While the transition towards renewables is speeding up, fuelled by high-profile thermal coal divestments by companies like BlackRock, it will need to be carefully planned to prevent fossil fuel workers and people lower on the socioeconomic ladder from falling by the wayside.
“Coal-fired power stations are generally away from the cities,” said Nick Langley, co-founder and senior portfolio manager at RARE Infrastructure.
“You can have anywhere from, for a live station, 2,000 to 5,000 jobs in the running of that and the supply of materials to it. So if you shut that plant down you have a significant employment problem in a region where it’s going to be the major employer.”
Rapid divestment from particular forms of energy without the necessary infrastructure to replace them can also have more immediate and deadly consequences.
“After the Fukushima accident in Japan, there was only one person that died from radiation exposure,” Mr Langley said.
“But there were four and a half thousand that died when the government made the decision to shut off nuclear power stations around the country. That winter, power prices went up by 20 to 30 per cent. And lower socioeconomic households stopped heating their homes.”
But some of those crises could be averted by the creation of stronger and clearer frameworks for promoting green energy production as a nation-building effort, as well as the creation of infrastructure banks and the issuing of “green bonds” to finance projects.
“These things need to be tackled in a sensible kind of planned way,” Mr Langley said.
“It really has to come back to the governments to set that public policy and then to give regulators the time to put the rules in place to implement that public policy. And then companies can get involved.”
