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What the clean energy boom means for fossil fuel communities

'Uncertain Futures' reveals what makes policies and promises attractive to those upturned by a greener economy.

The COP28 climate meeting this year will be in Dubai, a controversial location as its wealth largely comes from fossil fuels. But thinking deeply about how those fossil fuel communities can transition into a future powered by clean energy is a critical task. I was very happy to interview the authors of a new book that does exactly this, focusing on parts of the United States with ties to carbon-intensive industries but also areas that stand to benefit from the green transition. Alex Gazmararian is a PhD candidate at the Princeton Department of Politics. Dustin Tingley is professor of government at Harvard. 

Jeremy Wallace: Your book, Uncertain Futures: How to Unlock the Climate Impasse, is chock-full of fascinating data and analysis about the deep politics of an energy transition away from fossil fuels. Congrats!
It argues that reducing opposition and creating allies are key pieces in this unlocking. But you’re not focused on potential supporters right at the margin of pro-climate action – suburban parents, perhaps, who care about climate change but are wary of increased gas taxes. Instead, the book argues we need to take a deeper look at fossil fuel communities, and the political, economic, and social pressures that shape them. Why focus there?

Dustin Tingley: That’s a great question, Jeremy, and thanks so much for having us today.

You know, I think part of the turn to focus on those communities is that they tend to not be focused on. And I think that’s a shame – people in these communities have powered this country for well over a century. These are communities that have been marginalized in lots of other ways. They’ve been on the front lines of environmental contamination, for instance.

And I think they’re also going to be a big part of playing a crucial role in the energy transition, given the sets of skills and the opportunities that people in these communities could help unlock. I don’t think we want to say that we don’t need to focus on those other communities. It’s just that this is a really important piece of our country, and it’s an important piece of many countries as well. And so I think it was good to really spend some time talking and learning from them.

Alexander Gazmararian: Yep, and thank you again for having us, Jeremy. There’s one thing I might also add: It’s smart politics to focus on these areas. Look at how the U.S. electoral college concentrates power on states like Pennsylvania, which is a place with lots of coal mining and natural gas extraction. And if you look at the recent Inflation Reduction Act (IRA), who was the pivotal vote? Sen. Joe Manchin from West Virginia. So what happens to these states matters for the types of policy outcomes and coalitions that you can form – and the durability of these coalitions. Of course, for ethical and moral reasons, people shouldn’t be left behind in the energy transition. But understanding the challenges in these communities also matters for putting that coalition together in the first place.

The book makes a strong case along these lines. From that big question of “how do we unlock the climate impasse” the book investigates three empirical questions: Why do fossil fuel communities resist compensation? Why do reformers struggle to find allies? And why do green workforce shortages persist? On the first question, it seems like the easiest thing in the world is to give people money. But compensation just doesn’t always work as well as one might imagine. What do you find about that puzzling reality?

Tingley: I think the thing that we really have to accept and understand is that this is going to be a long transition. Right? Anyone that’s saying that this is gonna be quick … while I appreciate their enthusiasm, they need to sort of recheck what the numbers actually are about, how difficult and long this process will be. When you’re in that setting of being in this for the long haul, a one-off payment is not compelling. “Here’s some compensation, now go figure out the rest of your life” doesn’t work. 

This approach doesn’t work for a couple of reasons. One is that it doesn’t really set you up for a transition. Right? Some people have called this a “suitcase solution,” like, here’s a suitcase and a $20 bill. And now move somewhere else and figure out the rest of your life. Okay, so that doesn’t set you up for a transition to other work. 

The second challenge is making promises about long-term compensation. Here the energy transition fundamentally faces what we in political science and economics call a credibility problem. The government can promise to compensate affected communities, and it might pay out. But administrations and budget priorities could change, and it is really hard for politicians to tie their own hands. Politicians and governments in general have a hard time committing to future policies because things change – and that creates a real credibility problem.

