- Proponents of oil and gas projects like the Keystone XL Pipeline cancelled by President Biden cite the jobs lost.
- Green energy advocates, including major companies like Ford and Amazon, are talking massive job climate jobs creation.
- In between these opposing views, one of the biggest climate change policy challenges for the Biden administration is how to support rural areas like coal mining and power plant towns where fossil fuels have long powered local economies.
- Colorado and New Mexico are among the first states to enact legislation to directly confront this issue which some policymakers call "just transition," but experts say the massive scale of the problem requires a broader federal mission.
America has been here and done this before, with a spotty track record. Steel, timber, manufacturing. Market and political forces have reshaped — and in some cases, wreaked havoc on — local economies powered by a single industry. Now as the Biden administration outlines its climate change policies, one of the more challenging goals is making sure fossil-fuel driven economies, like coal towns from Appalachia to the Illinois Basin, tribal nations and Powder River Basin in the Western U.S., are not left behind.
Amid the slew of executive orders on climate change signed by President Biden on Wednesday was an interagency working group on coal and power plant communities and economic revitalization. The idea is not new. Labor groups and climate policymakers around the globe call it "just transition" for communities on the wrong end of the shift from fossil fuels to renewable sources of energy — a town where a coal mine is shut down or a power plant powered by coal is closed. But unlike the booms and busts that both coal and oil towns are accustomed to surviving, a permanent shift is different.
In the U.S., policy efforts are already underway. The Obama administration created the Power Initiative in 2015 to focus on economic development in regions like Appalachia, and even though Congress refused to approve an initial Trump administration budget request to scrap it, funding levels remain too low for the challenge. In the past year, Colorado and New Mexico approved legislation to create just transition offices in their states — a state representative in West Virginia recently introduced a similar measure. But experts, including those working on these new state-level efforts, say the scale of the task is massive and much more federal support will be needed.
"I think the Power Initiative under Obama was a good start, but it just wasn't anywhere near enough money," said Brandon Dennison, head of Appalachian economic development firm Coalfield Development. "Compare it with other industries, like auto bailouts or agricultural subsidies. It needs to be in the billions and it was in the millions ... and it and was under perpetual threat."
One analysis by economists looking at the impact coal has on the economy of Eastern Kentucky found that coal was more important to the region than the auto industry was to Detroit.
"The basic issue is one of equity," said Wade Buchanan, who heads the state of Colorado's new Office of Just Transition. "As a nation, and as world, we are transitioning from carbon-based fuels to cleaner fuels, but thinking the workers are transitioning from carbon-based employers to clean-energy employers is the wrong way to think about it. Locally, this is basic rural economic development. ... Clean energy might be part of the answer, but it is not the answer. ... In 2008, we tried to rescue an industry. This isn't so much a rescue as phasing it out in a humane and just way. And it becomes a weight that the state can't bear alone that creates incredible levels of inequity."
Money Report
Energy transition is underway
The Biden administration's new interagency working group is just a first step, but if there is real follow-through and it is coordinated with the local representatives, it could be one key to moving politicians and stakeholders past a jobs debate that has often devolved into sound bites.
Backers of projects like the Keystone XL Pipeline cancelled by the Biden administration cite the thousands of jobs lost. From the corporate world, a growing number of the largest companies say renewable energy is an engine of job creation. Meanwhile, key swing votes on Capitol Hill, such as moderate Democratic Senator Joe Manchin of West Virginia and moderate Republican Senator Lisa Murkowski of Alaska, represent states where fossil fuels remain critical and workers, families and communities remain skeptical about the promise of new opportunities.
The Bureau of Labor Statistics estimated the number of oil and gas extraction jobs at roughly 160,000 at the end of 2020, and coal mining jobs slipped below 50,000 total by year-end. Those numbers can appear small — Amazon hired over 400,000 workers during the pandemic and now employs more than one million globally — but as America and companies like Amazon transition to a green economy, these extraction jobs are concentrated in many rural regions where local economies are reliant on the mining and drilling, including the Permian Basin in West Texas and New Mexico; the Marcellus in Pennsylvania and Ohio; the Bakken in North Dakota; and in parts of California, Colorado, Louisiana, Oklahoma. In many, economic hardship and unemployment during the pandemic were higher than the national average — the size of the oil and gas jobs labor force fell to a multi-decade low in 2020 after having been as high as 600,000 jobs just a few years ago.
