Hub readers would be somewhat justified for being confused about the current political maelstrom about the so-called “just transition” of oil and gas workers. The language of “just transition” has up until recently been mostly confined to academics, think tanks, and climate advocacy organizations. It’s now at the centre of a renewed debate about the costs and consequences of the Trudeau government’s climate change agenda, including for particular regions, sectors, and workers.
The controversy started about two weeks ago with the release of an 81-page federal briefing document for Natural Resources Minister Jonathan Wilkinson on the government’s plan to transition workers in carbon-intensive industries such as oil and gas production into job opportunities in greener parts of the economy.
It precipitated a swift reaction from federal and provincial politicians, including Alberta Premier Danielle Smith who said the briefing document confirmed her “worst fears” about the Trudeau government’s plans to shift the centre of gravity of Canada’s economy from carbon-intensive to less carbon-intensive sectors.
The ensuing political tensions are a bit odd. The players seem to be slightly confusing causes and symptoms. Premier Smith’s problem isn’t presumably the federal government’s plan for training and employment subsidies to help transition oil and gas workers into new jobs. It’s Ottawa’s plan to threaten their current jobs in the first place.
But it nevertheless sets up an intellectual and political battleline between Ottawa and Alberta rooted in competing conceptions of how we ought to think about the pursuit of our collective climate goals: is it about managing the decline of the country’s oil and gas sector, or instead what the Public Policy Forum has come to champion as the “aggressive decarbonization” of energy production, transmission, and usage? How we answer this question in the coming years will have significant economic, political, and social consequences.
The term “just transition” is widely thought to have been coined by Tony Mazzocchi, a well-known American labour and environmental activist, in the early 1990s. He and his acolytes saw the concept as a means of addressing tensions and creating alliances between the labour and environmental movements.
The basic idea was to design and implement large-scale public programs—what Mazzocchi famously called a “Superfund for Workers”—that would mitigate the inequitable effects on livelihoods caused by environmentally-motivated transformations in energy systems and resource use. As he wrote at the time: “we need to provide workers with a guarantee that they will not have to pay for clean air and water with their jobs, their living standards or their future.”
The Trudeau government has since adopted this language in the context of its own ambitious emission-reduction targets including the impending adoption of an emissions cap on the oil and gas sector. It’s a basic recognition that such policy actions won’t be costless and their consequences will be concentrated among certain people and places.
The government’s briefing materials essentially say as much: “The transition to a low-carbon economy will have an uneven impact across sectors, occupations, and regions, and create significant labour market disruptions.” There’s been a lot of attention paid in particular to some numbers in the document including the possible employment threat of “large-scale transformations” for about 13.5 percent of Canadian workers, including more than 200,000 in the energy sector.
Even if Ottawa’s just transition plan to mitigate the displacement effects for some share of these affected workers is ultimately effective, the consequences could still be significant. Consider, for instance, Alberta’s oil and gas sector employs nearly one in ten workers across the province’s entire economy.
These figures actually underestimate the energy sector’s role in Canadian political economy over the past two decades. I’ve previously written for The Hub about the phenomenon of “jobs polarization” in the modern economy. The basic idea is that the shift from a goods-producing economy to a service-based economy has contributed to a bifurcation of the labour market with a growing share of jobs concentrated in high- and low-skilled occupations. It’s come to be described as an “hourglass economy.”
Although Canada isn’t immune to these trends, our labour market structure has remained more egalitarian than most peer jurisdictions. Labour economists David Green and Benjamin Sand attribute it in large part to sustained labour demand in the energy sector over the past twenty years or so. Their analysis finds that during this period of jobs polarization across advanced economies, Canada’s resource-based sectors have acted as an “employment alternative to low-paying services jobs.”
This conclusion aligns with the work of economist Kevin Milligan who has similarly argued that resource-based jobs have sustained Canada’s middle class in the 2000s. As he has written: “The resource sector has contributed substantially to the good jobs that underpin middle-class resilience.”
Another way to put it is this: during a period of worldwide jobs polarization, Canada’s natural resources sectors in general and its oil and gas sector in particular have counteracted this trend, fortified the country’s middle class, including among those without post-secondary credentials, and in so doing had a powerful anti-inequality effect on Canada’s labour market.
Throwing these workers into disarray therefore would not merely have economic consequences in the form of job and income losses, but it could have broader political and social implications. Remember the story of the contemporary populism around the Western world is in large part the political expression of those who once aspired to a middle-class life and have instead slid down the skills ladder into lower-paid jobs or unemployment altogether.
If one thinks about the just transition debate according to this lens, policy-based threats to resource-based jobs could hasten the erosion of middle-class jobs in Canada, produce greater inequality in our society, and ultimately precipitate a rise in political and social instability.
This of course doesn’t mean that Canadian governments ought to abandon their climate goals. But it is a reminder that they need to be judicious in how they assess the benefits and costs of different policy actions if for no other reason than it will undoubtedly threaten the political durability of their own policies. It’s difficult to envision how a stringent climate policy that resulted in major employment dislocation and a spike in inequality could possibly be sustainable.
With this in mind, the Trudeau government would be wise to adjust how it thinks and talks about the application of its climate goals to the resource-based sectors along the lines set out in a recent letter from Premier Smith to the prime minister. The letter puts forward some sensible ideas to encourage investment in lowering the carbon intensity of oil and gas production, as well as new technologies such as Carbon Capture Utilization and Storage, hydrogen, geothermal, and nuclear.
But its key point is more fundamental: the ultimate goal of federal policy shouldn’t be the managed decline of oil and gas employment through regulations, taxes and transfer payments but rather the support for sustainable, high-paying employment opportunities through a mix of emission-reducing technologies and low-emitting energy exports.
Put differently: instead of a just transition plan, what we actually need is a low-carbon export strategy that strengthens the domestic conditions for the development and adoption of low-emitting technologies and shapes the global trading and reporting regime for emissions accounting between importing and exporting jurisdictions.
Such an agenda may not satisfy the most hardcore climate activists but it would reflect a proper understanding of justice in terms of ensuring that the costs and consequences of climate policy aren’t disproportionately borne by resource-based workers and communities. That’s the basis of a just and durable climate change agenda for Canada.
