Energy Transition and Labor Transition
When it comes to workers’ salaries in oil and gas vs. clean energy, how does their compensation compare? The answer depends on the roles of workers and their locations, qualifications, experience, training—and personal decisions.
Canada is ramping up its commitment to energy transition with its “just” transition bill. And with it comes concern about employment in the oil and gas sector.
The proposed bill will be introduced early this year with the intent to help workers in the oil and gas sector move into clean energy jobs by defining principles to guide decisions and creating jobs. Natural Resources Minister Jonathan Wilkinson has described the bill as an action plan for “sustainable jobs.”
“I said it many times publicly that I do not believe that the challenge we are going to face is that there are workers who are displaced that will not find other good-paying jobs. I am actually quite worried that there are so many opportunities … we will not have enough workers to fill the jobs,” Wilkinson recently told CBC News.
Gil McGowan, president of the Alberta Federation of Labor, told CBC News, “This shouldn’t be a political issue, this is an issue about what’s really happening in the global economy.” He added that if done right, the bill could incentivize technologies like carbon capture and hydrogen.
But when it comes to workers’ compensation in oil and gas vs. clean energy, how does it compare? The answer depends on the roles of workers and their locations, qualifications, experience, and training.
An ex-coal miner who now runs a government-funded Just Transition center supporting former Canadian coal workers summed it up: “It’s 100% not that simple ... to go from making C$100,000 to C$40,000 plays a big part in the decision making that comes with the idea of losing your livelihood.”
Adam Legge, president of the Business Council of Alberta, wrote in November 2020 in CBC Calgary that more worker transition programs are needed. He highlighted the interest in the Calgary Economic Development EDGE UP program which retrains people displaced from oil and gas into high-growth digital technology opportunities. The program saw 1,300 applicants for 100 available slots. Another program, AltaML Applied AI Lab, had 500-plus applications for its first cohort of eight participants for a 16-week course.
On a global level, in the International Energy Agency’s (IEA) inaugural World Energy Employment report published in September 2022, Dr. Fatih Birol, executive director of IEA, highlighted the acceleration of clean energy transitions and securing of energy supply chains prompted by Russia’s invasion of Ukraine. He wrote, “Its success will depend a great deal on the actions governments, industry, labor representatives, and educators take to prepare the energy workforce of tomorrow. Above all, it will depend on the capable workers responsible for designing, building, operating, and overseeing the new energy economy.”
The energy sector requires more highly skilled workers than others, with 45% of the workforce requiring some degree of tertiary education, from university degrees to vocational certifications. On average, the sector also sees higher wages.
The report found oil supply has the highest employment among fossil fuels, at almost 8 million workers in 2019. Five million work in extraction and production, and around 1.4 million each in transport and refineries. Nearly 20% of the jobs are in the Middle East; 15% each in North America and Africa. Refining accounts for 1.4 million, concentrated in the Asia Pacific region.
Skills of oil and gas workers are in demand by other energy sectors because of the applicability of their higher-level expertise. For example, petroleum and gas engineering skills in seismic interpretation, drilling and completions, reservoir, and flow assurance are applicable to geothermal. Chemical engineers in refineries can apply their expertise to green fuels and hydrogen. The report added, “Skilled workers can transfer to deepwater offshore wind, carbon capture and storage, or midstream hydrogen pipeline infrastructure, among many other job disciplines.”
Emerging clean energy industries such as hydrogen and CCUS today constitute small portions of the energy workforce but are important areas of growth and demand highly skilled workers to establish and expand these industries.
About 35,000 people work in hydrogen production today, according to the IEA report. The sector is expected to see high growth and requires skills that are compatible with those of oil and gas workers, with the addition of specialized safety training. The worlds’ first engineering courses in hydrogen safety have been developed by the European HySafe consortium.
For those workers who must or wish to seek alternative opportunities, will their outcomes match or surpass their current roles? There are no guarantees or promises. The determining factors are many. Even with all things being equal such as the freedom and opportunity to choose, education, training, etc.—the individual will make the final call.