The thinking here, I should say, came out clearly in the interviews Alex and I were doing in some of these communities. People would tell stories like that. They wouldn’t use the same terminology. They wouldn’t say a time inconsistency problem, but they’d sure tell you a story that was very similar to that. And so this resistance to policies that suggest you can just compensate your way out of this problem is a very rational concern, in our view.

Gazmararian: The history of compensation doesn’t have a great track record. We talk about the case of timber in the Pacific Northwest. Industry and environmental regulations were put in place. There was promised compensation, but it was insufficient, resulting in rural economic decline that persists to this day. There are similar stories with trade adjustment assistance responding to globalization. These types of time inconsistency problems rear their head again and again. Ronald Reagan comes into office and cuts trade adjustment assistance that workers had counted on. And even in the context of coal, there’s big debate over the Byrd Amendment to the 1990 Clean Air Act Amendments, which would have provided compensation funds to these impacted communities, but it gets largely cut out of the final agreement. These communities, when they’re being given promises of compensation, have every reason to be skeptical.

One of the ways the book focuses on these communities is that the credibility problem is not just at the individual level – why I may not trust that I’m going to get compensation – but that there is a community-level aspect to it as well. The need for compensation is not just about my family, because we need money because I lost my job, but there’s a community-level impact as well. Was that something that you expected? Is this something that you think that we can get our heads around in terms of coming up with solutions that would help?

Tingley: There was some prior work that presented those types of results. I had done some earlier work with Nikhar Gaikwad and Federica Genovese that was published in the American Political Science Review. One of the interesting results was when we asked people in fossil fuel community samples: If compensation were to come in, do you think it should go directly to individual workers? Or should it be spread out more broadly to communities? And what was interesting is that these communities were more likely to select spreading it out to the broader community than was the general public.

It might seem a little bit alien to the cosmopolitan environments that some of us find ourselves in, but these are areas with dense social networks and real strong senses of community. It points to one of the failings of earlier sorts of transitional assistance programs that really just focus on individuals rather than the broader social and economic context of communities. 

Take trade adjustment assistance. The ineffectiveness of those programs points out that we weren’t investing in schools. We weren’t investing in the next generation and the sort of knock-on effects that that has on communities. So, it doesn’t really matter if I’ve given you some money. I’ve helped you transition, but all of the talented workforce has left, and there’s a massive drug opioid problem, and other problems. It doesn’t matter if I’ve helped you transition into a new job in your community because the community doesn’t exist anymore. And that job doesn’t exist anymore. So this sets up a turn in interest to more place-based development policies, which we are starting to see a number of folks take a look at again after many years of economists often dismissing that style of program. And we’re glad our book was very early on in that wave.

Gazmararian: The energy transition has community-wide effects, as Dustin said. A particular one to emphasize is the loss of tax revenue that comes from mining coal and extracting oil and gas. These tax revenues fund local public goods. When an industry goes away, it affects people throughout the community beyond just the share who were directly employed in it, and this matters for politics.

There’s also a large sociological literature that we draw on that talks about the cultural importance of these industries. Coal mining and even the auto industry, for example, are really important for communities in Michigan and the Midwest. Not just through its economic impact, but the organizations that the industry sponsors, like the local football team. When an industry goes away – due to the electric vehicle (EV) transition or a coal mine shutting down – it matters for the community. 

The Eagle Butte coal mine in Gillette, Wyoming. Gates Frontiers Fund Wyoming Collection, Carol M. Highsmith Archive at the Library of Congress.

Some polling work that I’ve done asked people: Of the 10 people in your family and friends that you know best, who works in the coal industry? The modal answer people give is 9 or 10, which is somewhat of an exaggeration, but it reflects the perceived social importance of this industry for you and the people around you. People are not just acting in this purely self-interested way; they’re also considering how these types of policies affect people that they know and care about around them.

The reason for the town is the coal mine. So even if you actually run a restaurant, you’re feeding coal miners and their families and generations of them. And so there’s probably a lot of kind of identification with that industry, right? The census data may categorize only 25% of the population in a particular rural county as directly employed in these sectors. But identities of people might be more tied up with these industries than those data suggest.

