welder who had come to the Athabasca oil sands for work.

Before that, the Victoria, BC, native spent his first eight years after high school in heavy machinery repair and steel fabrication, often on oil field equipment such as flare stacks and rig platforms. He says serving the oil field’s needs was “the bread and butter” of his work, with an occasional job building renewable-energy equipment such as parts for a biofuel facility.

“I really loved that job,” he says, but opportunities in the North called and he spent the next half dozen years in the oil sands, doing similar work, primarily during spring and autumn, when sites get set up and stripped down. He found it exciting, interesting—and lucrative.

Then came the downturn. As international market forces sent the price of Western Canada Select plummeting from close to $100 per barrel to at times less than $20, oil sands operations struggled to survive, especially as the break-even price for many operations was as high as $80 per barrel. The opportunities that brought thousands like Lliam north evaporated.

“It was crazy,” he says. “Every single day in the lunchroom we were having conversations about who was getting laid off… and when would we be laid off?”

Worldwide, the price crash saw more than 440,000 petroleum jobs disappear. Bloomberg UBS predicts that between a third and as many as half of those 440,000 jobs will never return. In Canada 46,000 oil and gas workers were laid off, mostly in Alberta. Pipeline purgatory and the spectre of fossil fuels’ decline dominate public and political rhetoric on the subject.

What hasn’t been at the forefront is talk of an escape plan for tens of thousands of oil workers. In the past, when industries from carriage makers to cod fishers suddenly crumbled, workers were abandoned. Now the hope is for a “just transition.” The concept of just transition holds that when an industry or sector declines, particularly if that decline is mandated by government policy, the workforce is entitled to planned support to move people to new gainful employment, ideally in their own community.

In theory it’s a grand concept and one of the best ways to gain support for climate change policies from the affected workforce. In practice, “just transitions” have had mixed results.

Alberta and Canada had a practice run in coal. Canada’s coal phase-out got its start in 2012 when the Harper government imposed emissions limits for coal-fired power plants that effectively guaranteed their shutdown. Technological solutions that would sufficiently lower emissions at these generators weren’t cost-effective, especially in the face of coal’s declining competitiveness worldwide.

Alberta followed suit in late 2015 when the Notley government announced similar limitations as part of its Climate Leadership Plan and soon after mandated that at least 30 per cent of Alberta’s electricity grid be powered by renewable energy by 2030. At the time, coal fed over half of the province’s electricity needs, and its production here was greater than all other provinces’ combined. Coal directly supported roughly 3,150 jobs in Alberta, mostly in mining and processing rather than plant operations. Coal workers include engineers, welders, mechanics, electricians, heavy equipment operators and maintenance staff. The economies of some 20 communities were tied tightly to the industry.

Pipeline purgatory and the spectre of fossil fuels’ decline dominate public and political rhetoric.

Hanna is one of those coal towns, and perhaps the poster child for the phase-out thanks to its vocal mayor, Chris Warwick, and the town’s concerted efforts to meet the phase-out head on.

Hanna’s population is 2,500, 210 of whom work in the nearby Sheerness coal mine and power plant. The mine operations prop up the town’s economy, inflating incomes above what would be expected in a remote farming community, allowing business and public services to thrive where they likely wouldn’t otherwise.

While Warwick’s efforts have focused on the town’s economic transition, councillor Connie Deadlock devotes her time to the workforce. “There have been a lot of conversations about just transition from the provincial and federal governments, as well as everyone else,” she says. The mine and the power plant are still operating, but the town is already affected by the inevitable changes, and residents are anxious.

“Not only do we have to worry about the direct job losses, there is no other industry, so many people and families will have to relocate,” Deadlock says. “Housing prices have already been declining, our schools are affected, our businesses, and the list goes on and on.”

She says that because the power plant will convert to run on natural gas, not everyone will lose their jobs, but the new operation will require far fewer employees.

Immediately after the phase-out announcement in 2015, Hanna’s leaders scrambled to find a way not only to keep the town alive but to maintain its quality of life. They contracted Calgary’s Urban Systems to make an analysis of the town’s predicament and attributes and outline a path forward. The resulting Cactus Corridor Economic Opportunities Report has good news and bad for the little town.

“Be realistic,” it recommends. “Living in a community/region can make one unrealistic about its potential.” Also, expect some decline, because “it’s unlikely high wage primary industry jobs can be replaced. If workers in these industries want to stay in the community, they may have to accept a reduction in income and work with less status.” Don’t rely on ongoing subsidies or bailouts, it adds; don’t look for a panacea; establish a sense of urgency.

