Assessing local economic and employment impact of JGT
Research in Bosnia and Herzegovina
The proposed research aims at analysing the possible impact of future coal mine closure on coal sector workers as well as asses the indirect impact of workers in other economic sectors linked to the coal value chain. The analysis will present a labour market perspective on the transition, focusing on labour market and welfare implications of the coal mine closures in the BiH, and especially within local labour markets. The main objective of this research is to produce a policy relevant analysis of the overall and local labour market impact of decarbonisation in BiH. The research is expected to inform the design of options for mitigating social and labour impacts associated with the anticipated closure of coal mines in the general territory of Western Balkans as well, based on specific insight of the specific context of BiH.
Coal mines have historically played a significant role in the economy of Bosnia and Herzegovina. The country is estimated to have coal reserves of approximately 3.3 billion tons, which represents a significant portion of the country’s natural resources. Brown coal and lignite accounted for 52 percent of BiH’s primary energy supply in 2019, among the highest shares in the world (only North Korea, South Africa, Mongolia and China have higher coal dependencies). In 2018, Bosnia and Herzegovina produced 14.3 million tons (Mt) of brown coal and lignite, which were mostly used to generate electricity at power plants near the mines. Seventy percent of the country’s electricity production was from coal in 2020. Coal is also widely used for heat generation. However, the dependence on coal has negative implications for the environment and public health, as coal mining and burning emit greenhouse gases and pollutants. To address these issues, Bosnia and Herzegovina had to diversify its energy mix and invest in renewable sources of energy. In recent years, coal mines have become less important to BiH economy as the country tries to diversify its economy and become less reliant on coal. As part of the Paris Agreement, Bosnia and Herzegovina has agreed to cut its greenhouse gas emissions and use more renewable energy sources like hydroelectric power. This move toward renewable energy sources is not only a response to climate change but also a way to help the economy grow and become less dependent on unstable and expensive fossil fuels.
BiH has taken decisive action by submitting revised NDCs with more ambitious GHG reduction goals in 2021. As a member of the Energy Community, the country also has to bring its energy sector in line with the EU Acquis Communautaire. Since energy production was responsible for 64% of BiH’s greenhouse gas emissions in 2014, the climate strategy’s top priority is to get rid of carbon from the energy production industry. With the help of the Energy Community and the country’s large potential for renewable energy sources like hydropower, solar, and wind, this ambitious goal is doable. However, the country will also need to implement the necessary policy and regulatory frameworks to incentivize private investment in clean energy and reduce its reliance on fossil fuels. The country plans to reach its targets by repurposing and decommissioning some inefficient coal-fired thermal power plants, which will go along with the closure of coal mines. This plan will affect not only people who work in coal mines, but also a large number of workers, businesses, and households, especially in areas that depend a lot on the sector.
The coal mine closures should be managed to ensure that no one is left behind. The “Economic and Investment Plan for the Western Balkans” and “Guidelines for the Implementation of the Green Agenda for the Western Balkans” documents, released by the European Commission in October 2020, support the transition to climate neutrality in accordance with the principles of Just Transition for All, which state that a successful low-carbon transition must be inclusive and socially just. The government needs to make sure that affected workers and businesses get the help and retraining programs they need to move on to new sources of work and investment and reduce the social and economic effects of the change. Additionally, the government should also consider investing in renewable energy and sustainable industries, which will create new job opportunities and promote economic diversification in these regions.
Design of effective measures to address just transition requires conducting research that will produce evidence that will offer answers to important questions such as: “What is the expected impact of coal mine closures on employment”, “How can coal mine closure be managed to ensure no one is left behind?” and “How will coal mine closures affect communities highly dependent on mines?”. By answering these questions, policymakers can come up with a better way to close coal mines in a way that protects the rights and well-being of workers and the long-term economic stability of the communities affected. Additionally, examining successful transitions in other industries can provide valuable insights and best practices that can be applied to the coal mining sector.
The coal mine closures will have an effect on firms and their employees. Some firms will shrink (especially those that can’t make the change), and others will grow. While these may largely balance out at the national level, this is not a given at the subnational level, where the spatial distribution of specific sectors may result in asymmetric impacts. Most coal and related economic activities that are hard to make climate neutral tend to be concentrated in one area. This also includes companies that supply coal mines and power plants, which will also face problems as the world moves toward a greener future. Hence, in order to ensure a fairer distribution of benefits and opportunities, policies and support programs will need to be created to specifically target the regions and industries most impacted by these disparities. This will require careful analysis of regional disparities and targeted interventions that take into account the unique challenges and opportunities of different regions and sectors. In addition, there may be a need for workforce retraining and reskilling programs to ensure workers are equipped with the skills needed to succeed in new and emerging industries.
Local economic and labour market impact is important to be addresses in a situation of high dependence of local communities on coal mines, both through direct employment in mines, as well as indirect upstream employment in firms supplying mines and downstream employment in businesses replying in provision of good and services to mine workers. National, regional and local economic planning, including that related to the Green Agenda, can take into account the anticipated employment effects, and policies can be designed to mitigate the negative impact on workers and facilitate their transition into alternative jobs. To do this effectively, it is essential to understand the scope and nature of these employment effects. Understanding the implications of coal mine closures at local level will help planning for a just transition, given that socioeconomic situations vary by location. Therefore, a comprehensive approach to climate neutrality must take regional disparities into account in order to achieve equitable outcomes. Such an approach would require addressing the unique challenges and opportunities presented by different regions and providing tailored support to ensure a just and sustainable transition.