What Does America’s Renewable Revolution Mean For Fossil Fuel Workers?

• The U.S.'s transition to clean energy is creating numerous jobs nationwide, but displaced fossil fuel workers may not possess the necessary skills to fill these roles.
• While some traditional roles can transition to the renewable sector, the disparity between the demand for green jobs and the available skilled workforce is a significant issue.
• The Biden administration and institutes like the Brookings Institute suggest strategies for a just transition, including the creation of a dedicated federal office, identification of labor market frictions, and appropriate funding.

The United States is finally getting serious about the renewable revolution. For years, the U.S. has lagged far behind other developed nations in terms of clean energy spending and policy measures, but recent legislation from the Biden administration and a changing global energy market have kick-started the country’s latent road to decarbonization. While this is hopeful news for the climate as well as the economy, it could be devastating for the nation’s 1.7 million fossil fuel workers. 

The United States’ clean energy transition is expected to create hundreds of thousands of clean energy jobs, but there is no guarantee that these will provide direct relief to the individuals and communities that are losing their livelihoods based in a wide variety of nodes all along the fossil fuel value chain. In fact, there is currently such a high demand for renewable energy workers that there are some concerns about whether a lack of skilled labor could derail the planning buildout of renewable energy production and manufacturing capacity in the United States. More than 114,000 U.S. clean-energy jobs were created in 2022, according to the U.S. Department of Energy’s annual employment report, and more than 40% of all domestic energy jobs were in clean energy. What’s more, the trend is not just concentrated in eco-focused states like California, but is occurring nationwide – an increase in green jobs was recorded in each and every one of the 50 states. 

But the employment gap faced by the green energy sector is not just a personnel gap – it’s a skill gap, meaning that many – if not most – displaced fossil fuel workers won’t be able to transition directly into open slots for renewable energy jobs. According to the Wall Street Journal, U.S. green job postings on LinkedIn jumped by 20% in 2022, but green talent grew only 8.4%. That being said, not all of the new jobs associated with the renewable energy industry require “green” skills. “There are also plenty of traditional economy roles that can quite easily transition to green jobs, such as from construction, electrical work and engineering,” the Wall Street Journal reported based on insights from Kenneth Gillingham, economics professor at the Yale School of the Environment. 

Even so, the situation is dire for the fossil fuel labor pool. “Beyond construction, wind and solar farms typically require few workers to operate, and new clean energy jobs might not necessarily offer comparable wages or align with the skills of laid-off workers,” the New York Times recently reported. 

For a clear view of the risks posed to current oil and gas workers, we can look at coal towns that have been experiencing a decline of coal jobs and coal-related tax revenue for the last several decades as the coal industry has sharply declined. A recent paper from the Aspen Institute looked at regions impacted by the decline of coal between the years of 1980 to 2019, and found lasting reductions in wages and employment, higher rate of applications for Medicare and Medicaid benefits, and an exodus of younger workers. The overall impact was an economic downturn and associated out-migration which “leaves behind a population that is disproportionately old, sick and poor.” 

The Biden administration has taken some steps to try to mitigate the jobs losses for communities dependent on fossil fuels for their livelihoods via wages as well as tax revenues, namely by providing additional tax advantages for renewable energy projects that are developed in areas that stand to lose the most fossil fuel jobs. But economists say that these measures alone won’t be nearly enough to ensure a just transition. 

The Brookings Institute has identified three key measures to support a clean energy transition that doesn’t leave traditional energy workers behind: 1. creating a dedicated Just Transition Office at the Federal level to ensure a coordinated and far-reaching strategy; 2. Identification of ‘key frictions’ in labor markets that would prevent workers’ transition to new job markets in order to make sure that taxpayer dollars are getting spent where they will actually make a difference; and 3. appropriate funding. A just transition won’t be easy or cheap, but it will be necessary to make sure that fossil fuel workers and their communities aren’t left behind.

By Haley Zaremba for Oilprice.com

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