As We Transition Away From Fossil Fuels, We Must Also Tackle Inequality
Above Photo: A just transition to a low-carbon future must offer support not only to displaced fossil fuel workers but also to the surrounding communities that have suffered the negative environmental consequences of fossil fuel use for decades.WITTHAYA PRASONGSIN / GETTY IMAGES
Two truths lie at the heart of efforts to transition away from fossil fuels. The first is that to stave off the worst impacts of climate change, we must rapidly and dramatically reduce our carbon dioxide emissions. The second is that the resulting decrease in fossil fuel use and extraction will cause displacement of workers and the loss of tax revenue for many communities, and in some cases, it will eliminate entire tax bases.
The second truth does not change the first, and the costs of inaction will far outweigh the cost of decarbonization. But, for a just, low-carbon future, the solutions to climate change cannot exacerbate existing inequities by leaving workers displaced and communities without economic resources. A “just transition” — an energy transition that addresses and mitigates the challenges fossil fuel workers and communities face in a decarbonized world — will be a complex process. It will often require difficult trade-offs. However, proactive planning and organizing can help equitably transition these workers and communities into a low-carbon future.
The Reliance on Fossil Fuel Extraction
There is an increasing acknowledgement that fossil fuel workers must be provided with support during the carbon transition, as evidenced by policies in the Green New Deal and several Democratic presidential candidate climate plans.
Less discussed is the role that fossil fuel extraction plays in economically supporting local and state economies. In Wyoming, the top coal-producing state, taxes on coal extraction provide a substantial amount of the state’s annual budget. As journalist Andrew Graham detailed in the independent outlet WyoFile, coal companies pay the state through four different streams. These include:
- Severance tax: There is a severance tax paid to the state when coal is removed from the ground. Wyoming’s 7 percent tax on surface mined coal is one of the highest in the nation.
- Federal mining royalties: Approximately half of mining royalties paid to the federal government for coal mining on federal land are returned to the state.
- Sale of coal leases: When coal leases are sold, a lump sum payment is paid to the state.
- Ad valorem: A type of property tax, ad valorem taxes are paid at the county level and redistributed throughout the state. These taxes and fees are in addition to employing thousands of miners at high wages.
While steadily declining, in 2017, coal contributed more than $891 million in taxes, royalties and fees to the state’s economy. The estimated revenue in the state for the same year was $2.1 billion. While the state is attempting to diversify its economy through initiatives like ENDOW and Next Generation Sector Partnerships, there are steep challenges to attracting industries that can provide the same tax revenue and wages as the coal industry. In 2016, the average wage of a coal mining worker was more than $85,000, nearly twice that of the average for all industries combined. The role the coal industry plays in providing an economic base for the state cannot be overstated.
Economic dependence on fossil fuels extends beyond extraction. The shutdown of coal-fired power plants also creates economic distress. In Tonawanda, New York, the falling cost of natural gas meant the town’s Huntley Power Plant, a coal-fired plant, was no longer economically competitive and its operator, NRG, began to reduce production and tax payments to the town. Between 2008 and 2012, the town lost $6.2 million in tax revenue. As a result of the decrease in tax revenue, four schools in the town closed and the plant’s workforce was reduced by 60 percent.
Who Gets a Just Transition?
The focus on fossil fuel communities and workers can feel misplaced. Other communities, in particular, those that have experienced environmental racism that left them with the negative environmental consequences of fossil fuel use without its benefits, are justifiably wary of the attention and resources devoted to transitioning extractive communities.
For example, fossil fuel extraction has enriched Wyoming such that there is no state income tax. Environmental justice communities — communities of color and low-income communities that bear a disproportionate environmental burden — living near coal-fired power plants, on the other hand, receive little of the economic benefit and must live with the environmental burden of fossil fuel.
However, not all fossil fuel communities have been enriched and many face a legacy of toxic environments and deep poverty. Moreover, these communities – environmental justice communities and fossil fuel extraction sites — have more needs in common than in opposition. Both communities have suffered economically and environmentally in the extractive economy, whose main benefits are reaped by fossil fuel companies, not workers nor communities.
Just transition for fossil fuel workers and communities must be in addition to, and not instead of, transition programs targeted at under-resourced, marginalized communities that are hit first and worst by the impacts of climate change. These overlapping transition challenges can be met through expansive programs that both address the challenges specific to the cessation of fossil fuels and mitigate the historic burden placed on marginalized communities from fossil fuels.
A Framework for a Just Transition
The increased attention to just transition policies is an important step toward fully confronting climate change. However, whether the transition is just depends on how and what gets implemented. Assuming all coal miners will transition into renewable energy jobs, for instance, ignores the reality that coal mining jobs tend to pay a relatively high wage, while solar installation jobs, for instance, pay on average roughly half that wage.
Further, assuming rural communities dependent on natural resource extraction can easily attract other industries ignores the reality that few industries are interested in locating themselves in areas that are not easily accessible nor have an available trained workforce.
Recent research provides a framework of principles that can guide just transition policy development. The principles were developed by analyzing just transition efforts around the world and understanding the short-term (i.e. immediate wage, benefit and revenue replacement) and long-term (i.e. economic diversification and retraining) needs that workers and communities will face. The principles include strong governmental support, dedicated funding streams, strong and diverse coalitions, and economic diversification.
The case of Tonawanda, New York, where the coal-fired power plant shut down, highlights how many of these principles work in practice. There, a diverse coalition, including the Kenmore Teachers Association, the Western New York Area Labor Federation, the United Steelworkers of America, Tonawanda, the IBEW Local 41, the Clean Air Coalition of Western New York, and the Sierra Club, came together to save the school system, protect workers and ensure ratepayers did not face increased electricity costs. They received both strong governmental support and a dedicated funding stream when the New York State Legislature allocated $30 million in gap funding, which increased to $45 million in 2017 when NRG announced the official retirement of the coal plant.
The town also engaged in a collaborative process — bringing together town officials and residents, community organizations, labor unions and local businesses — to develop a vision for the town’s future. The resulting plan, “Growing the Town’s Economic Future” was released in 2017 and looks to leverage the state’s gap funding to build upon existing initiatives and attract new industries to strengthen the tax base and create good, family-sustaining jobs.
Among the strategies for building the town’s economy are positioning the town as a regional hub for sustainable manufacturing and trade, building workforce and career pipelines for younger workers, and redeveloping the town’s waterfront district to attract tourists and new residents.
The climate crisis requires transitioning away from fossil fuel extraction and use urgently. Yet, even with the short timeline the climate crisis demands, we cannot repeat the injustices of the extractive economy. We must not abandon workers and communities. Smart, targeted policy can, and will, provide a just transition.