US energy transition policy is leaving vulnerable workers behind

If we’re serious about achieving a truly just transition, far more federal policy action is needed.

While the world continues to transition away from fossil fuels, an equally important aspect of this transition is being overlooked: It must be just, orderly and equitable. 

While it may not have made headlines, planning this transition was one of the toughest topics in recent COP28 negotiations. In the end, negotiators left Dubai having created a dedicated work program to support their workers in vulnerable communities in shifting to a green economy.

This monumental achievement puts pressure on the United States, home to one of the largest fossil fuel workforces in the world, to lead the way in transitioning the workforce from brown to green. But while the Biden administration has hinged its climate strategy on generating new, green jobs in clean energy and manufacturing, new research at MIT’s Center for Energy & Environmental Policy Research finds that current federal policy to support existing workers is inadequate and short-sighted.

Our research paper, published in the Proceedings of the National Academy of Sciences, provides new economy-wide data on where employment in the United States is most vulnerable to the economic pressures of the energy transition. We find that the 2022 Inflation Reduction Act fails to effectively support many parts of the country where employment is at risk.

Our study calculates the average carbon intensity of jobs in every U.S. county — the higher the carbon intensity, the more likely jobs will be impacted by a shift away from fossil fuels. When mapped across the country, these carbon footprints provide a blueprint for policymakers to identify communities that will need support through the energy transition.

Currently, the Inflation Reduction Act offers special subsidies for clean energy investment in a selection of “energy communities” that rely on fossil fuel sectors. But, according to our data, many of the communities with the highest carbon footprints do not qualify.

The first map below shows the employment vulnerability of counties that qualify for extra energy community funding while the second map shows those that don’t. Crucially, the orange counties on the second map are those that have above-average employment vulnerability but are not recognized as energy communities. 

Communities can qualify if they have both high levels of fossil fuel employment and above-average unemployment. This makes sense for areas where there have already been heavy fossil fuel job losses such as in Appalachia, but what about communities where layoffs are just starting? Oklahoma is second only to Texas in oil and gas employment and recently recorded more energy sector job losses than anywhere else in the country. 

Despite this, the state is almost completely ineligible for the energy community funding because unemployment is not yet high enough for communities to qualify. Conditioning their eligibility on the unemployment rate means these counties won’t receive support until more jobs are lost.

Similarly, communities can qualify if a nearby coal facility has closed, but this support only kicks in after the industry has shut up shop. 

Trimble County, home to one the largest coal-fired power plants in Kentucky, has some of the most carbon-intensive employment in the country. Jobs at the power plant are under threat, with its owners intending to partially retire it in the coming years. Despite this, Trimble County won’t qualify as an energy community until after this retirement has taken place. 

Our results also warn against focusing exclusively on fossil fuel communities. While coal mining and oil and gas workers undoubtedly deserve support, many of the counties that don’t qualify as energy communities rely on industries that consume a lot of fossil fuels, such as the manufacturing of metals and chemicals, and these sectors will also be impacted as the economy moves away from dirty energy. Broadening the definition of an energy community to include those that are dependent on fossil fuel consumption would anticipate such impacts.

These impacts are happening now. The recent United Automobile Workers strike was the first time in 80 years that workers walked out against all three major Detroit automakers and among the union’s key concerns was the shift to electric vehicles. EVs require less labor to manufacture than internal combustion engine vehicles, and automakers had previously refused to include workers at battery plants in their union contracts. 

Ultimately, the United Automobile Workers deal secured protection against impacts from the shift to EVs. But not all industries are represented by one of the most powerful labor unions in the country, nor do they have a clear green alternative to pivot their business towards. Without proactive government intervention, we risk leaving workers in these industries behind and potentially incentivizing similar large-scale labor mobilization against the energy transition.

To be clear, the Biden administration’s work on the energy transition has far surpassed what anyone could have expected given the paralyzing political power of the fossil fuel industry. But if we’re serious about achieving a truly just transition, far more federal policy action is needed. And crucially, this action needs to target the most vulnerable communities accurately — otherwise, we can expect to see many more strikes in the future.

Kailin Graham is a Fulbright Scholar and graduate researcher at the MIT Center for Energy and Environmental Policy Research. Christopher R. Knittel is the George P. Shultz professor of energy economics at MIT’s Sloan School of Management, director of the MIT Center for Energy and Environmental Policy Research and deputy director for policy at the MIT Energy Initiative.