Tingley: Yeah, that’s very much the case.

To go back to the 1990 Clean Air Act Amendments example, the book presents something of a revisionist story. Those amendments are seen, usually, as a success story, focusing on the reduction of acid rain and the efficacy of a cap-and-trade system. Yet your research suggests a different narrative. The communities you studied didn’t see this as a dramatic success in reducing acid rain but rather as failed compensation and subsequent problems for local communities.

Tingley: It’s important to say that the Clean Air Act Amendments of 1990 were a tremendous success at a first-order level. In recent debates on whether carbon taxes will work, the contentious nature of passing these amendments often gets overlooked. It was a significant challenge, especially concerning the fate of communities reliant on high-sulfur coal production, like those in Appalachia and the Midwest.

Analyzing the Congressional Record, speaker memoirs, and the United Mine Worker Journal from that era, we found a heated debate over whether the government should compensate people displaced due to federal policies. This issue wasn’t new; it had previously arisen in the Pacific Northwest with logging and in public health discussions about pricing tobacco.

The resistance to compensation was rooted in concerns about the precedent it would set for future government policies. People worried about the next thing they might have to compensate for. This ties into a broader credibility concern – if the prospect of future tax burdens is salient, it becomes challenging to pass such legislation. Despite Sen. Robert Byrd’s strong push, the vote to include compensation in the bill failed by one vote. I won’t reveal the deciding vote here; you’ll have to read the book for that surprise. Some compensation made it into the final bill but was later chiseled away, and the provision wasn’t reauthorized a few years later.

Pres. George H.W. Bush signs the Clean Air Act Amendments, Nov. 15, 1990. George Bush Presidential Library and Museum

Gazmararian: Another crucial aspect of the 1990 Clean Air Act Amendment is its bipartisan nature. Unlike the recent Inflation Reduction Act, which passed along party lines, the George H.W. Bush administration collaborated with Democrats in the House and Senate to successfully pass the law. This bipartisan approach, in some respects, contributed to the durability of the legislation. In contrast, the current legislative landscape – where we see concerted efforts by Republican lawmakers opposing specific provisions and attempting to chip away at them – it raises questions about how people perceive investments in their communities.

The credibility issue is a significant factor, as you both point out. Looking forward, there’s a concern about the credibility of future compensation efforts and the potential inclusion of new populations. This raises questions about the sustainability of such policies. Dustin emphasized the idea of policies that protect populations broadly, rather than addressing specific populations or issues one by one.
While the focus of the book is on targeted policies for specific communities, I wonder about universalistic policies as potentially also having credibility given their more inclusive nature. Of course, that might feel like an impossible vision that I’m dreaming up in Ithaca. 

Gazmararian: We’ve been exploring how the theories discussed in the book can be applied to understand climate politics on a global scale. One notable institutional feature is the strength of the welfare state and the availability of active labor market policies, which vary across countries and can help explain the observed variations.

However, given the geographically concentrated effects of the energy transition, there’s a recognition that some form of regional, place-based policy, in addition to universal programs, will likely be necessary. This is especially relevant when considering the distinct consequences of a coal mine shutting down compared to someone getting laid off from a job with more transferable skills.

Tingley: Absolutely. I believe part of the reason we didn’t delve into that direction extensively is a recognition of the American political context. It might be a tough sell, but who knows? Perhaps there will be an enterprising future Republican senator or even a presidential candidate who recognizes that many of their constituencies are affected by these challenges since, despite political affiliations, the urgency to make progress due to the climate crisis impact on farmers and various communities is evident.

We do point out where other countries, like Germany, have incorporated elements of this approach. Although even there, it’s a mixed success story, with western Germany seeing more success than eastern Germany.

