Energy transitions and structural adjustment
On Thursday, the plant’s main owner, Engie Australia, announced the plant would be shut from 31 March, causing 750 job losses, although the Construction Forestry Mining and Energy Union said about 1,000 workers would be affected. The company cited commercial reasons including the hundreds of millions of dollars of investment needed to keep Hazelwood operating.
It comes on top of the $43m pledged by the federal government for transition, the Victorian government’s $22m for workers and affected businesses and $20m for a Latrobe Valley Authority to manage the transition.
The recent announcement that the Hazelwood power station will close is likely a win for the climate, but presents challenges for workers and the region in transitioning to new employment and industries.
Governments have a patchy track record in terms of delivering beneficial outcomes through structural adjustment packages. The packages announced by the Victorian and Commonwealth Governments will need to be well designed and mindful of past mistakes if they are to be successful.
More broadly there is a need to consider what assistance can and should be provided as the energy sector transitions, and be proactive in preparing. Past efforts to address structural adjustment such as those reviewed in Aither’s 2012 review provide an indication of potential pathways to ease adjustments while allowing markets to do what they should.
This insight was written in response to the article ‘Hazelwood closure: Daniel Andrews pledges $266m for Latrobe valley’ by Paul Karp which first appeared on theguardian.com on 4 November 2016.