In 2007 the Centre for Full Employment and Equity at the University of Newcastle published a report into “A Just Transition to a renewable energy economy” as a contribution to the debate about how to manage the inevitable transition to a low carbon economy. The report aimed to stimulate a conversation about how to use policy to manage the future transition in a proactive way.
Eight years later, it is clear that Local, State and Federal Governments have failed to plan for a disruptive transition that is now taking place – regardless of government policy. Rapid technological improvements, combined with economies of scale and innovations in finance, are driving a renewable energy revolution faster than most people thought possible. At the same time, the global imperative to reduce greenhouse pollution coupled with acute pollution problems in China and other countries is driving regulation that is reinforcing the market shift that is already well and truly under way.
The tide of history has turned and the transition is upon us. According to the Australian Bureau of Statistics, coal-mining jobs in Australia are down 17,000 since 2012, representing roughly ¼ of all employees. The closure of Alinta’s coal power station in Port Augusta, following hot on the heels of the closure of the Angelsea power station in Victoria, are but the beginning of an economic disruption that has a long way to run.
In 2011, Peabody was the largest privately owned coal company in the world with a market capitalisation of US$18bn. Today, their share price is down 95% and their market capitalisation has shrunk to US$730m. With over US$5bn of debt and massive unfunded pension and rehabilitation liabilities, this raises serious concerns about their viability. They are facing legal action by employees who claim that Peabody failed to exercise their fiduciary duties by investing employee pensions in Peabody shares – shredding the value of retirement savings. It is a dramatic fall from grace that is symbolic of the fortunes of an industry that was once a shining light of innovation and future prosperity.
In 2012, Kodak filed for bankruptcy having dominated the global photography industry for over 30 years. Peabody, and indeed the wider coal industry, is facing its ‘Kodak moment’. Policymakers have a rapidly closing window of opportunity to plan for the transition to ensure that coal dependent communities are supported and environmental remediation responsibilities are met. The problem isn’t going to go away and the longer we wait, the harder it will be to manage.