Accelerating Decarbonization in the United States Technology, Policy, and Societal Dimensions (2024) / Chapter Skim
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Pages 193-240
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2019. "Physical Activity Levels and New Public Transit: A Systematic Review and Meta-Analysis." American Journal of Preventive Medicine 56(3)
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There is widespread agree ment that historical trends of net fossil fuel job losses will continue and may accelerate, although there is still uncertainty about the timing, geographical distribution, and magnitude of these losses. Policies and programs need to address the losses that will inevitably occur in employment, economic base, and public revenue for workers and communities with close ties to the fossil fuel industry.
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There is widespread agreement that historical trends of net fossil fuel job losses will continue and may accelerate, although there is still uncertainty about the tim ing, geographical distribution, and magnitude of these losses (see Chapter 12 for technical details)
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The goal to support communities, businesses, and workers had four sub-goals that inform the recommendations relevant to workforce: • To provide workers and communities accurate information about how clean energy transitions could impact them and access to viable economic transition strategies; 196 A00026 -- Accelerating Decarbonization in the United States_CH04.indd 196 3/29/24 7:40 PM
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establish an independent National Transition Corporation to ensure coordination and funding to mitigate job losses, deploy and decommission infrastructure, and provide equitable access to economic opportunities and wealth, and to create public energy equity indicators.
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manufacturing that would create jobs overall, but would reduce demand for fossil fuels and therefore reduce demand for fossil jobs. Also, all workforce impacts will ripple through the economy.
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• The Career Skills Training Program was authorized $10 million to award grants to pay the federal share of associated career skills training programs under which students concurrently receive classroom instruction and on-the-job training for the purpose of obtaining an industry-related certification to install energy efficient buildings technologies. • The Industrial Research and Assessment Centers Program was authorized $150 million in cooperative agreements for institutions of higher education, community colleges, trade schools, and union training programs to identify op portunities for optimizing energy efficiency and environmental performance at manufacturing and other industrial facilities, and an additional $400 million in implementation grants to small and medium manufacturers assessed by these institutions to implement suggestions.
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Five percent of Low–No competitive grants are required to support workforce development and training, to ensure that diesel mechanics and other transit workers are not left behind in the transition to new technology. More than $3.3 billion of this funding has already been made available as of July 2023 and nearly 25 percent of projects funded for fiscal year 2023 explicitly include workforce elements such as Project Labor Agree ments, use of registered apprenticeships, and/or expansion or establishment of workforce training programs.
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Inflation Reduction Act The IRA, passed in August 2022, appropriates almost $400 billion for clean energy through more than a dozen federal agencies (Badlam et al.
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(2022) describes several tax credits and deductions under the Department of the Treasury that incorporate labor standards (e.g., Clean Energy PTCs and ITCs, Carbon Oxide Sequestration Credit [45Q]
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IRA appropriations for workforce development include the following: under DOE, $200 million for State-Based Home Energy Efficiency Contractor Training Grants to pro vide state energy offices with grants for the training of contractors to carry out energy efficiency upgrades in residential and commercial buildings (Sec.
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Finding 4-1: There have been significant efforts recently to incentivize businesses to utilize domestic content, pay prevailing wages, and incorporate apprentice ships into projects. However, the majority of the policy action does not involve durable, mandatory labor standards set by regulatory action, but rather limited duration tax incentives with labor elements contained to bonus credits earned through voluntary action.
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As detailed in the following sec tions, these concerns include • Hiring challenges across energy jobs, particularly in manufacturing and construction; • Job quality issues of new clean energy jobs; • Diversity and inclusion; • Deindustrialization and decline in U.S. manufacturing and domestic supply chain capacity; and • Skills gaps.
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Fossil Trends As discussed in Chapter 12, there are clear trends across the three fossil fuels: Coal production continues to decline, while natural gas and oil production have not only avoided declines but in fact have increased in the past decade to meet both domestic needs and provide strategic energy security internationally. Employment in fossil fuel extraction has been declining, impacting geographic areas with concentrated fossil jobs.
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. Many incumbent energy jobs that will be lost tend to be high wage, with benefits, and high rates of unionization, and the clean energy jobs being created do not always provide the same array of benefits.
