The industry that powered Alberta homes and businesses for decades is slowly burning down as the province phases out coal-fired electricity.

According to Economic Minister Deron Bilous, that means almost 2,000 jobs in the industry are also being phased out starting in 2018.

On Friday, the province announced it will spend $40 million to help Alberta coal mine and power plant workers.

The Coal Workforce Transition Fund will go to those who need supplementary income while finding new jobs or bridging to retirement.

The province is also asking the federal government to allow workers to benefit from the fund without seeing their employment insurance benefits reduced.

"We anticipate that they will, they have said that they have these workers backs as well," said Alberta Labour Minister Christina Gray.

"We need the policy flexibility so that this can be an effective transition. Either way the Alberta government is there for these workers."

Benefits top up

Employment Insurance typically pays out 55 per cent of a person's average weekly earnings, but the province plans to increase that for coal workers.

"We will offer top up benefits to workers up to 75% of previous earnings for the entire EI period," Gray said. "If the federal government agrees with this, it will not result in the worker's regular EI benefits being reduced."

The fund will also support retraining programs including tuition vouchers for post-secondary institutions.

"With the right training we are optimistic workers will be able to find new jobs in new or similar industries," Gray said.

The fund was among 35 recommendation the province accepted from the Advisory Panel on Coal Communities.

The fund is financed by the Climate Leadership Plan.