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What is the cost of a just transition for former coal workers?

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Released today, a new policy brief from the Center for Global Sustainability (CGS) at the University of Maryland conducts a detailed review of worker support policies across seven countries to quantify the policy cost spent on supporting a just transition. The analysis found and calculated costs for three main categories of worker assistance—rehiring, income compensation, and health—finding on average countries have provided more financial support  on income compensation that includes unemployment benefits, early retirement compensation, and severance pay. 

In anticipation of the rapidly increasing global transition away from fossil fuels, countries should protect and support displaced workers through demonstrated strategies and concrete actions in line with a just transition. In the countries we researched, we found an average cost of $253,420 per worker for income compensation policies, $23,337 per worker for rehiring support policies, and $12,783 per worker for health support policies.

“As countries turn away from coal power towards clean energy, it is critical to ensure that former workers are protected and not left behind during the transition,” said Ryna Cui, CGS Research Director and Global Coal and Fossil Transition program lead. “To inform other countries in designing their transition policies, our research analyzes the types of worker support policies used in several countries and quantifies the cost of these policies to provide useful data for other countries’ transitions.”

Through reviewing and compiling available financial information on existing or proposed worker support policies, this brief paints a picture of the potential cost of different policies that can be applied to other countries. Income compensation policies cost the most for countries, as they were not often one-time payments, but often take the form of early retirement which is not beneficial to countries with a young workforce. Centering workers’ rights is critical in this transition and they need comprehensive assistance to prevent the adverse effects associated with losing jobs and livelihoods.

“We found rehiring support was the most utilized policy tool among the transition plans, but effective programs implemented a wide range of policy solutions to aid workers in the transition,” said Claire Squire, CGS research assistant and co-lead author. “Furthermore, while most policies were provided by the national government, it is still critical to tailor these policies to local needs.”

A central tenant of just transition policy is to support former coal workers and coal-reliant communities, but not every country is capable of providing adequate support. This analysis highlights the significant financial investment required to finance a just transition. For rehiring support alone, countries have spent between $195 million and $784 million. As more countries, specifically developing countries, transition away from coal, international aid is likely needed to support the global just transition effort especially as the need for rapid reductions ramps up to keep the world on track to below 1.5C.

Download the policy brief to learn more and check out our previous analysis on financing a rapid and just coal transition in Indonesia.

For Media Inquiries:
Shannon Kennedy
Strategic Engagement Manager, CGS
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