A full transition to renewable energy is wreaking havoc on labor markets in the United States. In some places, it will be a wonderful thing—a huge number of well-paying, permanent skilled and unskilled jobs will appear in communities near solar and wind farms, for example. But in other areas, the loss of jobs in the fossil fuel sector could be catastrophic if not properly considered and planned for.
There are 1.7 million fossil fuel workers in the U.S. But until recently, there was a problematic lack of data on exactly where these jobs were concentrated, where they represented most, if not all, of the available work, and which industries would be most affected by the coming energy evolution.
To help address this issue, the Massachusetts Institute of Technology (MIT) recently conducted a county-by-county study in the United States that shows which labor markets are most closely tied to fossil fuels and therefore most vulnerable to the transition to clean energy. This map, which the researchers call the “carbon footprint of employment,” can then be used by policymakers to properly support those states that will bear the brunt of this unprecedented economic shift to ensure a “just transition.”
Focusing on a just transition is important because the transition is already underway, and widespread job losses in the fossil fuel sector are already looking imminent. In the year since the Biden administration passed the Inflation Reduction Act—the largest climate law in the nation’s history—companies have announced more than $110 billion in clean energy investments. And as of last July, those investments are estimated to have already created more than 170,000 clean energy jobs.
According to the U.S. Department of Energy’s annual employment report, more than 40% of all energy jobs added in 2022 were in clean energy, with every 50 state seeing an increase in green jobs. While it’s encouraging that these types of jobs are widespread across the country, there are still significant areas in each state that are at risk of being left behind by the transition.
So while the boom in green jobs is great news for the climate and the economy as a whole, these numbers are nothing short of terrifying for countries that rely on fossil fuels for their livelihoods and for the well-being of entire cities and communities. “The U.S. Climate Change Reduction Act’s targeted community efforts are leaving behind a significant number of the nation’s highest-carbon regions,” says the aforementioned MIT study, published earlier this month in the Proceedings of the National Academy of Sciences (PNAS), a peer-reviewed journal of the National Academy of Sciences (NAS).
The study found that there are a large number of countries whose economies are heavily dependent on fossil fuels but that are currently ineligible for support from the Inflation Reduction Act. “It’s important for policymakers to understand these employment impacts across the economy. Our goal in providing this data is to help policymakers incorporate these considerations into future policies, such as the Inflation Reduction Act,” lead author Kaylin Graham was recently quoted as saying by MIT News.
Moreover, the rapid growth of clean energy jobs has created a huge skills gap. It won’t be as simple as taking all those unemployed fossil fuel workers and putting them in all those new green energy jobs. “Besides construction, wind and solar farms typically require a small number of workers to operate, and the new clean energy jobs may not necessarily offer comparable wages or match the skills of the laid-off workers,” the New York Times reported last year.
There are simply more clean energy jobs than there are skilled workers to fill them. There is currently such a high demand for renewable energy workers that the labor shortage threatens to derail the United States’ planned construction of renewable energy generation and manufacturing capacity. Clearly, more support is needed from both sides of the energy industry, for both renewable energy workers and fossil fuel workers, to facilitate a smooth and just transition.
Pylyp is an experienced private banker and asset manager.