Green growth – sustainable resource extraction and the role of trade unions

NFS Conference

Ilulissat, Greenland

24 April 2013

Béla Galgóczi

bgalgoczi@etui.org

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Structure

Structure of the presentation:

Background: we have only one planet, not five!

- Resource and material use (the reckless exploitation of natural resources) cannot go on as in past

Green economy, green growth, green jobs

Green transformation: double challenge for trade unions

Resource extraction, mining: what are the major social and environmental challenges

The case of Greenland

What trade unions do and could do?

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Background: Revision of growth model

Long term challenge: a fundamental revision of previous growth model, above all face the challenge of climate change,

The Great Transformation of the next decades will be the

transition to low (zero) carbon economy

Green growth – a strategy to promote ‚eco-industry‘, clean energy and also give push to green restructuring of traditional sectors

In 2011-2012 we see the danger of a reversal of green policies in Europe: what we see is ‚black austerity‘ where incentives and subsidies into the green economy are cut back for sake of fiscal consolidation and ‚affordable energy‘ gets ‚fake‘ priority (e.g. Italy, Spain)

This is in sharp contrast with 2009 ‚green stimulus‘ packages

We also see a revival of fossil fuel (shale) gas and coal

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Track record: the challenge is bigger then assumed by mainstream policy scenario

It is clear that on basis of current policy scenario the world is heading for a 3.5-4C temperature increase by 2100 (IEA, 2012)

Keeping the 2C target requires four times higher rate of future decarbonisation (reduction of CO2 emitted per unit GDP).

Global ghg emissions keep on growing

Ghg emission reductions in Europe were more due to crises then to systematic implementation of climate policy – no signs of decoupling economic growth from emissions

Huge gap in Europe in term of resource productivity (Bulgaria -Luxembourg: 1:30), but diversity also in per capita emissions, although in a reverse order: Luxemburg has the highest level

No paradigm change visible yet

CO2 emissions from fossil fuels and cement in MtC/yr (TgC/yr), 1980-2008

Source: Eloi Laurent (2012) and Raupach et al (2007)5

Looking beyond 2020: the 2050 Low-Carbon Roadmap (ghg emissions in % of 1990 level)

LONG WAY TO GO

Efficient pathway and milestones:

-25% in 2020-40% in 2030-60% in 2040

80% domestic reduction in 2050 is feasible:

•With currently available technologies,

•With behavioural change only induced through prices•If all economic sectors

contribute to a varying degree & pace.

0%

20%

40%

60%

80%

100%

1990 2000 2010 2020 2030 2040 2050

0%

20%

40%

60%

80%

100%

Current policy

Power Sector

Residential & Tertiary

Non CO2 Other Sectors

Industry

Transport

Non CO2 Agriculture

Performance in decoupling economic growth from resource and material use in Europe

No major progress in decoupling, as the next graph for Europe shows

Only Germany, Italy, the Netherlands, Hungary and Luxembourg achieved absolute decoupling (economy grew with less resource use)

In decoupling, Nordic countries were not performing well: DK, SE and FI all performed worse than the EU27 average and with economic growth they also used higher resources

It is a general problem that no (hard-core) incentives for higher resource productivity exist; companies are good in increasing labour productivity, but not resource productivity!

Yearly average change of domestic material consumption and GDP between 2000 and 2007 by member state

Source: Eurostat (2011)

no decoupling

relative decoupling

absolute decoupling

The bulk of the adaptation is still to come

Current climate policy tools are clearly not enough to reach target. If we had those (and they would be also implemented), their effects would be also harsher than what we see now!

The major challange for the employment effects of the green transformation is this uncertainty

Some principal questions:

Decarbonisation through desindustrialisation??

- Downscaling energy intensive activities or to improve energy efficiency and resource productivity efficiency while keeping and developing them (we need to make sure the second option will apply)

- Address carbon leakage

Green jobs: the positive agenda

Takes a narrow perspective on employment effects, looks at the labour market in a singular and segmented way in isolation from the rest of the economy

Definition problems

Process or product based view? (with view to their positive climate/environment effects), e.g. are the following “green” jobs`?

- Steel industry (with inputs to eco-industry equipment)

- Construction industry (depending on product and technology: what and how you build)

- Financial services /?/, IT services

Focusing on green jobs by investments into a green economy (taking the opportunities arising from a new expanding sector) is indeed a useful policy, BUT it is only PART of the FULL STORY

- The green transformation should encompass the entirety of the whole economy

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Challenge for trade unions in the broader context of the green transformation

Tension between their role as broad social actors and as membership organisations (e.g. Canada oil pipeline)

Path dependency?: In industrial societies trade unions fought the fair share of labour within the growth based resource wasting production and consumption model in the past

Are they still locked-in in that role /as some NGO-s state/?

