US efforts to transition to cleaner energy carry risks of mass layoffs in mature industries, experts say, who warn that policies to soften the blow may not live up to the hype.
The Biden administration, through measures such as the Inflation Reduction Act of 2022, is highlighting billions of dollars in support targeting disadvantaged communities in the energy transition.
The push for change received a boost at the UN-led COP28 summit in Dubai on Wednesday, where governments endorsed an agreement favoring “a transition from fossil fuel to energy systems, in a fair, orderly and equitable manner”.
The Biden plan includes grants for projects in places that have lost coal mining jobs, plus billions of dollars to enable conversion investments in electric vehicle manufacturing, including internal combustion engine (ICE) car factories or even oil refineries.
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The goal is to ensure “a strong and fair transition to electric vehicles” and maintain “high-quality jobs in communities that currently host manufacturing facilities,” according to statements from the Department of Energy.
Such programs sound promising, but not everyone is convinced they will work. Funding under the programs goes to businesses with growth plans — not workers whose factories are closing.
Gordon Hanson, a professor at Harvard’s Kennedy School of Government, predicted that Biden’s policies were more likely to succeed in boosting greener manufacturing than supporting workers from losing industries.
He notes that much investment in new electric vehicles (EVs) has gone to southern states like Georgia and Tennessee, where companies have hired younger workers — not the traditional auto-making base of the industrial Midwest.
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Of particular concern is a potential mass layoff event, such as the closing of an ICE assembly plant or an oil refinery.
The United States could lose at least two to three million jobs over the next 15 years between the energy transition and the negative impacts on communities, Hanson estimates.
“We have to design for it to be disruptive,” he said. “If we don’t, it’s going to look a lot like what happened to manufacturing because of globalization and technological innovation over the last three decades, and that’s not pretty.”
Growing demand
On Nov. 27, the Department of Energy announced $275 million in funding for seven projects targeting areas that had closed coal mines or coal-fired power plants.
The funds will be used to make wind turbines, base metals for grid storage and produce components used in EV batteries.
One of the recipients, Alpen High Performance Products, will use $5.8 million from Washington to buy state-of-the-art equipment to boost production of flat glass for high insulation.
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The equipment will be used at a Colorado plant near a recently shuttered coal-fired power plant and at another plant near Pittsburgh, in an area that has lost coal mining jobs, Alpen CEO Brad Begin said. .
“Demand is exploding right now,” said Begin, who expects to add another 100 workers in light of new building codes favoring high-performance glass.
As part of the grant application, Alpen said it will contact a coal workers union in Pennsylvania about the jobs.
“We’re going to be proactive about that,” Begin said, adding that a push for former coal workers is “somewhat implicit” under the program.
Transition from “dirty” jobs
Although there has been some increase in workers moving from unfavorable sectors to green jobs, less than one percent of workers who leave a “dirty job” have landed in a “green job,” according to a July 2023 paper published from the National Bureau of Economic Research.
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E. Mark Curtis, an economist at Wake Forest University who co-authored the paper, welcomed the targeting of coal-hit areas, but said his study underscored the challenges, especially for older workers and those without a college degree.
One reason for optimism “is that 30 percent of workers who leave a fossil fuel industry go into manufacturing,” Curtis said in an email.
“To the extent that the IRA creates industry jobs in fossil fuel communities, that will be good for those communities.”
Harvard’s Hanson said the government should develop a separate policy for vulnerable workers who are not seeking to boost green energy at the same time.
It further recommends boosting spending for community colleges in hard-hit areas, additional unemployment benefits for communities losing jobs, and encouraging small business loans in such areas.
Source: AFP