Why do green jobs plans need a different politics and economics? (Part 1)

The Greener Jobs Alliance was very pleased to invite Jonathan Essex to speak at our AGM on 13 February.  Here Jonathan expands on the ideas in that presentation in a two-part blog posting, focusing, in this first part, on the urgent need for a different approach to transition in several specific sectors. 

Green jobs plans are an important part of the transition to a zero-carbon economy. But they need wider political commitments to make this happen. This piece explores the need for a stronger position by the UK government on phasing out fossil fuels, for a transition for heavy industry such as steel, for reducing overall demand for energy and materials, and for this to be set within an economics of redistribution. 

No more oil, coal and gas

First, we need to stop extracting ever more coal, oil and gas. We can’t afford to extract and burn current reserves, let alone new reserves. That Rosebank, the large new oilfield in the North Sea, should not be exploited, is a litmus test of political commitment to sufficient climate action. It has long been known that we must leave at least 80% of coal, oil and gas as unburnable to stay within 2°C of global warming. In 2021, the International Energy Agency said that no more oil, gas or coal reserves should be developed to stay within the limit of 1.5°C. In 2023 researchers have estimated that 60% of existing oil, gas and coal fields and mines already open or under construction need to be shut down. 

The implication for the UK is clear. No more offshore or onshore fossil fuel extraction should start, and existing North Sea oil and gas fields should be phased out. 

But to constrain fossil fuel burning within global limits we need more global restraint of supply and demand than has been envisaged, let alone agreed, at global climate conferences.

Firstly, a non-fossil fuel proliferation treaty is needed to keep large amounts of existing reserves, including that already being exploited, in the ground in a fair manner. This needs a global transition fund and clear agreed plans for its implementation. 

The UK and other historic emitters should lead by example. For the UK this means not just no to Rosebank but no new coal mine in Cumbria, no fracking or other onshore extraction. 

But that is only half of the story. Research by Fergus Green on climate policy highlights that to be effective, policies to limit fossil fuel extraction and constrain demand for oil, coal and gas need to work together. They use the analogy of a pair of scissors. Unless pressure is put on both sides, to reduce supply and demand together, then policies to cut carbon will not work. 

So, alongside limiting extraction, real efforts to curtail demand are needed. Such demand reduction must start with key sectors of the economy that have to date largely defied efforts to decarbonise. Three are explored here: transport (particularly aviation, shipping and road freight), heavy industry and the overall demand for high carbon ways of living. To explore this the fastest growing form of transport emissions – aviation – and perhaps the cornerstone of heavy industry – the steel industry – are considered, before exploring how society as a whole might make sufficient changes.

Green New Deals in place of Airport Expansion

So how might that look where I live around Gatwick, which provides much employment now, but automation will mean it will employ fewer, even if it grows. Here the choice is that articulated in our Green New Deal for Gatwick report, a plan worked up during Covid lock-down through Green House colleagues working together with Tahir Latif and Sam Mason of the PCS trade union. This sought to quantify how the area around Gatwick could create new green jobs to transition towards zero carbon, instead of placing the hope of post-Covid employment on airport growth – which feels like a false hope as even new jobs from runway expansion are cancelled out by automation at the airport – little better than trying to run up the down escalator.

The Green New Deal report set out the possibility of giving local people the choice of different jobs to go green: to retrofit every home in need of a makeover; to transform the care sector, to become teaching assistants; to deliver 90% reuse and recycling; to become installers of solar and wind; as well as help make the local environment more productive and biodiverse together through a shift to more organic, regenerative systems of agriculture. Clearly this needs government committed to properly fund education, social care, and put the amount of money needed to retrofit not just all our homes and transport but global supply chains too. But our report was also about making the case that just by shifting the relative subsidy to burn oil which it gifts to aviation, government could set out to create sufficient employment to transition more jobs than exist at Gatwick Airport today. (We found that the UK the aviation industry receives £8 billion in tax breaks from the government each year.)

The New Economics Foundation recently highlighted the disservice that the aviation sector does to airport workers and the wider UK economy. The Losing Altitude report highlighted that aviation and the globalisation that goes with it, are rubbish for inequality in wages and increasing income disparities between London and different parts of the UK. Their research found that aviation is the worst of 96 sectors of the UK economy in its real terms median pay decline from 2008-22 – and second worse pre-pandemic from 2008-19. And, shockingly, NEF found that earners in the 20th percentile (i.e. the lower-paid workers) saw average gross pay declines of 26% between 2006 and 2022 while earners at the 80th percentile (i.e. higher-paid workers) saw an increase of 1%.

