The fossil fuel industry touches just about everything. Its most visible effects are pockmarked across the land as coalfields and oilfields, or blown into the air as smoke from factories and power plants. But its economic impacts spread across many sectors and regions. For that reason, decarbonizing 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 laborers, many of whom may be dislocated by these changes and need help adapting to the post-carbon world.
When President Biden signed the Inflation Reduction Act into law, many communities with faltering coal mines and oil derricks realized they were poised to benefit from it. The legislation provides billions in tax incentives and grants to help “energy communities” — those towns and counties with brownfield sites, previously dependent on now-shuttered coal mines or coal-fired power plants, or otherwise having high tax revenue from fossil fuel extraction. Such places also must have an unemployment rate higher than the national average to qualify for support. The goal 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 U.S. Department of Energy, the energy communities eligible for federal help sprawl mainly across Appalachia and the Southwest. However, research from the Massachusetts Institute of Technology suggests a large swath of the country is being overlooked by these designations.
Using a new metric, termed “employment carbon footprint” or ECF, the study presents a new method of determining a county-level economic dependence on fossil fuels, in the hope that the government uses the data to more accurately pinpoint communities in need of assistance. Though layoffs and closures of coal mines and coal-burning plants affect thousands of workers, many industrial operations heavily reliant on fossil fuels, including steelmaking, fertilizer production, and refining, may feel some pain from decarbonization, too. 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 extraction, still have a deep underlying dependence on the fossil fuel industry and risk 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 that do qualify face relatively little economic vulnerability to the coming transition. What’s more, the federal designation does not cover those places, such as Mountrail County, North Dakota and Washington, Nebraska, that are so heavily dependent upon 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 employment carbon footprint of various job sectors, they overlaid them on a map, showing a few surprising downstream effects of decarbonization on the job market.
“For example, if you’re making steel, you’re burning a lot of natural gas and electricity,” Knittel said. “Or it could be you’re making fertilizer, and we make fertilizer from natural gas. So those sectors are not going to be defined as energy communities because they’re not actually extracting fossil fuel.”
The “just transition,” an idea the labor movement developed in the 1970s and ’80s in response to increased environmental regulation, demands that communities facing economic disruption from the downsizing or removal of environmentally harmful industry be compensated with new investment and workforce training. While coal-producing regions of the Rust Belt and Mountain West are receiving tax credits and other benefits to help them through the green transition, large swathes of the Great Plains don’t 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 go up and these areas or sectors might be harmed, but they would be missed by the way we define energy communities.”
That doesn’t mean there’s nothing out there for places that might be overlooked by the IRA’s efforts to help energy communities. The study refers only to the 10 percent tax credit available to new projects, facilities, and technologies located in such places. Other programs target regions experiencing declines in industrial employment. The IRA, for example, provides $48 billion to promote advanced manufacturing, much of which may benefit locales outlined in the MIT study. The government also is 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 plenty of funding available, but it’s all very confusing for small communities to navigate. It’s too easy for small pockets of high need to fall by the wayside in Washington.
“The study has provided a useful map for federal agencies who want to get projects into communities that need them now,” he said.
Even so, federal funding is targeted more generally at local and state governments to facilitate industrial development, with less emphasis on resolving the training and employment needs of workers dislocated by energy transition. There are many opportunities out there, “but no clear avenue for these workers to transfer from a fossil fuel job to any of these new jobs in manufacturing or clean energy,” Kay said. If the definition of “energy community” is widened, it may not even be quite enough: This administration, and future administrations, may need to consider what other programs might be needed to support workers, rather than simply incentivizing industries to move around and hoping they hire locally.
In fact, he said, the danger may be more that some officials may simply not recognize the need for investment. In places like the Dakotas, where oil and gas remains relatively strong, the economic pressure to change just isn’t there yet, and economic diversification may not be a priority, whereas it’s a more active conversation in Appalachia, particularly since the coal industry’s steep decline in the 2010s. The changes may not be fully present, but they’re coming, and with them, the need for some form of cushion to help workers make the transition.