For every direct jobs lost in a power plant or in mining, the community loses four indirect jobs, according to Heidi Binko, executive director of the Just Transition Fund, which has been working on projects in coal communities since 2015.
Even though it is coal right now that has seen its fortunes, and jobs, shrink the most consistently and rapidly, the broader workforce supported by oil and gas numbers in the millions and with decisions like GM's this week to fully transition to electric vehicles over the next 14 years, the labor market and economic ripple effects will be widespread.
The U.S. oil industry is expected to contract by 20% in the next decade and by 95% between 2031–2050, according to the Political Economy Research Institute at the University of Massachusetts Amherst. The natural gas industry isn't expected to begin its decline until 2030, but decline by 75% in the two decades after that. Any forecast is based on assumptions that will be tested by the global appetite for aggressive climate policies, and the political reality could result in a slower decline. But many experts do agree that the coal industry may be gone for good, even by the end of this decade.
"We started with coal knowing these are economic adjustment problems and what we could learn with coal we could apply to other transition communities ... the lessons are transferable and can be used as a blueprint," Binko said.
While the overall number of jobs to be displaced are relatively small compared to the overall economy — 1.7% of the labor force — and the estimated 34,000 jobs lost per year through 2050 are far less than millions forecast in new job creation related to the energy transition, they are "also a matter of strategic politics," according to the UMass research, especially as the percentage of domestic fossil fuels consumed in the U.S. has reached 96% in recent years on a net basis.
"We lost so much time to delay and obfuscation," said Daniel Raimi, a fellow at the nonpartisan policy group Resources for the Future. "It's time to get to work and in my view that means not just reducing emissions but addressing the workforce and community challenges it will bring. There are some relatively moderate senators who have powerful platforms and lots of fossil energy interests in their states and my hope is we make some progress."
Survey data from the Yale Program on Climate Communication finds that the majority of the U.S. public is in favor of financial support for these communities. When asked how the government should spend revenue from a potential carbon tax, 72% of registered voters said assisting workers in the coal industry should be a priority. Only investment in new technologies and infrastructure spending had higher response rates.
"Americans don't want to leave these communities behind," said Anthony Leiserowitz, senior research scientist and director of the Yale program. "Americans have big hearts on this. But how do we do it? ... It doesn't just mean unemployment benefits and making coal workers wind technicians. That most likely won't be most of them, and they also don't want to leave West Virginia, or Texas or Oklahoma. They have generations invested. We need to bring the opportunity to them."
"We are in the middle of the energy transition right now and it will be ongoing and workers are going to be hurt unless new public policy and investment is designed to support them," said Jason Walsh, executive director of the BlueGreen Alliance, a labor organization focused on climate, clean energy and economic development. "The politics and economy of coal in Appalachia has made sure public policy doesn't allow for new sectors to compete. But it is unrealistic to think we can move all dislocated coal miners into solar and wind jobs. We need to think more broadly."
Orphaned oil wells, abandoned coal mines
One idea that has gained traction from many experts focused on this energy transition issue is for workers in fossil-fuel regions to be provided work repairing the damages left behind by legacy strip mines and oil wells, sometimes for safety and health reasons and also in some to case to rehabilitate the land for new uses.
"We blew the tops off hundreds of mountains in places these people live in and drink water in and there is an enormous need to not just abandon these people and places but to restore them and hire people to restore them," Leiserowitz said. "There are hundreds of thousands of abandoned oil and gas wells that are toxic and leaking methane to this day."
A significant federal program to plug orphan wells could create tens of thousands of jobs, potentially as many as 120,000 jobs if 500,000 wells were plugged, with the largest number of orphaned wells in Pennsylvania, according to a recent study from the Columbia Center on Global Energy Policy. More than 76,000 direct energy industry jobs were lost from February to June of 2020 as Covid-19 increased pain in the energy sector, especially in rural regions where domestic oil and gas production occurs. The industry labor force size sank to its lowest level since 2006, before the shale boom. The costs of plugging the known inventory of 56,600 orphaned wells could range from $1.4 billion to $2.7 billion, while expanding the program to identify and plug 500,000 wells could cost between $12 billion and $24 billion.
