The fossil fuel industry affects just about everything. Its most visible effects are seen across the country as coal fields and oil fields, or as smoke from factories and power plants blown into the air. But its economic impact spreads across many sectors and regions. For this reason, the decarbonisation of the economy will affect more than miners and drillers. The changes will ripple through heavy industries that employ hundreds of thousands, if not millions, of workers, many of whom may be disrupted by these changes and need help adapting to the post-carbon world.
When President Biden the Inflation Reduction Act in the law, many communities with faltering coal mines and oil rigs have realized they are ready to benefit from it. The legislation provides billions tax incentives and grants to help “energy communities”. — those towns and counties with brownfield sites, formerly dependent on coal mines that are now closed or coal-fired power plants, or otherwise have high tax revenues from fossil fuel extraction. Such places must also have an unemployment rate higher than the national average to qualify for support. The aim is to provide the incentives these areas, and the residents who live in them, need to attract new industries, particularly those in renewable energy and electrification.
According to the US Department of Energy, the energy communities eligible for federal aid are spread primarily across Appalachia and the Southwest. However, research from the Massachusetts Institute of Technology suggests that much of the country is being overlooked by these designations.
Using a new measure called “employment carbon footprint” or ECF, the study presents a new method to determine a county-level economic dependence on fossil fuels, in the hope that the government will use the data to help communities to more accurately identify who needs help. Although layoffs and closings of coal mines and coal burning plants affect thousands of workers, many industrial operations are heavily dependent on fossil fuels, including steel manufacturing, fertilizer production and refining, may also feel some pain from decarbonization. To determine where these places might be, researchers calculated the carbon footprint of a number of employment sectors, including agriculture, oil and gas, and construction. They found that areas with heavy manufacturing but no direct link to mining still have a deep underlying dependence on the fossil fuel industry and are at risk of being left behind by the green transition.
According to co-author Christopher Knittel, an economist at the MIT Sloane School of Business, about half of America’s most carbon-dependent economies don’t qualify for the energy community IRA tax credit — and many of those who do qualify have relatively little to contend with . economic vulnerability to the coming transition. What’s more, the federal designation does not cover those places, such as Mountrail, North Dakota and Washington, Nebraska, that are so heavily dependent on fossil fuels for manufacturing and other sectors that they face greater economic vulnerability than many designated energy communities. After Knittel and other researchers calculated the occupational carbon footprint of various job sectors, they put it on a map, showing some surprising downstream effects of decarbonisation on the labor market.
“If you make steel, for example, you burn a lot of natural gas and electricity,” Knittel said. “Or it could be that you make fertilizer, and we make fertilizer from natural gas. So those sectors are not going to be defined as energy communities because they are not actually extracting fossil fuels.”
The “just transition,” an idea developed by the labor movement in the 1970s and ’80s in response to increased environmental regulation, demands that communities facing economic disruption due to the downsizing or removal of environmentally damaging industry be compensated with new investments and workforce training. While coal-producing regions of the Rust Belt and Mountain West receive tax credits and other benefits to help them through the green transition, large parts of the Great Plains do not have a single IRA-designated energy community, despite the high levels of carbon dependence in their economies, which revolve around oil, gas, construction, heavy industry and agriculture.
“As we transition to a low-carbon world,” Knittel said, “energy costs are going to rise and these areas or sectors may be disadvantaged, but they will be missed by the way we define energy communities.”
That doesn’t mean there isn’t anything out there for places that could be overlooked by the IRA’s efforts to help energy communities. The study only refers to the 10 percent tax credit available for new projects, facilities and technologies located in such locations. Other programs target regions experiencing declines in industrial employment. For example, the IRA provides $48 billion to promote advanced manufacturing, many of which could benefit places outlined in the MIT study. The government is also providing additional support to so-called Justice40 communities – those with concentrated poverty, large populations of marginalized people and other considerations – to help them make the transition.
Thom Kay, of the labor and climate advocacy group BlueGreen Alliance, said there is a lot of funding available, but it’s all very confusing for small communities to navigate. It is too easy for small pockets of high urgency to fall by the wayside in Washington.
“The study provided a useful map for federal agencies looking to get projects into communities that need them now,” he said.
Even so, federal funding is more commonly directed at local and state governments to facilitate industrial development, with less emphasis on addressing the training and employment needs of workers disrupted by energy transition. There are a lot of opportunities out there, “but no clear way for these workers to transition from a fossil fuel job to any of these new jobs in manufacturing or clean energy,” Kay said. Expanding the definition of “energy community” may not even be quite enough: This administration, and future administrations, may need to consider what other programs might need to support workers, rather than simply incentivize industries to moving around and hoping they hire locally.
In fact, he said, the danger may be greater that some officials simply do not recognize the need for investment. In places like the Dakotas, where oil and gas remain relatively strong, the economic pressure to change just isn’t there yet, and economic diversification may not be a priority, while it’s a more active conversation in Appalachia, especially because the coal industry is steep. decline in the 2010s. The changes may not be fully present, but they are coming, and with them, the need for some form of cushion to help workers make the transition.
