‘How to make the green transition – without the mistakes of the 1980s’

Where a worker is in the world right now plays a pivotal role in shaping their experience amid global efforts to combat climate change. In the heart of coal country in the United States, the United Mine Workers of America (UNWA) are already reaping the benefits of President Joe Biden’s commitment to intertwine environmental action with economic prosperity through a green industrial strategy. Recently, the UNWA and Sparkz, a battery manufacturer, forged one of the largest climate-tech union workforce partnerships in the US. The agreement ensures that the majority of the first 350 jobs at the upcoming battery plant in West Virginia will be reserved for former miners.

As Biden aptly put it: “When I think climate change, I think jobs.” The Inflation Reduction Act, enacted just over a year ago, exemplifies how policies can be crafted to ensure a just transition for workers. It offers substantial incentives to renewable projects that provide decent wages. Local content requirements ensure that funding is directed towards companies that manufacture or source their products domestically. Furthermore, firms receiving federal subsidies are encouraged to engage in collective bargaining with trade unions and provide affordable, high-quality childcare for their employees. Public money for public good, in action.

Across the Atlantic, the EU has developed its own green industrial strategy, known as the green deal industrial plan (GDIP). The GDIP focuses on aiding workers in transitioning from polluting industries to green ones and places a strong emphasis on training for these new roles. However, when compared to the US, the EU’s proposals fall short.

UK efforts to ensure a just transition have been fragmented

Here at home, while the climate change committee predicts that the shift toward a net-zero economy will have a positive impact on employment, the UK’s efforts to ensure a just transition have been fragmented or, at times, entirely absent. Unlike the US, where tax credits are tied to investments in local supply chains, the North Sea transition deal contains only voluntary, industry-set targets. Despite the UK’s environmental achievements in offshore wind energy (last week’s glaring auction failure notwithstanding), the absence of a comprehensive green industrial strategy remains a significant impediment to generating a local manufacturing supply chain.

The importance of incorporating fairness into decarbonisation policies cannot be overstated. This approach not only garners political support and appeals to the public but also holds economic advantages. A fair transition can yield substantial benefits, including the creation of well-paying, highly skilled jobs, an overall increase in employment and future economic prosperity.

However, there remain challenges as well as opportunities. We must not, and cannot, repeat the mistakes of the past, such as the devastating impact of coal mine closures in the 1980s that still affect communities to this day. International observers looking at the UK’s policy approach often come away disappointed, with one US trade unionist describing the UK to me as a “cautionary tale”.

Lessons for the UK from other countries’ approaches

So what can the UK learn from policy shifts elsewhere? First and foremost, establish long-term plans and stick to them. Clear, long-term goals supported by consistent funding commitments provide businesses, investors and workers with certainty and a foundation for future planning. For example, some of the tax credits offered by the Inflation Reduction Act extend into the 2040s. IPPR has called for a similar green industrial strategy backed by £30bn of annual public investment into reaching net zero, restoring nature and delivering a fair transition.

Second, link long-term investment to conditions that secure high-wage, high-skill jobs. These conditions should encompass job quality, fair pay, collective bargaining and access to trade unions. To go beyond the US, where the lack of legal enforcement weakens wage and union provisions, the UK should enshrine fair transition agreements between workers, unions and businesses in law.

Third, establish a social partnership approach that brings together government, trade unions, workers, industry and business, local government leaders and the voice of local communities. IPPR has recommended the creation of a net zero and just transition body to coordinate and oversee investments, ensuring that all spending adheres to the essential criteria for a fair transition.

Fourth, like the US and EU, prioritise training at the core of the industrial strategy. This should include providing a funded right to retrain, the introduction of ‘green skills colleges’ and labour clauses mandating businesses to hire and train workers locally.

Lastly, fairly distribute the rewards and benefits of the transition. This entails restricting share buybacks and sharing any excess profits. The excessive profits and dividend payments made by the oil and gas industry are unacceptable. However, a green industrial strategy should go further by focusing on areas in greatest need. In the UK, opportunities for net-zero investment often align with carbon-intensive regions, making a place-based green industrial strategy essential to unlocking their potential.

Labour must build on its green jobs plans if it wins the election

Labour has grasped the importance of such measures, reflecting many of IPPR’s recommendations in its green prosperity plan, from its pledge to invest £28bn a year by the end of the next parliament to a commitment to make “make sure that this new wave of green jobs are good jobs, with high standards, decent pay and union recognition”. These promises must be delivered and built upon if Labour forms the next government.

The risk now for the Conservatives, if they fail to make a similar offer, is of losing support from a public who overwhelmingly support the transition but want it to be fair. The risk for the country is that the government fails to maximise the economic benefits, fails to minimise the risks, but succeeds in undermining support for the transition to net zero.

Addressing climate change and restoring nature with urgency is an established scientific imperative. How we achieve these goals is still evolving. By embedding fairness into the transition for workers, communities and consumers, we can accelerate our journey to net-zero emissions and a thriving natural world while building a fairer, more prosperous economy at the same time.

This article previews a report from IPPR out later this month and is part of IPPR’s new programme focused on how to re-balance power in the economy towards workers.