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, with only around one-sixth in professional occupations, and only 2 percent in specialized energy efficiency occupations like energy auditor. This result shows that very niche training programs that cater to a specific clean energy technology, such as training for solar panel installation, may be less effective than programs like apprenticeships and pre-apprenticeships that provide broader training and equip workers with skills that can move between clean tech nologies (Zabin et al.
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mining and geological engineering employment is expected to grow more slowly than all U.S. occupations over the next decade, about 500 openings are projected each year on average, mostly stemming from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire (BLS 2022)
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. Finding 4-2: There is a pay gap between some fossil fuel jobs and clean energy jobs.
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. This does not account for the additional economic benefits generated by incentivizing domestic manufacturing of clean energy technologies and their supply chains.
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However, gross job losses would also be substantial. A 2022 study from the McKinsey Global Institute found that the transition would have uneven effects on sectors, geographies, and communities, especially at the beginning (Krishnan et al.
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Employment and wage losses in fossil fuels are offset in aggregate by growth in low carbon sectors. These results are broadly consistent with the conclusions of the literature in this area and offer granular insights about how decar bonization impacts employment by resource sector, geography, and timing.
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In areas like North Dakota, the oil sector employs a large share of the labor force through midcentury. Natural gas employment is influenced by rate of heating electrification, renewable sit ing constraints, and natural gas exports, leading to vastly different potential pathways.
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Wind resources increase employment mid-continent, and manufacturing increases employment across the East, Midwest, and Great Lakes. Wind has the potential to mitigate job losses from fossil fuels in some areas, such as Wyoming.
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to 50 percent leads to an additional 850,000 jobs, and increasing to 75 percent leads to 1.7 million jobs gained, countering 87 percent of losses. The domestic content and manufactur ing requirements to harness bonus rates for tax credits included in the IRA will sup port realizing the job gains projected in WRI's scenario.
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. While most net-zero studies include manufacturing jobs to produce equipment and infrastructure needed for the net-zero economy, most do not address specifically job impacts of transition on the industrial sector.
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, these communities will be the first to face a transition due to climate policy," and oil and natural gas would follow behind. Geography of Job Losses Nationally, fossil fuel jobs account for less than 1 percent of total employment.
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The Costs of Job Loss for Workers Job loss, especially in fossil sectors, is likely to be extremely costly to an individual/ household. Evidence from researchers examining mass layoffs in a variety of contexts show that earnings losses for affected workers are large and persistent -- about 20 percent below their forecasted earnings trajectory up to 20 years later, the sum of which amounts to around $110,000–$140,000 in earnings losses for someone mak ing $50,000 annually (von Wachter et al.
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considers the consequences of the post-1980 decline of coal in order to see how the safety net might address job loss from the energy transition. During the past 40 years, coal mining has had two major contractions.
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. Rising imports from China caused higher unemployment, lower labor force par ticipation, and reduced wages in local labor markets that contained import-competing manufacturing industries -- ultimately responsible for nearly a quarter of the decline in U.S.
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Overall, this program includes many of the interventions described in the following section "Policy Tools and Mitigation of Impacts": extended UI benefits and active labor market programs, such as intensive job training. More recently, part of TAA has been further experimenting with wage insurance programs that have also shown promise (Hyman et al.
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There appears to be scope to further tune UI benefits to local economic conditions. Because job loss caused by the energy transition is likely to be highly concentrated in specific local labor markets, state-level triggers may be too crude to help the regions that will suffer high levels of worker displacement, entailing larger than necessary fiscal expenditures.
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Wage Insurance Program Because UI reimburses only a modest fraction of the long-run earnings losses associ ated with job displacement, some have suggested wage insurance systems to coun teract these effects (LaLonde 2007)
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The authors find that workers eligible for wage insurance are 25 percent more likely to be employed in the years just after displacement, and their earnings are a sustained 20 percent higher, relative to similar workers who are not eligible for the program. Most of these differences in earnings are accounted for by the higher probability of employment, rather than job quality improvements, suggesting that these programs can be effective in getting displaced workers back into the labor force and out from the long-term unemployed.