The tension appears between the role of supporting more determined and ambitious climate policy on the one hand, but protect jobs that might come under pressure as a consequence, on the other

In this context we also see divergergent positions at different levels of TU organisations /international, national, branch level/

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Trade union role: the positive agenda: active policy role and social dialogue to meet the challenge

Trade unions (especially at higher organisational levels) are engines of green policy at national and international level (ETUC, ITUC, national unions as TUC, DGB, Nordic unions)

Good practices at company level: ‚Green workplace‘ project/initiative by ETUC, tools, manuals for trade unions

Managing restructuring on enterprise level under pressures of globalisation, especially in countries with strong workers participation patterns (successful plant level practices during the crisis in Germany, Austria, Nordic countries)

The Green Transformation is the most comprehensive restructuring process ever faced and will go on in the following decades – trade unions should promote this process actively!

A socially responsible and just transition to a low carbon economy is a vital interest for trade unions but posing also huge challenges for all actors managing this process including workers representatives.

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Innovative alliances between NGO-s and trade unions

Trade unions are committed to more ambitious climate policy at the same time demand a framework that provides a balanced approach: just transition

This makes a comprehensive policy approach necessary: climate + employment + social + industrial policy

Just burden sharing during the transition - job quality

Trade unions developed practices of managing change and managing transitions /they are not anymore clinging to preserve status quo/

Innovative approaches: TU-NGO alliances /Green-Blue Alliance in US (also at company and project level), Spring alliance in Europe (now on EU policy level)

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Sustainable mining and resource extraction

The priority of a greening economy is to produce (more) value out of less material and resource input through higher resource productivity and efficiency, through changing behaviour, consumption and mobility patterns…

AND NOT CHASING FOR MORE RESOURCES..TO COVER THIS

What we see nowadays is a new race for resources, a mining and gas boom…

- US and Canada gas fracking boom, new oil pipeline to boost consumption

- Extraction in Africa by Chinese firms is expanding rapidly

- Brazil sees ist future in the new oil and gas field explorations

- Mongolia is said to become the ‚Saudi Arabia‘ of rare earthes

- Greenland and the wider Arctic region is the next target

Not a healthy trend, BUT still (or even more so) we need to address the case of ‚sustainable‘ mining and resource extraction and trade unions need to develop a strategy for this!

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Sustainable mining and resource extraction

What is at stake, where trade unions must be aware?

- financial transparency (in order the benefit of the extracted natural values contributes to the wealth of the local population and not (only) to the profits of multinational companies;

- technological safety (preventing natural catastrophes), limit exposure of workers to health and safety risks;

- labour standards, working conditions, fair pay, decent work

- environmental standards (least possible intrusion into the ecological balance of the environment, recultivation of landcape and soil, preserving biodiversity)

- special attention to pristine natural environment (Alaska, Amazonia, Greenland) especially if the environmental balance of the region has an impact on the whole planet

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Greenland: the challenge of mining and resource extraction

There is a new ‘goldrush’ for mineral resources worldwide (US, Canada, Brazil, Mongolia and now also Greenland)

A vice President of a global mining company on Greenland:● ‘Greenland offers relatively low corporate taxes, and an

environment that requires no royalty payments or the challenge of having to deal with Aboriginal land claims issues. Permits can also be secured within a six-month window.’

Question: is it necessary to enter into this race? Go for more and more resources just to feed the appetite of a resource wasting production model? Instead of embarking on a new growth model based on resource productivity and efficiency?

Sure, there are economic realities, Greenland wants to create an independent economic fundament and given its natural resources their exploitation seems to be unavoidable for the well-being of ist 58 thousand population

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Greenland: mining and resource extraction projects

● Although not one mining or oil project started yet, more than 100 exploration licenses were awarded.

● The big hope for the mining companies now is that Greenland will permit to extract uranium as a by-product from rare earth deposits (largest in the world outside of China that now has 90% of global production.

● Alcoa plans to bring 3000 workers from China. ● Greenland Minerals and Energy Ltd. - plans to extract

40,000 tons of rare earth metals per year, with some uranium as a by-product.

● Hudson Resources, (White Mountain) - access to 27.4 million tonnes of rare earth minerals.

● London Mining Plc. - $2 billion Isua iron-ore project: 700 permanent jobs, 2,000 Chinese workers for its construction.

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Sustainable mining and resource extraction: Canada - a conflict case for trade unions

Conflict case, Keystone XL Oil pipeline, Canada:

The development of tar sands oil supply (twice the amount of carbon dioxide as other oil reserves) is a huge risk for the climate...