But aviation’s disbenefits are not just impacting airport workers: they are felt across the whole economy. NEF analysed data from the Office for National Statistics that shows that from 2001 to 2019, average weekly household expenditure rose from £587 to £588. But that is the average. With greater inequality this has meant a growing minority flying a lot more. In fact, since 2006 spending on air travel and overseas trips has increased by 20% and domestic tourism spending fallen by 20%. This has created a monumental £34 billion annual UK travel spending deficit. Addressing this would be a good way to start levelling up the UK, redistributing £2 billion of tourism gain with £36 billion of loss across the UK, including many historic seaside destinations, such as Blackpool which ranks as the most socially deprived local area in the UK.

In contrast, a green jobs transition would create jobs nearer where people live than where people work – with jobs proportionate to land area and population it would also be a great way to make the UK economy ‘level-up’ – not through mythical growth but through redistributing money and jobs from wealth and profit into green collar work, skilled, entrepreneurial, life and world changing. 

Rethinking Trade and Industrial Production – a Spotlight on Steel

Now let’s consider the impact of international trade before exploring what green steel that addresses the climate emergency might entail.

During lockdown, research by Green House Think Tank quantified the largely unreported climate impact of the UK and European part in global trade. We found that the transport carbon footprint of the UK’s imports and exports amounts to over 36 million tonnes of carbon a year.

One of the most significant impacts was the transportation associated with iron and steel production – over 2.5 million tonnes of carbon emitted in shipping coal and iron ore from Australia and Brazil, as well as importing and exporting steel. Unbelievably, in 2019 the UK exported four fifths of its scrap steel (10.5 million tonnes), which is far more than the 5.7 million tonnes made in UK blast furnaces. We found that shifting our production from blast furnaces burning coal and ore to electric arc furnaces melting scrap would reduce UK steel industry emissions by 75%. We also found that the UK could shift to making higher quality steels – but that would require interventions to reduce copper concentrations in scrap, interventions outside of the steel industry itself, a wider green transition than that proposed currently in Port Talbot. E.g. to deconstruct cars so as to separate out copper wiring from motors before the car is scrapped. This would keep the value of the steel and in turn would free up copper, itself a valuable metal used for renewable energy provision and battery storage.

For example, the electric arc furnaces proposed at Port Talbot could create high-grade steel which could be part of a repurposing and re-localisation of global supply chains. Most probably, however, not all in Port Talbot, one of the UK’s two remaining steel works, but in regional industrial clusters linked to sub-regional and local enterprises. Colin Crooks called on the UK to create 1 million social enterprise jobs – creating 1000 jobs in 1000 locations across the UK. This would be far better than the current government’s capital-intensive ‘levelling-up’ programme.

But this is not what is proposed in the replacement of the blast furnaces with electric arc furnaces in Port Talbot. Instead of wider green industrial transformation for the sub-region, it is simply to replace one form of technology with another – no investment in a wider circular economy or reskilling of the workforce made redundant into new jobs.

Unsurprisingly neither the steelworkers nor the unions are impressed. 

However, a real green transition of the steel industry would need to extend far wider than ensuring a just transition for the existing workforce. It would mean reducing the overall scale of steel production and use, in the UK and also worldwide. This would mean reversing the drivers that lock ever more steel into new buildings, vehicles and infrastructure, which demand yet more steel products, including machinery in buildings and the huge number of vehicles in circulation. 

This is what the challenge to stop growing material and energy use and the resulting ecological and climate footprint of the UK would look like in practice. It is not just cheap energy from fossil fuels that drives up demand for products. Increased production of steel and other core materials enables expansion of the scale of the built environment and infrastructure systems that lock-in such demand. To change the scale at which materials and energy are used we need to constrain industrial production and the wider material extraction that underpins it. 

Economists have studied how the rate of construction and key infrastructure assets are produced. Earlier research by Green House highlighted that creation of new fixed capital items (which for a large part is construction) accounts for around a quarter of GDP in developed countries, and construction alone around a tenth of GDP. This highlighted research by Lopes (2009) which concluded that once countries have developed (constructed) to a certain degree then continued economic growth and development can be sustained.

Some have highlighted that when what they call gross capital asset formulation reaches 20% an economy becomes ‘developed’. That means that the rate of construction is sufficient to self-sustain continued growth in the amounts of production, consumption and scale of an economy (as measured by GDP). That is what capitalism means when it refers to the notion of sustainable development. Replacing one technology with another, such as replacing blast furnaces with electric arcs, will not change the nature of this process. Such so-called ‘green growth’ will not stop us burning ever more fossil fuels or sustaining high levels of steel production to build more vehicles, buildings and even airports.