Working toward a Just Transition for Coal Communities

The Biden administration aims to cut economy-wide emissions by 50–52 percent from 2005 levels by 2030 and to decarbonize the electricity sector by 2035. A transformation at that pace would have real repercussions for fossil fuel workers and communities. Many coal-fired power plants are already slated for retirement by 2035, and new policies to promote clean power will only accelerate this trend. Most coal communities have experienced economic decline for years, and there is an urgent need to plan ahead so that more workers and communities are not left behind.

The good news is that the “Build Back Better” legislation making its way through Congress includes numerous initiatives to fund infrastructure and support these communities. The core priorities of the legislation include environmental remediation, workforce development, and targeted investment. The $1 trillion infrastructure bill passed by the Senate in August allocated $21 billion for remediation, including $11.3 billion to reclaim and redevelop land at disused mines and $4.7 billion to plug and remediate abandoned oil and gas wells. Those measures have bipartisan support. Meanwhile, legislative text passed out of the House Energy and Commerce Committee includes $2 billion in funding over 10 years for low-carbon investments (Sec. 1706) in energy communities, including worker retraining and land reclamation and redevelopment. It remains to be seen how many of these items will be included in the final budget reconciliation package.

In addition, the president’s January 27 executive order on climate established an Interagency Working Group (IWG) on Coal and Power Plant Communities and Economic Revitalization. The group’s first report identified 25 vulnerable coal communities and “fenceline” communities that have historically been exposed to environmental hazards from industrial or energy facilities. The IWG identified $38 billion in potentially available federal funding for these regions, including finance for infrastructure, site remediation, and local community development.

The Biden administration’s mantra is that climate policies can create well-paying clean energy jobs and help to ensure a successful transition for fossil fuel workers. These efforts are much needed, but it is important to apply the principles of just transitions in both legislation and future executive action. Priorities should include extensive engagement with local communities, focused investment, and realistic plans for the diversification of local economies.

Positive Steps in Engaging Coal Communities

The United States should look to past economic transitions to identify the best ways to engage fossil fuel communities. In countries such as Germany and Canada, the government successfully identified key stakeholders including the most underrepresented groups in fossil fuel communities and engaged extensively with them to implement policies. In doing so, they helped to ensure that local communities remained invested in just transition programs.  

Despite strong efforts, the Biden administration’s outreach may be falling short. For example, the American Rescue Plan—the Covid-19 rescue package enacted in March 2021—included $300 million to support coal communities called the Build Back Better Regional Challenge. Phase one applications for funding are due to the U.S. Economic Development Administration (EDA) by October 19, 2021. There has been criticism that this timeline is too ambitious and that local communities are finding it difficult to navigate the complex federal grant application process.

Efforts to engage local communities are just beginning. The IWG has been conducting outreach to assist fossil fuel communities and to hear their ideas for economic development and revitalization. It has held workshops in Pennsylvania, West Virginia, Colorado, Arizona, North Dakota, and Wyoming, including officials from the EDA, the U.S. Department of Energy, and the Department of the Interior. Nongovernmental organizations like the Just Transition Fund are also collaborating with community leaders and organizations to help them manage the funding and grants process and to offer technical assistance. But compressed timelines make it challenging for small organizations and traditionally underrepresented groups to access funding. In any case, this initial outreach is less important than creating a sustained dialogue that will bring together civil society groups, industry, workers, and government officials to outline a successful transition.

Many fossil fuel communities at risk in the energy transition have been exposed to toxic materials and pollutants, and these regions are a priority in the administration’s Justice40 plans. The federal government has expanded its engagement with environmental justice organizations and local officials in the Gulf Coast, Appalachia, and Wyoming. But earmarking money for these communities is just the first step, and it will take additional work to solicit ideas for projects and investments in these regions.

Challenges with Targeted Investment

Coal communities are often highly dependent on a single industry. Only 42,000 Americans work in coal mining, but the National Mining Association estimates that if service sector and transportation jobs are included, the coal sector directly employs at least 100,000 workers. Indirect employment in coal country is even larger. The closure of a mine or coal-fired power plant can have disastrous effects on local economies, so it is especially important to act early to support economic alternatives for these communities.

The “Build Back Better” legislation aims to channel investment toward fossil fuel communities to create jobs and seed new industries, but history shows this is difficult to achieve. Advocates of place-based development argue that targeted investment in a particular region can help generate a virtuous cycle, with clusters of activity that help to spread innovation. Ideally, a place-based development strategy for coal communities would begin with a needs assessment that reflects each region’s particular strengths. But an inclusive process is no guarantee of success, and the more successful examples of coal transitions took decades of sustained planning and support. Typically, they have also taken place in countries with stronger social safety nets than the United States and more active collaboration between trade unions, employers, and government.

At present, the risk is that the government will aim to jump-start a new industry in a particular fossil fuel region, but isolated projects will fail to create positive spillover effects. For example, there is limited evidence that past initiatives like federal and state empowerment zones generated lasting economic development as opposed to a short-term boost in employment and wages. Pilot projects or tax incentives to lure high-profile companies may be less effective than improving the factors that enable regional development, such as workforce development and training, and support for research universities.

Concerns over Job Quality and Diversification

Aside from selecting which projects and industries to support, job quality is another challenge. President Biden and Energy Secretary Jennifer Granholm have often reiterated that their goal is to create millions of good-quality, high-paying clean energy jobs. But evidence suggests that at the moment, renewable energy jobs pay less than many fossil fuel jobs. For example, the average salary in oil and gas is $114,000, the average in coal is $96,000, but the average salary of clean energy jobs is $82,000. These jobs also tend to be less secure and are less likely to be unionized. Studies have shown that most of the jobs in the renewable energy sectors such as solar and wind are in the construction segment of projects and are mostly temporary. Moreover, according to the 2020 U.S. Energy and Employment Report, the unionization rates of solar and wind industries stand at 4 percent and 6 percent, respectively—less than half the rate of fossil fuel industries.

Leading unions have expressed concern about these issues. They are worried that the jobs waiting for them in wind and solar might not pay well or have required union protections. Additionally, these jobs may not always be available where fossil fuel employees currently live and work. Research has shown that many coal mining areas are not suitable for setting up large-scale renewable energy projects due to a lack of solar and wind resources. The Biden administration may be better off widening the focus to include not only clean energy, but also other sectors such as agriculture, tourism, and manufacturing.

However, there is a need to map the competitive advantages of coal-dependent regions based on factors such as available natural resources, labor skills, infrastructure needs, and anchor institutions like universities. This will be a precursor to deciding which sectors are scalable or feasible in coal-dependent regions. It is also important to determine whether some of these sectors would be attractive for coal workers in terms of job security and wages. These are critical considerations while planning investments in coal regions.

The Biden administration is making admirable efforts to help coal communities, but it is imperative to heed the principles of just transitions in development planning. Extensive engagement with local communities, thoughtful and targeted investment, and realistic plans to diversify local economies focusing on multiple sectors can help achieve better and more equitable outcomes.

Ben Cahill is a senior fellow with the Energy Security and Climate Change Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Sandeep Pai is a senior research lead with the Just Transition Initiative in the CSIS Energy Security and Climate Change Program.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

© 2021 by the Center for Strategic and International Studies. All rights reserved.