Unions should not only bear the interests of their own members in mind, but also wider risks. To offer support for the Keystone XL pipeline, the AFL-CIO won a few construction jobs and a little money at huge external costs

The Murray River coal project (Canada): create up to 600 permanent jobs, and in 30 years three billion tonnes of coal. ‘Chinese investment and the project was welcome, only the workers not’, (Trade unions filed a court case against the use of foreign workers but support the project).

LESSONS for TRADE UNIONS for the proper BALANCE

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Sustainable mining and resource extraction: tools for trade unions

Sustainable mining principles, guidelines:

● Extractive Industries Transparency Initiative (EITI) – 32 countries produced EITI reports, from Europe only Norway (Greenland should join!)

● The EITI Criteria:

-Regular publication of reports on all material oil, gas and mining payments by companies to governments (“payments”)

-Civil society is actively engaged (design, monitoring and evaluation)

-A public, financially sustainable work plan developed by the host government

● OECD, International Investment Agreements: Survey of Environmental, Labour and Anti-corruption issues, 27 February 2007

● ITUC Briefing note on Bilateral Investment Treaties (BIT):New BITs must contain clauses in respect of OECD Guidelines for Multinational Enterprises and the ILO Tripartite Declaration of Principles concerning Multinational Enterprises

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Sustainable mining and resource extraction – summary of challenges for trade unions

Addressed (even if not fully): transparency, distribution, direct environmental effects on population, flora, fauna;

For direct safety risks and related direct environmental effects also have attention (like oil spills, or water contamination) – push for higher standards through lessons (Deep Water Horizon)

Less focus however on long term consequences and environmental impacts – here we only have one-sided declarations and corporate social responsibility initiatives from companies: this is clearly not enough, TU-s should push for more

BUT Towards Sustainable Mining (TSM) reporting (Canada) for mining companies is useful – needs to be binding (trade unions to urge)

For social aspects: we have the ILO norms as basic guidance, European social standards and national standards (either by Labour Law minimum criteria or through collective agreements)

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Greenland: the challenge of mining and resource extraction

Greenland is a special case from an other aspect, also: it is a pristine landscape and its ecological balance is critical for the whole planet (in this regard only Amazonia is comparable).

It would be an illusion however that a proposal could be raised, as the aborted attempt at the Yasuni Natural Reserve (Equador) where a compensation of cca. 2.7 bn USD was discussed to prevent the project.

We cannot expect this in case of Greenland. BUT at least the limits of extraction activity should be addressed!

Nordic countries, Denmark and also the EU (although Greenland is not part of it) should pay more attention!

But the EU is more aiming at special mining rights in Greenland (not granted, but a Memorandum of Understanding on the EU‘s access had been signed in 2012)

The EU also rejected a ban on oil drilling in the Arctic region (October 2012)

PRESSURE on the EU from a NORDIC Alliance?

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Greenland’s large scale law – relaxation labour law

● The Law on large-scale projects in Greenland● New legislation to encourage foreign investments in large-scale projects

through reducing labour standards (only to building and construction activities linked to the exploitation of minerals)

● The foreign workers will be entitled to the same labour rights as Greenlandic workers, (right to strike, to organize and collective bargaining).

● BUT foreign employees, who are subject to a foreign CB agreement will be allowed to maintain the salary and employment conditions of their CB agreement if in accordance with Greenlandic legislation.

● The foreign workers are also entitled to a certain minimum wage equivalent to the Greenlandic (with a limitation on possible deductions)

● Local trade unions, employer's associations and NGOs are entitled to have access to the collective agreements.

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Greenland’s large scale law – relaxation labour law

● Issues for trade unions:● It is a fundamental question however: do resource extraction investments

need special treatment and preferences? (possibly no)● Incentives by countries to attract manufacturing investment is a

different matter (these can be moved) - not relevant for resource extraction)

● Greenland has unique rare earth deposits, it does not need to give away concessions cheap! Why preferential treatment? Is the ‚Large scale law‘ necessary? More self-confidence needed!

● Mining only starts now, a broader impact on the wider environment is not yet to be expected, but it is already time to think about the limits

● It is necessary to implement the highest environment and safety standards for the immediate effects (contamination of soil, water/ice masses, prevent possible spills, leaks, etc)

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Recommendations for trade unions

● Clarify responsibility of investors in case of potential accidents● Recultivation obligations after extraction activity ends● For labour effects, Greenland has a different context then countries with a

larger population (and population density)● The conflict situation in countries with larger population appears in the

substitution effect between foreign and local labour● Preserving existing labour standards is an utmost priority, the danger of a

crowding out effect by foreign labour is less the case● Investors should pay attention to include domestic labour and also

provide training for tasks that can be performed ● Local labour content maximisation according to potential – should be a

criterion!● USE the power of the Alliance of Nordic Countries to agree on sustainable

mining and social standards also in Greenland● NGO-trade union alliances are ideal to increase influence on resource

extraction, mining issues