Yale's survey work shows widespread support from registered voters in the U.S. to create jobs for coal workers and oil and gas workers — jobs permanently shutting down mines safely and shutting off abandoned wells, with 83% of voters saying they support creating a jobs program that would hire unemployed coal workers to safely close down old coal mines and restore the natural landscape, as well as a jobs program that would hire unemployed oil and gas workers to safely close down thousands of abandoned oil and gas wells.
Louisiana is among the states which has had its own program in place to hire former oil and gas workers to find and cap abandoned wells, which state audits can often miss, and its officials expect that problem to grow over time as more companies in the oil and gas sector face financial distress and abandon operations.
The hard work of rural economic development
There is no shortage of work to be done cleaning up polluted sites, and at millions of orphaned wells, soon-to-be orphaned wells, and hundreds of abandoned coal mines, as well as even older silver and copper mines. Sen. Manchin of West Virginia has sponsored legislation to fund mine remediation and is seen as a key mover on efforts to pass legislation that includes advanced manufacturing credits that might be geared to hard-hit fossil fuel economic regions.
There are economic development experts within these regions who are hesitant to place too much focus on abandoned mine or well work, even though it is estimated that years of work could lay ahead — and in the case of oil and gas wells being plugged, potentially decades of jobs around the country. A key question is how spending on these jobs is weighed against spending on broader workforce development and training.
"It is an example of how you can keep these people in communities where they are and rehabilitate these communities and natural landscapes. It gives them a runway because it is not a forever project, but it does give them time to invest," Leiserowitz said.
The Energy Policy Act of 2005 established Department of Energy authority to provide technology and financial assistance to help states clean up these projects, but to date it has not been funded.
A carbon tax is the most obvious big-ticket way to pay for these jobs and also make additional investments, though its legislative outlook is difficult to assess given decades of efforts ending in failure. Raimi said there are estimates as high as $100 billion a year that could be raised through a carbon tax and spent on a variety of purposes, including reclamation of fossil fuel sites and workforce development.
"Right now, the most obvious source of funding is debt. That is how we seem to be funding most things. That can't go on forever. Long term we need to think about raising large amounts of revenue," Raimi said.
But thinking all displaced workers will want to do this remediation work remains an assumption rather than fact.
"One big knowledge gap we have now is what the existing fossil fuel workforce might want to do if their current jobs go away," Raimi said. "I spent a lot of time in oil and gas country and people who work for those companies are proud of their jobs. It's not clear how to replace those, but it is our job. We need to do a lot better understanding the best potential matches," he said.
Sectors such as a shifting electricity grid and new transmission and power plant construction put the labor movement in a position to advocate for a jobs policy that benefits these workers. And many unions have come together on climate change and job opportunities, even as some unions jobs are lost on projects like Keystone.
Pipelines have created good jobs for some in Appalachia and while there are environmental problems, "folks are doing what they need to do to feed families," Dennison said. "Being dependent on fossil fuels has gotten us into generational dependence. ... We will need some stop gaps as far as jobs. Renewables have potential, agriculture has potential, but those sectors will take time and those sectors alone can't employ everyone."
"Some things we can't find agreement on, but let's not lose the forest for the trees," Walsh said.
Even as union jobs were tied up in the Keystone XL Pipeline, union groups, including steel workers and plumbers and pipefitters, are signing on to net zero pledges not only to address the climate crisis but the crisis of economic inequality, he said.
"Literally every major economic shift of the past several decades has been manifestly unjust for American workers and policy makers failed to craft responses that were fair and effective," Walsh said. "Working people should not suffer due to efforts related to climate change and job No. 1 as we lose jobs in incumbent energy industries is that we create jobs in new industries and sectors that are just as high quality and we are not there yet," he said.
The Power Initiative began with a focus on coal workers but officials involved in its administration realized quickly that the issue of a declining jobs industry could not be separated from broader family and community issues, such as the opioid epidemic experienced in Appalachia. Drug rehab programs and broadband development became part of the effort as it widens its scope from thinking narrowly about transitioning jobs.
West Virginia's manufacturing sector made up 13.1% of jobs in 1990, but by 2017, accounted for only 6.1%. Mining and logging jobs fell from 5.4% of state employment to 2.7% in the same time period, according to the Bureau of Labor Statistics. Roughly 16% of the state's 1.8 million people live in poverty, compared with 10.9% nationally, according to statistics from the U.S. Census Bureau.
