By Amanda Stiebris

Energy transition picture

Moving away from fossil fuels is the next step in American energy. Bolstering renewable energy is necessary for fighting climate change and cutting greenhouse gas emissions in the long-term, and efforts to reduce dependency on fossil fuels for everyday use are already well underway. However, as we work to transition to greener energy, we cannot forget about the communities that are reliant on the fossil fuel industry for employment and for economic well being. Over a million people work in fossil fuel extraction, refinement, and electricity generation as well as in manufacturing for highly energy-intensive industries. The majority of these workers do not have a college education and are vulnerable to job loss as we transition to cleaner energy. Without intervention, a transition from oil and gas can mean economic devastation. First, however, we must look at the communities that will be affected by the change to clean energy and what policies can be used to mitigate the economic consequences for those vulnerable in the transition.

The obvious answer would be to transition people from fossil fuel jobs to renewable energy jobs as we make the move to cleaner energy. However, a deeper look into the demographics and geography of those at risk provides insights into why this assumption does not work.

To start, the majority of the at-risk jobs in the fossil fuel industry are concentrated in four regions: Appalachia, East Texas-Louisiana, West Texas-Eastern New Mexico-Oklahoma Panhandle, and Mountain West-Northwest Plains. These areas are generally remote and far from population centers. As such, the communities there are highly reliant on the fossil fuel industry. To take an example, over 20 percent of the prime-age workers (ages 25-54) in Odessa, Texas are employed in gas and oil extraction and refining. This sector is particularly vulnerable to changes in the fossil fuel industry since employment is directly tied to oil and gas demand. If demand were to shrink rapidly, not only would unemployment skyrocket in the town, but the widespread income loss would ripple through the entire local economy. This is true not only for the fossil fuel industry itself but also for sectors heavily reliant on fossil fuels. Industries with high energy usage tend to cluster near energy sources to cut costs. As such, manufacturing plants in highly energy-intensive industries may feel a cost pressure to relocate nearer to renewable energy sources as it becomes cheaper. In just the nine most energy-intensive industries (line and gypsum, pulp and paper, glass products, industrial chemicals, iron and steel mills, aluminum, clay products, fiber and thread mills, and cement and concrete), over 700,000 workers largely without college degrees are at risk for job loss if manufacturers move nearer to renewable energy sources.

Most of the jobs in this sector are inherently linked to the source of the energy. This is an important component of why just moving people from fossil fuel jobs to green energy jobs is not an end-all solution. The locations of oil and gas wells are fundamentally different from where renewable energy concentrates. Most green energy production, primarily through solar, wind and hydroelectric power, is currently located in places with lots of sun, consistent high winds, and fast-moving water sources. These areas are far from where oil and natural gas wells tend to be found, making them unrealistic alternatives.

Even if the location of these new renewable energy jobs were ideal, the types of jobs available are themselves also insufficient replacements. Construction accounts for over 40 percent of employment in renewable power generation. These jobs are short term and will primarily be available as the industry is growing rapidly. As demand for new plants shrinks, so will the number of construction jobs. The jobs that will become obsolete as we transition to green energy are long term, well paying jobs that do not require a college degree. Replacing them with short term jobs far from home for many fossil fuel workers is not an adequate solution. If we are going to prevent these communities from collapsing as we move to green energy, we need solutions that provide economic support and create suitable jobs to replace those lost.

In upcoming posts, we will dive into the past to look at what went wrong with governmental response to the transition away from coal and look into the future to see what policies could be put in place to prevent economic devastation in these communities as we move away from oil and gas.

Local Labor Market Impacts of the Energy Transition

This is the first post in a series covering the working paper “Local Labor Markets Impact of the Energy Transition: Prospects and Policies” by Gordon Hanson, Faculty Co-Director of Reimagining the Economy at Harvard Kennedy School.

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