Coal dependency and just transition prospects

The world has already warmed to over 1°C above pre-industrial levels, largely due to the burning of fossil fuels such as coal. This is causing ever-increasing rates of climate-related events such as floods, droughts, and wildfires. Any steps to keep global warming well below 2°C, a target en­shrined in the Paris Agreement, would require rapid reduction in the use of fossil fuels—particularly coal.

Although some Organization for Economic Cooperation and Development (OECD) countries have already made plans to phase out coal-based power, attaining Paris Agreement goals would require large coal-dependent emerging economies, including South Africa and India, to also reduce their long-term dependency on coal.

However, beyond the techno-economic challenges of manag­ing a coal phase out, there are complex and multifaceted social concerns associated with a coal phase out, such as the loss of local jobs and revenues. Addressing these concerns will require just transition planning in order to ensure that workers and communities are not left behind in any move away from coal.

In both South Africa and India, coal transitions will likely have an outsized impact in certain areas because of the concentration of coal production in a handful of states. This study Understanding just transitions in coal-dependent communities focuses on Mpumalanga and Jharkhand—two prominent coal-dependent regions in South Africa and India.

The study analyses coal dependency and just transition prospects in these jurisdictions in order to generate insights and recommendations useful for these regions as well as other coal-dependent emerging economies. It explores coal-related socio-economic dependency in Mpumalanga and Jharkhand and investigates the following key elements of just transition planning:

• the challeng­es and opportunities associated with diversification of provincial/state economies
• the pros­pects for environmental rehabilitation of coal mines and power plants; and
• the landscape of stakeholders important for just transition planning, including underrepresented stakeholders.

The case of Jharkhand

Jharkhand forms an important part of the coal mining belt in India, with over 144 opera­tional mines that collectively produce over 130 million tonnes (MT) of coal every year. While Jharkhand produces large amounts of coal, the state does not have many power plants, with less than 2 gigawatts (GW) of installed capacity. Most of the coal produced in the state is shipped to other states for power generation.

Large-scale coal extraction over the last century has impact­ed the local environment and the health of people living in these areas. Coal mining activities have resulted in surface and groundwater pollution and have also disrupted the water table, causing shortages in potable water resources in many areas. The Damodar River, considered sacred by local tribes, is one of the most polluted rivers in the country today, thanks to mining opera­tions and coal-based industries that have sprouted up on its mineral rich banks.

Despite the negative health and environmental impacts of coal mining, the sector is also deeply embed­ded socio-economically in Jharkhand and nationally. The coal mines and power plants are concentrated in the central and eastern part of the state in districts such as Dhanbad and Ramgarh. Nearly 1 million people are working in the coal sector supply chains and service sectors in the state.

This study generated the following key insights and recommendations:

Additional analysis is needed to identify and quantify points of dependency and transition risks across the coal ecosystem for a just transition. Both case studies show that local governments and communities in Mpumalanga and Jharkhand are deeply intertwined with the coal industry. In both places, the coal-dependent ecosystem has many layers.

Existing literature and data sources clearly show that the industry generates significant local jobs, government revenues, and local mixed infrastructure, among other key services. However, in both Mpumalanga and Jharkhand, many elements of the ecosystem have not been quan­tified.

For example, there is no quantification of the number of induced and informal jobs linked to the coal industry, which is suspected to be significant. Further research and quanti­fication of coal ecosystems, including of dependent stakeholders, will be vital to planning for an inclusive and just transition in coal-dependent states.

In-depth feasibility and scalability assessments of regional economic diversification op­tions are required to map and assess realistic regeneration pathways. Mpumalanga and Jharkhand have the potential to diversify their economies to sectors such as agriculture, tourism, and renewable energy to mitigate the impacts of coal transition and generate new opportunities for affected workers and communities.

The expansion of provincial and state economies to these non-coal sectors has various challenges. Coordinated investments from stakeholders in feasibility and scalability assessments of proposed diversification sectors will be important to just transition planning.

Following a diversification mapping exercise, long-term pathways for diversification to alternate sectors need to be developed and should be grounded in local priorities. In both Mpumalanga and Jharkhand, there is a need to create diversification strategies that are based on the mapping exercise proposed above and which take into account factors such as local needs and priorities, resource availability, and workforce skills.

Government and coal company diversification plans need to be better coordinated to en­sure transitions are well planned and inclusive. Mpumalanga and Jharkhand’s coal indus­tries are dominated by state-owned coal companies such as Eskom and Coal India Limited, which are already planning to diversify their businesses into non-coal sectors. There is a need for enhanced coordination between the diversification plans of provincial and state governments and coal companies.

Strengthened regulatory regimes are needed for the effective environmental rehabilitation of current and legacy coal mines and power plants as part of the diversification of coal-de­pendent economies. Mpumalanga and Jharkhand face various regulatory, institutional, and financial challenges in ensuring adequate rehabilitation of coal mines.

Addressing these challenges will require ensuring that regulatory bodies managing the rehabilitation process are adequately resourced to ensure sufficient enforcement capacity; that rehabilitation pro­cesses are guided by adequate laws; and that mine closure plans are transparent and made public.

Following mine closures, robust land use policies and plans are needed to ensure effec­tive environmental rehabilitation and subsequent diversification pathways. Without land use policies and plans where mines have closed, the potential for effective environmental rehabilitation that restores the health and productive use of land while generating jobs and diversification pathways is greatly diminished.

The rehabilitation of current and legacy coal mines must be based on land use policies and resultant plans that require consultation with local stakeholders for better, more inclusive outcomes.

Local stakeholders, including underrepresented stakeholders, must be meaningfully en­gaged throughout the transition process to ensure inclusive outcomes and buy-in. There are many underrepresented stakeholders in both Mpumalanga and Jharkhand not currently engaged in transition discussions, such as coal workers in the informal sector in both plac­es.

To ensure inclusive and just outcomes, it is important that governments and institutions leading the process create mechanisms and institutional structures for capacity develop­ment and dialogue with all relevant stakeholders.