In eastern Kentucky, 38 of 54 counties in the Appalachian Regional Commission are designated as distressed. Kentucky has more distressed counties and communities than any other Appalachian state and not one ARC county is rated as "competitive."
"Broadband access is so crucial for rural communities where they barely still have dial up. There is no way you can participate in the economy let alone compete if you don't have strong broadband," Leiserowitz.
The communities most dependent on a single source of employment are the ones least likely to have the capacity to transition an economy on their own and the continued shift in the economy will only make that limited capacity worse as direct royalties paid by fossil fuel companies and other forms of community investments the dominant industry has provided wane.
The Appalachian region experienced three-quarters of the mining job losses in the U.S. in the past decade and approximately 30,000 direct coal mining job net losses across eastern Kentucky, West Virginia, southern Virginia, and Alabama. And that has a ripple effect in the form of supply chains linked by rail and trucks that cross states, lost incomes for customers of local businesses, and declining tax revenue.
"Once you move outside the direct coal jobs ... the ripple effect is pretty massive," Dennison said.
State economies are not closed systems, and most of the coal mined in Colorado goes to other states or for other purposes than general electricity. Close to half of coal burned in Colorado power plants comes from Wyoming.
Geography will create other imbalances.
"Jobs lost in west Texas will not obviously become new jobs in west Texas. There will be regional challenges," Raimi said.
Job losses will accelerate
The massive layoffs already experienced in the coal sector are more related to market forces — including automation, the natural gas boom and renewables coming down the cost curve and becoming competitive — than just policy decisions. The layoffs will continue to be an issue for years to come. For oil and gas workers there is more time to plan, but getting the transition right with coal is the first step because it is happening much more rapidly.
Workers and the communities that have long lived with declines and then bursts back in economic growth over multiple generations can have the perception if they hold tight the jobs will come back, and if the jobs don't come back, they can't see themselves in any other work. Experts say trying to overturn a culture or think only in terms of a specific worker will fail.
"The transition is happening, but it feels for lots of people like the transition has been forced on us," Dennison said. "The worst thing we can do is lie to ourselves or be told coal will come back. ... Even when coal was booming we still led the nation in poverty and poor health outcomes. We have generational challenges we need to overcome. It's so deep," he said.
A reasonable path forward to diversity a fossil fuel economy is a long-term undertaking. New highways and rail and broadband, and workforce development, are all part of it.
"The strategy can't just be get money to coal workers to help them get into another industry when the real issue is generational poverty as result of generations' addiction to this one resource," Dennison said.
In eastern Kentucky coal country, progress has been made retraining dislocated coal miners to work in sectors including IT, agriculture, advanced manufacturing and health care, and regional efforts have also been forced to help some residents move away for better opportunities.
"We are looking at an industry that is going away basically," said Jeff Whitehead, executive director of the Eastern Kentucky Concentrated Employment Program, which has worked on coal miner job transitions and says the effort requires nothing short of a "rural czar" in the White House.
"We're working on changing a way of life and economy, and that is a more intense, longer-term transition. It is not something you can just throw money at and train a few people and it goes away," Whitehead said. "In Appalachia and in eastern Kentucky coal fields, the industry as a driving force of economy was already struggling but it was the mainstay of the stability there. ... Going away permanently might be down the road, but the facts are the facts. Do I think coal will boom again and we will have in eastern Kentucky or other places a massive workforce again? No, I don't, and if you proceed with that mindset then you are just putting yourself further behind the curve of transition."
The energy industry is looking at technology like carbon capture as a way to reach net zero emissions goals without abandoning the oil and gas exploration and production business. But even experts willing to give the technological concept and its big industry backers, such as Occidental Petroleum — and more recently Elon Musk, whose SpaceX has plans to drill in Texas for natural gas to use in rocket fuel — a serious look rather than dismiss it as a PR stunt, say it isn't likely to change the overall direction of jobs in the energy industry in the decades to come.
Over 2021–2030, the total number of displaced workers will average about 12,000. Between 2031–2050, that is projected to rise to an average of about 34,000 workers per year, according to the UMass Amherst Political Economy Research Institute. It estimates that in the next decade, the total costs of funding this transition to be about $1.2 billion per year over the next decade. Other estimates assume the price tag will be even higher.
"I think it is safe to say that if we want to get to net zero in the second half of the 21st century, we will have far fewer people working in oil and gas and coal. There is no way around that," Raimi said.
