Transition to green economy may cause disruptions comparable to the decline of coal in Wales says think tank

The Welsh Government may be “overly optimistic” about the transition to a green economy, which has the potential to greatly disrupt certain industries and cause unemployment in a way similar to the decline in the coal industry, a think tank has said.

A new report by the Institute for Welsh Affairs, Turning rhetoric into reality: decarbonising the Foundational Economy, notes that the transition to Net Zero would parallel the effects of the decline of the coal industry in Wales among certain industries.

Summarising the report, the IWA said that the report “advises that the Welsh Government may be overly optimistic about the potential impacts of green jobs”.

“The IWA’s analysis notes that the potential for disruption and unemployment on certain industries and places due to the transition to Net Zero would parallel the effects of the decline of the coal industry in Wales.”

The report suggests that Wales’ experience of transitioning for coal can inform its approach to the current transition, and also provide lessons for the rest of the world.

“The negative lessons are very clear,” the report says. “The first wave of decline, in the mass unemployment of the 1930s, saw a huge loss of population from Wales and from the coalfield in particular.

“The rapid acceleration of the decline in the 1970s and 1980s was associated with immense political strife, leaving many people in Wales with the belief that their government in London was at war with them, and creating a feeling of distrust that still remains today.

“Productivity remains very low by western European standards, with knock-on effects for earnings and wealth.”

‘Ambitious’

The report’s summary notes that the Welsh Government has adopted an “optimistic take on what a Net Zero economy will look like” which is “clearly valuable for winning support”.

“However, there is strikingly little analysis, modelling, public engagement or policy development that reflects the potential for significant disruption,” it says.

The report notes that interviews with workers and industry bodies in the motor repair and gas industries highlighted a lack of understanding about the proposals for their industries under the Welsh and UK Net Zero strategies.

This is despite fast-approaching timelines for the phasing out of both gas central heating and petrol and diesel vehicles from 2030, it says.

Dr Jack Watkins, author of the report, said that the report’s key findings was that “very few individuals and organisations are achieving their full potential in terms of reducing their carbon emissions”.

“Much more is needed in terms of skills, research and innovation, business support and incentives, and the Welsh Government must be much more ambitious with its devolved powers,” he said.

It will be up to the Welsh government to support workers to adapt their skillset or retrain out of declining industries, the report says.

That will require a significant increase in the budget available for vocational education and for post-19 education in Wales, potentially through a guarantee to fund training for anyone who stays to work in Wales, and by greater parity in the student finance offer between academic and vocational education.

The IWA also calls for more powers to be given to regional bodies from the Government in Cardiff, in order to reflect different opportunities in different parts of Wales and encourage stronger engagement with businesses.

The report also highlights Wales’ weak performance in research and innovation, which may limit economic opportunities stemming from net zero with Wales likely to repeat historical patterns of reliance on foreign investment.

To enable the growth of highly-productive indigenous firms, the think tank has called for an “ambitious programme of investment in research that creates more flexibility for universities and colleges in exploring early-stage ideas”.