Are coal workers ready for the transition amid the coal phase-out?

Interface News Reporter | Yu Juan

"What can we do if we don't dig coal?" 

When Li Ying asked the workers in the mining area what they would like to do if they were to transform in the future, most of the workers replied.

Li Ying, director of the International Exchange Center of the Kecheng Energy and Environmental Innovation Research Institute (Kecheng), a local non-profit organization in Shanxi, recently visited mining workers in several counties and cities in Shanxi to investigate the impact of the gradual withdrawal of the coal industry under the goal of carbon neutrality.

On November 23, she shared her research and observations at the EU-China Just Transition Dialogue – Employment Challenges conference organized by the Energy Transition Forum and Energy Foundation China.

It's not just miners who are affected

In September 2020, China pledged at the United Nations General Assembly to peak carbon emissions by 2030 and achieve carbon neutrality by 2060. In order to achieve this goal, according to the Opinions of the Central Committee of the Communist Party of China and the State Council on Completely, Accurately and Comprehensively Implementing the New Development Concept and Doing a Good Job in Carbon Peak and Carbon Neutrality, China will gradually reduce coal consumption during the 15th Five-Year Plan period (2025-2030) and increase the proportion of non-fossil energy consumption to more than 80% by 2060.

Employment in coal-related industries will be affected as a result. Li Ying said at the meeting that according to Kecheng's forecast in the report "Just Transformation of Typical Counties in Shanxi Province", by 2035, the number of coal workers in Shanxi will be reduced by 400,000 compared with 2020.

According to the report, this scale is expected to be largely due to the natural crowding out effect of increased labor productivity. After 2035, the coal reduction policy under the "dual carbon" goal will become the leading factor affecting coal employment.

The report predicts that between 2020 and 2060, the total number of jobs in Shanxi's coal industry will shrink by 796,000. In 2021, the total number of employees in Shanxi's coal mining and dressing industry was 878,600.

最终将It's not just miners who are affected。李莹介绍，山西很多煤炭大县或矿区的服务业都由煤炭产业带动。“如果这个地区的煤矿关停，周边的理发店、超市、饭店也会受到影响。” 她表示。

According to Zhang Ying, an associate researcher at the Institute of Ecological Civilization of the Chinese Academy of Sciences, the results provided at the meeting showed that every direct job in Shanxi's coal mining and washing industry is linked to three indirect jobs through the industrial chain.

In addition to the indirectly employed population, Zhan Yang, an assistant professor at the Department of Applied Social Sciences of the Hong Kong Polytechnic University, added at the meeting that unstable employment also needs to be protected.

According to the 2021 Roadmap for Carbon Neutrality in China's Energy System, the International Energy Agency, an intergovernmental energy agency, will increase by 2.2 million jobs in clean energy supply and battery manufacturing by 2030, while 1.8 million fewer jobs will be created in oil, gas and coal fuel supply and fossil fuel power plants. In the latter figure, the vast majority of the losses came from the coal mining chain, which is about 1.6 million.

Zhang Ying pointed out at the meeting that although domestic and foreign studies tend to support a net increase in the employment impact of the energy transition, job losses usually come more quickly, and the increase in employment opportunities driven by the development of zero-carbon industries is a long-term process.

In addition to the time mismatch, Zhang pointed out that there is also a mismatch in terms of skill demand. "It will be difficult for those who have been engaged in fossil fuels in the past to find employment opportunities in the emerging energy fields that are more promising in the future. Zhang Ying said.

There is a lack of clear goals for the transition period

Zhang Ying believes that the lack of clear goal-oriented and institutional arrangements for the transition between China's short-term positioning and long-term goals for coal is the biggest challenge for achieving a just energy transition in the future.

A just transition refers to taking comprehensive measures to support regions and groups that have been negatively impacted in the low-carbon economic transition, help them achieve high-quality transition, and ensure that the substantive benefits of the transition can be widely shared.

"So far, China has set clear targets for the development of renewable energy from the medium to long term to 2060, but there is no clear roadmap for the withdrawal of fossil fuels, especially the medium and long-term goals for the scale of coal production. Zhang Ying explained.

Li Ying said at the meeting that the workers she visited were generally unaware of the "dual carbon" goal and its impact. Although the managers of the second- and third-tier enterprises of the coal group understand the "dual carbon", in the context of the energy crisis and energy supply guarantee in the past two years, they are still relatively optimistic about the overall development of the coal industry, and do not have a strong understanding of the urgency of the transformation.

Coal power is the largest downstream of coal.