Ending fossil fuel demonization
In some respects, Colorado feels fortunate to have any time. Its coal plant closures are scheduled for years 2024 through 2030 and some of the first challenges are more manageable than what may come later. Coal makes sense as the first industry to transition because not only is it the dirtiest but also easier than transitioning national car fleets. "You close a power plant and you make a measurable dent in emissions in the region," Buchanan said.
The state's best example of the energy transition is the town of Pueblo, but Buchanan said pointing to it as a model is imperfect because it is one coal power plant employing less than 100 people and a town that is larger than other coal towns in the state, like Craig and Hayden, which are facing a huge proportion of their workers being displaced as well as the loss of the main source of property tax revenue.
"We don't have an answer yet in Craig and Hayden," he said. "Craig and Hayden are ground zero for this."
Towns where power plants close across the U.S. can lose upwards of 70%-80% of tax revenue, according to the Just Transition Fund.
The big job losses in the Colorado coal industry will take start in 2025 and it won't be complete until 2030 or later. Between now and then the economic development issues in rural areas need to go beyond the soundbites.
"They've had the best jobs, best paying and secure, and they are very nervous about how to visualize their future. … it is hard to pay the kind of wage scale they are used to," Buchanan said.
Tourism and existing industries like the ski resorts offer some opportunities, but Covid hit these hard in the short term which exacerbated the fears, and Buchanan added that "a miner doesn't want to be a ski lift operator."
At least for a period of three to four years, Colorado's advisory board expects there may be wage replacement programs necessary and the numbers get big quickly. Colorado only has 2,000 coal workers — which is small compared to Appalachia — but that is not taking into account the supply chains. The state estimates the initial cost to support coal workers at $100 million over a decade and that is not insignificant for a state budget. And Colorado is just 2% of coal mining in the U.S. Its neighbor Wyoming has 20 times the numbers of coal workers, and less money, and one congressional district. And when the issue is Colorado's oil and gas industry, that is ten times the size of its coal workforce.
The UMass Amherst research team forecasts a cost of $3.8 billion per year 2030 through 2050 for just transition policies.
States are also beginning to think about the creation of transition funds to replace the lost tax revenue from power plant closures, including in Minnesota and Pennsylvania. The first state transition fund in the U.S. to deal with the pending closure of a power plant was in Huntley, New York.
Colorado is a "strong local control state," according to Buchanan, and its residents do not want handouts, but the forecasts imply federal support will be needed.
He had meetings in Colorado coal towns before Covid-19 and found among the residents the range of skepticism and fear you would expect: calling it politics and not science, not wanting handouts from the federal government, and others saying even if they don't like what they see, they do need to move forward.
"That's natural. These are communities that have become a little cliche to say it, but they powered our prosperity and they are quite proud of what they've done, and should be, and now they are being told for the good of humanity they need to stop. That's a hard message to take, even if you understand and believe in it, and if you don't, it becomes even harder."
The skepticism runs to the "just transition" concept and his office's work, too. Some residents think the whole effort is to make the government and liberals feel better about themselves. "They are totally justified in being nervous," Buchanan said.
Opportunities in states like West Virginia, such as solar energy and farming on former mine sites are real, and agtech companies like AppHarvest in Kentucky which went public last year, provide a glimpse of future opportunities, but not a fully realized vision of job opportunities or broad economies.
"Folks in our [West Virginia] communities see through the soundbites on new green jobs," said Dennison. He said the Biden administration needs to understand that talk about "training those folks" has never been specific enough and existing federal job training programs have a mixed track record, which has made the community highly skeptical.
The idea of justice in the energy transition can be defined many ways, and communities in the line of hurricanes, flooding and wildfires, as well as urban communities facing long-term-health issues related to air quality, are among the stakeholder priorities. But climate advocates pushing for rapid change say we also need to think more about how we characterize the fossil-fuel towns of the past century.
"I think one of first things this nation should do, from the level of Biden down to the grass roots is stop with the demonization of fossil fuels," Leiserowitz said. "The CEOs knew better, what they knew, when they knew it, is a different conversation. But the working class, the oil drillers and coal miners, they built modern America, they risked their lives to go into mines and do the dirtiest, most dangerous work in the country. These people and communities deserve to feel proud of what they did. And now that we're in this race against time it is our responsibility as a society to not leave them, or the landscapes in which they live, behind."
