A recent report from RFF and EDF synthesizes insights about economic development, environmental remediation and infrastructure, labor supports, and public benefits in a clean energy transition. These insights can inform the design of policy that simultaneously addresses climate change and the needs of vulnerable communities. RFF’s Wesley Look, Daniel Raimi, Molly Robertson, and Dan Propp, along with EDF’s Jake Higdon, coauthored the report described in this blog post.
An energy transition is taking shape in the United States and around the world, as societies shift to clean energy, electrify transportation and other energy-intensive sectors, and boost energy efficiency. Resources for the Future (RFF) and Environmental Defense Fund (EDF) have joined forces to examine these trends and how public policies can promote fairness for workers and communities in regions where fossil fuel industries historically have been a leading driver of employment and prosperity—often referred to as a “just transition.”
The Challenge
Three-quarters of domestic coal mining employment—more than 100,000 jobs—have been lost since the 1980s. In the oil and gas sector, the shale revolution has led to dramatic but volatile job growth; however, due to the COVID-19 pandemic in 2020, upstream oil and gas employment (the support services for oil and gas extraction) fell by nearly 90,000 jobs. Further declines in coal, oil, and gas production would impact hundreds of thousands of workers (Figure 1).
Figure 1. Upstream Coal, Oil, and Natural Gas Employment in the United States
Source: US Bureau of Labor Statistics (2020). Support activities for mining (NAICS 21311) includes support activities for oil and gas extraction, such as well drilling and hydraulic fracturing services. Data through January 1, 2021
Future trends in technology development and policy design will likely exacerbate these challenges. For example, over the past decade, onshore wind and solar costs have dropped by 70 and 90 percent, respectively, making these renewable energy resources increasingly competitive with natural gas and coal-fired electricity. And as society formulates policies to address climate change—which will drive further clean energy adoption—declines are predicted in coal, oil, and natural gas production (Figure 2).
Figure 2. Historical and Projected US Energy Production (quadrillion Btu)
Source: International Energy Agency (2020). Stated Policies Scenario reflects current and announced policies. Sustainable Development Scenario limits warming to well below 2°C by 2100. Historical data are estimates provided by International Energy Agency to authors in November 2020
The Solution
Together, RFF and EDF have produced a series of reports that investigate a range of existing policies and programs in the United States and in Europe that we expect will help facilitate a just transition for coal, oil, gas, and power plant communities. In our most recent publication, we combine the findings from all of our reports to date, providing a go-to summary for policymakers who are interested in assessing policy tools that already exist and designing new solutions for a just transition.
To help policymakers identify the core components of a comprehensive just transition policy package, we group more than 100 policies into a framework (Figure 3) with the following four primary categories:
We also identify four crosscutting policy areas. Together, these policy mechanisms are likely to help support a just transition.
Figure 3. Categories of Just Transition Policies Studied
We distill from our research the following five insights that will be important as policymakers create effective policies for a just transition:
- Multiple and customizable policy types. No “silver bullet” exists for a just transition. Instead, policymakers need to assemble a package that includes all the policy types described in Figure 3. These policy options interconnect and together create a network of support for workers and communities. Furthermore, we find that policies often excel when they’re tailored to unique local circumstances, and when they’re targeted for populations most in need. Policymakers also may find success in designing policies that focus on a specific sector, such as financial support for coal workers and workforce training designed around the labor needs of advanced manufacturing.
- Coordinated delivery. Given the need for a dynamic system of intersecting initiatives, policymakers will need to ensure that administration and implementation are well coordinated, both horizontally (across federal agencies) and vertically (across levels of government and stakeholder groups). We also find precedent and rationale for centralizing and streamlining the delivery of services, to both help participants easily access available resources and ensure that government dollars are spent efficiently.
- Strategic timing and sequencing of policy implementation. The sequencing of just transition policy implementation is likely to affect program efficacy and cost-effectiveness. For example, national, regional, and project-specific just transition planning are crucial early-stage actions that help prepare communities for change and seize timely opportunities. Other early-stage interventions include reforms to bankruptcy laws and efforts to connect displaced workers with new, high-quality jobs—and if employment opportunities are not immediately possible, to provide temporary income supports and subsidies for foundational living expenses such as health care, housing, and childcare. Some programs, such as infrastructure expansion and environmental remediation, can put people to work relatively quickly in construction jobs while bolstering productivity and economic diversification over the long term.
- Equitable and inclusive policymaking and implementation. Equity and inclusion will play a central role in just transition policy. These efforts include addressing a legacy of underinvestment and environmental injustice in low-income and minority communities; ensuring procedural equity by engaging affected workers and communities in the design, implementation, and evaluation of policy; designing programs that are transparent in how funds are allocated and how program effectiveness is measured and evaluated; and ensuring that the companies that have benefited from polluting activities bear responsibility in environmental remediation efforts.
- Challenges that the energy transition poses for public revenue streams must be addressed. Although new economic drivers—including clean energy—could replace the fiscal losses that tribal, state, and local governments may face amid the energy transition, federal leaders may need to design policies to bolster the fiscal stability of subnational jurisdictions. Potential measures include raising new government revenue dedicated to this purpose, increasing spending from general funds, and enhancing local fiscal autonomy.
The energy transition will be essential as we aim to mitigate the greatest risks of climate change. This most recent report from RFF and EDF seeks to inform policymakers who are interested in addressing the environmental threat of climate change, while simultaneously investing in the workers and communities that have built the American fossil fuel industries. With smart, targeted policy, those individuals and communities will be able to thrive in the clean energy economy of the future.