In recent years, the positioning of coal power as the "ballast stone" of energy transition has been highlighted, and a new boom in coal power construction has emerged in many parts of China. According to statistics from the Energy Research Institute of Peking University, from January to November 2022, the total installed capacity of newly approved coal-fired power projects in China reached 65.24 GW, more than three times the total approved capacity in 2021. According to a new report by Tsinghua University's Institute of Carbon Neutrality, in the first half of 2023, China's newly approved coal-fired power capacity reached 52 GW.

According to the National Bureau of Statistics,In 2022, the share of China's coal consumption rebounded for the first time in 11 years, from 56% in 2021 to 56.2% in 2022.

Zhang Ying stressed that due to the above reasons, most managers of fossil fuel enterprises have not established expectations for employee placement.

According to Zhang Ying's analysis, enterprises play a dual role in the transformation process: on the one hand, they are stakeholders who have been negatively affected, and they also hope to receive support from governments at all levels and relevant policies in order to reduce the impact of transformation, and on the other hand, enterprises have the responsibility to resettle employees.

"In this process, how can corporate social responsibility be reflected? As an energy company, how should it plan and balance between its short-term profit needs and the rigid constraints of long-term transformation?" Zhang Ying pointed out that these problems need to be considered in advance.

Yu Han, director of the Energy Foundation China's Coal Transition Working Group, added at the meeting that many mining enterprises currently operate on a "workshop system", and there is only a one-way production relationship between enterprises and workers. Therefore, the path for enterprises to assume part of their social responsibilities at that time has not yet been established.

What preparations can be done in advance?

"In the past stage of economic development, China has actually encountered many pains of such transformation. ” 

Wang Yating, research assistant of Kecheng Coal Transformation Project, said at the meeting that from 2015 to 2020, Shanxi's coal industry was in the throes of a round of "de-capacity", and about 118,000 workers in the province were affected.

According to data from the State Council, after 2012, due to factors such as slowing economic growth and economic restructuring, coal demand fell for a time, and coal prices fell sharply. By the end of 2015, the coal industry was losing more than 90% of its money. The State Council issued the "Opinions on Resolving Excess Capacity in the Coal Industry to Achieve Relief and Development", requiring the national coal industry to withdraw, reduce and reorganize production capacity of 500 million tons within three to five years. Among them, the indicator of Shanxi Province is 113.8 million tons/year.

Wang Yating introduced that with the support of the central government and local funds, Shanxi has established a variety of employee resettlement methods such as internal retirement, internal diversion, training and transfer, labor export, and entrepreneurship.

Zhang Ying said that although China does not have a dedicated institutional system for a just transition, there are many fragmented systems within the existing institutional space, which can be called "quasi-just transition measures", which can solve the problems faced by the just transition, including the social security system, employment promotion policies, poverty alleviation policies, urban-rural integration, and regional coordinated development policies.

Wang Yating said that in the end, during the "de-capacity" period, Shanxi's employee resettlement method is still dominated by internal diversion - most people enter coal mines with capacity replacement, or coal-related coking and coal-fired power businesses within the group.

"There may still be a lot of challenges in dealing with some of the future employment challenges with the original mechanism. Wang Yating pointed out in her speech.

In her research, she found that "in some enterprises, the internal retirement method is mainly for management personnel, and it is difficult for underground employees to choose to be resettled in the internal retirement method due to the difficulty of recruitment." There is still a gap between private enterprises and state-owned enterprises in terms of social security and labor compensation. ”

On the other hand, the pattern of internal diversion of coal enterprises, on which most workers depend, may not be sustainable in the future. With the advancement of the "dual carbon" goal, other industries such as coking and steel are also facing transformation pressure, and there are signs of weakening demand for recruitment.

"Attracting more new industries in the future to settle in Shanxi may be a better solution to resettle workers. Wang Yating said that in this scenario, the content of employee skills training needs to be adjusted to combine market demand and workers' learning ability to integrate with new industries.

Zhang Jieqing, chief representative of the Beijing office of the Natural Resources Defense Council (NRDC), an environmental agency, called for Shanxi to nurture new industries early.

"The data shows that in 2021, the operating income and tax contribution of Shanxi's traditional industries of coal, coke, metallurgy and electricity accounted for 71% and 83% of the province's industry, respectively. If new industries and formats are not developed, the transformation will have a greater impact on the economy. Zhang Jieqing said at the above-mentioned forum.

Direct employment in China's coal mining and washing industry has fallen from a peak of 5.3 million in 2013 to 2.61 million recently, according to public data. Although the total number of coal workers in Shanxi Province has decreased, the proportion of employees in the same industry in the country has shown an upward trend.

According to data from the China National Coal Association, in addition to Shanxi, the raw coal output of Inner Mongolia, Shaanxi, and Xinjiang in 2022 will also be among the top in the country, accounting for 26%, 16.6%, and 9.2% respectively.