Coupled with the phase-out, Hanna, like many coal communities, is also rural. It is already subject to the pressures of rural decline, making it even harder to replace coal in its economy.

Hanna does have some business opportunities. Urban Systems points out it has some of the best solar power potential in the country, and likely good wind power possibilities too. As a farming community, it is surrounded by arable land and a fair water supply.

Government hasn’t abandoned Hanna and other coal towns, either. In addition to setting an end date for coal, the NDP government had the foresight to consider the transition—especially important given the phase-out only had 50 per cent public support province-wide. The government wanted widespread support as it made major changes to the way Alberta dealt with climate change issues.

The provincial government gave Hanna $450,000 to set up community action teams and help establish an economic plan. Unfortunately, Hanna was left off the list when the government committed funding at the end of 2018 for the municipal training centres many people say are integral to a successful labour transition.

“Our community has so many ideas for business and expansion, but no funds to bring them to fruition,” says Deadlock. “The employees at the mine don’t feel they will benefit very much from any programs that are offered. There needs to be some significant changes.”

Disconnect between what workers say they need and what the transition programs actually offer is a pervasive problem in Canada’s just transition efforts for the coal industry. “The most requested thing is for the government to offer training and other programs while people are still employed, [but] none of the programs are a benefit while still working,” says Deadlock. “Employees feel that if they could do some upgrading, training or education while still working and having an income, they would have a better chance.”

In response to how initial transition programs were designed, Jamie Kirkpatrick of Blue Green Canada says, “I think that was stupid.” Blue Green is a collaboration of labour unions and civil and environmental groups that has spent the past 10 years advocating for workers affected by environmental issues. It has primarily focused on the fate of Canada’s coal workers as coal-fired electricity comes to an end. Kirkpatrick says requiring workers to lose their jobs before they can begin retraining for a new career sets them back from the start. He and Deadlock agree the reason transition programs often don’t resonate with labour is because many of the plans were made without on-the-ground consultation.

“You actually learn more talking to people who are going to be affected by this than telling them what’s going to happen,” Kirkpatrick says.

Governments issuing decrees rather than including affected groups in the decision-making has been a major sticking point among workers and labour unions throughout the phase-out, seriously eroding any support the decision may have garnered from those most immediately affected
by it.

In the past, when industries from carriage makers to cod fishers suddenly crumbled, workers were abandoned.

Alberta did have a coal transition task force, and in April 2018 the federal government struck its own phase-out task force, including union representatives. That group’s report and recommendations were issued in March 2019. A combined $70-million in funding was allocated to support the transition.

After a year of work the federal task force had found that “coal workers, their families and their communities fear that without careful and inclusive planning, they may face devastating impacts from the coal phase-out. Workers and community members expressed their dissatisfaction with how the government decided and announced the phase-out in the first place, pointing to limited or no consultation about the impacts for both provincial power grids and for the coal mine and electricity-generation workforces… Many expressed sincere doubt about the ability of government to support them through a transition….”

“We cannot leave affected workers and communities behind during the transition to a low-carbon economy. They too must have hope for the future… The phase-out of coal-fired electricity must be done thoughtfully and with full recognition that there is a duty to care for affected workers and communities,” declares the report.

It suggests government, industry and unions share the responsibility for labour in the face of the transition, and recommends creation of local transition centres to help workers identify their skills, learn what retraining they need and what other professions their qualifications may apply to.

Among other things, Alberta’s coal transition plan had offered payments of up to $5,000 in expenses for workers who relocate at least 40 km to start a new job; a maximum $12,000 in tuition vouchers for any post-secondary education and career retraining started within five years of the layoff; career counselling and job-search skills training at affected worksites; transition services to help develop individualized plans to identify existing skills and administer short-term courses in skills development; and help in establishing worker adjustment committees to arrange training or match skills to job openings.

After the election of the UCP government, the transition plan was in limbo until the release of the budget on October 24, 2019. In it, $4.7-million was allocated to the coal workforce transition program. The UCP had never espoused much love for the coal phase-out. Premier Jason Kenney had promised a line by line inspection of all budget items to determine whether they merited continuing. That left everyone involved in the details of the transition hanging. As one Alberta coal worker asked the task force, “Is coal done or what?”

Alberta has 50 times as many oil and gas workers as coal workers, many wondering when they will be asking the same question about the oil sands: “Is it done or what?”

Before 2014 the province had 140,000 jobs in oil and gas drilling, servicing, supply, downstream, midstream, exploration and production roles. A third of them have been lost. Many Albertans are painfully familiar with the recession that began in the oil sands and reverberated throughout the province’s economy. It contributed to the fall of two successive provincial governments and helped create today’s political climate.