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involved in administering these programs, with jurisdictional boundaries that bear little relation to the geographic structure of local labor markets and often do not align with the regional structure of lo cal economic development agencies (Hanson 2023)
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These workers may have lost motivation, hope, or a realistic view of what wages to expect in the labor market. If targeted to workers most likely to exhaust UI benefits, bonuses that pay workers for finding a new job can reconnect long-term unemployed workers to the labor force, raising employment and reducing the cost for the UI system (von Wachter 2011)
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First, the current system of finan cial aid for college could be used to help prevent children of low-income background or of families who experienced a job loss from dropping out of college (von Wachter 2011)
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. Because decarbonization is likely to reduce the eco nomic vibrancy of regions currently specialized in fossil fuels, the role of place-based policies would be to help communities develop a new economic base and replace the well-paying jobs that have been lost (Hanson 2023)
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. In the 9 "In the United States, the practice of local economic development tends to be organized around five major areas: business retention and recruitment, workforce development, financial and technical assistance to small business, infrastructure development, and financial incentives to invest in low-income areas (Bartik 2020)
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Learning more about how well these programs work, ideally through gold-standard, randomized controlled trials should be a high priority.10 Place-Based Policies: Fossil Retirement Subsidies Another potential place-based policy to help mitigate some of the devastating impacts to fossil communities are place-based transfers designed to incentivize the closure of fossil facilities such as coal-fired power plants. While closing a facility would lead to job loss for affected workers, there are at least two reasons why these policies can be help ful.
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. Without significant changes to the existing safety net and transition assistance, the transition from fossil fuels seems likely to repeat the now familiar story of industry decline and regional hardship.
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3. Strong existing safety net for the labor force.
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This transition program should include extending unemployment insurance duration for workers affected by fossil fuel–related layoffs and continuing payments for those who choose to enroll in skill development courses or higher education programs following job loss. The program should include wage insurance to support laid-off workers who find new employment where pay is not com mensurate to their previous employment.
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; c. Creating estimates to inform state and local workforce development pro grams and the private sector of workforce preferences and capabilities (e.g., demand for different types of jobs)
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Objective(s) Categories Short-Form Implementing Addressed by Addressed by Addressed by Recommendation Recommendation Recommendation Recommendation Recommendation 4-1: Support the Department of • Electricity • Equity Building the Development Education, local • Buildings • Employment Needed Workforce of Net-Zero governments, and • Transportation • Public and Capacity Curriculum and school districts • Industry engagement Skill Development • Non-federal Programs for K–12 actors Students 4-2: Invest Congress • Electricity • Equity Ensuring Equity, in Linking • Buildings • Employment Justice, Health, People from • Transportation and Fairness of Disadvantaged • Industry Impacts Communities to • Non-federal Building the Quality Jobs actors Needed Workforce and Capacity 4-3: Extend Congress • Transportation • Equity Ensuring Equity, Unemployment • Fossil fuels • Employment Justice, Health, Insurance Duration • Public and Fairness of for Fossil Fuel– engagement Impacts Related Layoffs Building the and Develop Needed Workforce Decarbonization and Capacity Workforce Adjustment Assistance Program 4-4: Collect and Department of • Electricity • Equity Building the Report Data on Energy • Buildings • Employment Needed Workforce Net-Zero-Relevant • Transportation and Capacity Professions • Industry • Non-federal actors 236 A00026 -- Accelerating Decarbonization in the United States_CH04.indd 236 3/29/24 7:40 PM
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2013. "The China Syndrome: Local Labor Market Effects of Import Competition in the United States." American Economic Review 103(6)
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2021. "The Importance of Focusing on Jobs and Fairness in Clean Energy Transitions." IEA.
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2021. "Help Wanted: Diversity in Clean Energy." E2, Alliance to Save Energy, American Association of Blacks in Energy, Energy Efficiency for All, Black Owners of Solar Services, and BW Research Partnership.
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2023. "Local Labor Market Impacts of the Energy Transition: Prospects and Policies." Cambridge, MA: National Bureau of Economic Research.
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