The collapse in the price of oil forced the industry to find long-term cost-saving measures. Chiefly, labour costs have plunged as computerization, automation and artificial intelligence take over manual work. Everything from drilling platforms to mine hauling trucks can now operate with fewer than half the staff thanks to automation. Energy research group Wood Mackenzie projects global petroleum demand to continue to rise until 2036; but despite growing demand, improved oil prices and steady production increases, many jobs will never return.

Alberta Labour says direct oil and gas jobs currently make up 7.6 per cent of the province’s workforce, while the petroleum sector still accounts for 28 per cent of Alberta’s GDP (as of 2017 and 2016 respectively). How should the province respond to structural changes in the oil industry?

“People always resist change that hurts,” says Jamie Kirkpatrick of Blue Green about why any kind of managed decline is a touchy subject. For the past three years Blue Green Canada has held a two-day Just Transition Conference in the Edmonton area. It has primarily been in service of academic discussion of the coal phase-out, but Kirkpatrick says last year’s conference saw attendees from the oil sands, curious about what they could do in the same predicament.

“People can see the parallels,” Kirkpatrick says of the declining coal industry and possible fate of the oil sands. “They came to us and talked about the fact that they see the impacts of a changing economy.” Oil sands workers fear the effect of oil’s long-term decline on jobs.

Kirkpatrick says it’s never too soon to plan for an industry’s decline, especially given the size of the oil industry’s workforce. “There’s still a long window, [but] oil sands in particular need to be engaging in just transition planning, because if you can actually be prepared you’ll be much better off.”

In all petroleum transition discussions, the question of transition to what is the most difficult. Rachel Notley’s government incentivized petrochemical diversification through royalty tax credits, and allocated hundreds of millions of dollars in carbon tax revenues to 2,000 “green” projects in roughly 300 communities—everything from LRT expansion in Edmonton to solar panels atop Barrhead’s regional aquatic centre. By that government’s estimate, carbon tax revenues would create 25,000 jobs.

Notley’s team was criticized by some Albertans for diversifying too cautiously; by others for funding such efforts at all. Jason Kenney has expressed support for the NDP’s petrochemical program, but famously killed the carbon tax—and its diversification efforts—with 2019’s Bill 1.

“We stand at a critical moment in Alberta’s history,” concluded the Cactus Corridor Economic Opportunities Report, “facing the harsh realities of sector trends and an ever changing and dynamic labour market that is largely determined by external pressures… More so than at any other time, the province’s relative success in the serious pursuit of diversification will hold more weight in predicting future economic prosperity than the continued heavy reliance on a single commodity sector.” This is the report that the leaders of Hanna had thought might give them hope for the future of their town.

Liam Hildebrand points to the green economy that seems to so irk oil field promoters. He says that in those anxious lunchroom chats about who would be laid off next, many of his co-workers agreed oil sands crews were perfectly suited to build the country’s renewable energy infrastructure.

He notes that oil labour forces are predominantly made up of welders, steel fabricators, crane operators, heavy equipment operators, power engineers—people who should be able to put together a wind turbine or biomass generator with minimal retraining.

“We all agreed it was critical to diversify into renewables because that’s where the world is going,” he says. “The biggest concern is, where are all the jobs? A lot of oil sands workers would take the renewable energy job if it were available.”

Where the jobs are has always been the catch. Hildebrand says he often talked with his co-workers about climate change and the green economy. “In the oil sands, a lot of workers are very environmentally conscious and supportive of things to address climate change, but have a real visceral hatred of Greenpeace and organizations they think are trying to shut down the oil sands overnight.”

The reason they haven’t all thrown their support behind the green energy transition is that repeated promises of a renewable energy job boom have come to very little relative to what the oil and gas economy has given Alberta.

When jobs dried up in 2015, Hildebrand and three of his colleagues founded Iron and Earth. Leading the organization is now his full-time job. Iron and Earth advocates for renewable energy industry growth and oil workers’ suitability for making that happen. As to who is responsible for helping a workforce transition out of an industry that everyone is aware can’t last forever, Hildebrand says it’s everyone.

“We obviously can’t grow our oil sands forever, because we’ll burn up the planet and because we’ll run out of oil. If government wants to be a prudent manager of our resources, be they social resources or natural resources… it’s of critical importance to start looking into the future and where things are going and start diversifying.”

Suzy Thompson is a communications professional based in Calgary. Respond to this story at letters@albertaviews.ca.

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