Additionally, there’s an underlying hope for innovation and entrepreneurship. In teaching a course at Harvard Business School called Energy, there’s considerable interest in exploring business models that can repurpose old mines: for instance, using mine shafts to store energy by creative means like lifting weights high in the air and utilizing gravity. This perspective emphasizes maintaining an entrepreneurial spirit and a somewhat free-market vision in the U.S. context. This approach allows communities to plug into opportunities for economic vibrancy without solely relying on a widespread social welfare state. It points to significant opportunities for these communities to become vibrant economic agents of the future.

I wondered, as I was reading the book, to what extent the climate and energy transitions are simply reinforcing existing trends for these communities. The broader macroeconomic environment plays a role in shaping everything. I grew up attending elementary school in a small town in Indiana with a significant coal facility and a (now shut down) coal mine. Over the decades, the population has continued to decline, but it’s not a climate story. It’s more of a deindustrialization or economic opportunity story. Simultaneously, in large urban communities where I’ve lived, the story involves housing prices and the increasing challenge of moving from impoverished rural areas to urban ones, making it a tougher sell, literally a harder buy if you’re thinking about housing.
So I wonder if this is more of a climate story specific to certain areas or part of the general rural-urban divide in the United States or even globally. Could this just be part of an overarching housing theory of everything? The book quotes an individual around the time of the 1990 Clean Air Act Amendments debate, raising questions like, “If I had to leave, where could I get a job? Where could I get insurance?” I’ve already asked about a stronger safety net, but what about easier opportunities in places with higher-wage jobs? Does the current robust macroeconomic environment in the United States, with relatively low unemployment compared to the previous decade, play a role in making these transitions easier?

Tingley: First and foremost, we’re not against labor mobility. If someone wants to move and sees an opportunity elsewhere, by all means, go for it. However, it shouldn’t be a forced decision, and policies shouldn’t limit individuals to this option. The way I’ve thought about it is not just about finding a job in a low-unemployment environment. It’s crucial to consider where individuals fit, given their skills and where those jobs are located. 

Imagine you just got your pink slip and are told to go join this training program. You’ll train to become a wind engineer, and then, you know, you’ll graduate, and then you’re off to the races. Alright, let’s really think about this–you’re a mom or a dad. You’ve got a family to support. You are going into a new industry. You’re not necessarily sure if, on the other side of your retraining, that industry will be as vibrant as it might be right now. You’re not earning much of a wage, so you’re probably having to pick up some other job on the side. That other job is probably not paying as well. And lo and behold, our job training programs don’t really work all that well in this country, despite the efforts of many people.

On the job side, there’s also the issue of housing that Jeremy brought up. While we might have a good unemployment rate right now, it sure seems more difficult than it was to get a mortgage. These macroeconomic factors have an impact. I get really concerned with what the insurance industry is going to look like in the future. Not just home insurance but also crop insurance. The reinsurance firms – the companies that provide insurance to insurance companies – are freaking out about this. And if the reinsurance firms are freaking about this, the insurance firms are certainly freaking out about this, and they’re leaving states to sort things out with this higher risk driven by carbon. 

Gazmararian: To pick up on Jeremy’s point about economic and demographic trends in rural and urban communities, it’s essential to note that much of the coal transition we’re witnessing isn’t a direct result of climate policy but rather cheap natural gas displacing coal. These market-driven shifts have real impacts on communities. Even without climate policy, targeted transitional assistance and place-based policies would be relevant for economic development and diversification to assist areas affected by the market-driven decline of coal. 

However, I have some other work that shows people often misattribute what’s happening to them to environmental policies, which has political consequences. Because if what people think is happening to them – their coal mine shutting down is because of policies [rather than market forces] – that drives the types of candidates that they vote for, driving them to politicians who may want to obstruct the energy transition. But in the future, the energy transition is increasingly going to be ratcheted up because of these policies that we’re putting into place that are leading to the deployment of more renewables. The pressure from the energy transition is only going to intensify.

Yeah, I think that’s really well taken. One could imagine fractures in a fossil fuel coalition, pointing out that it’s the natural gas firms that actually pushed you out of your job at the coal mine or that shut down the coal plant. But I do think, Alex, you’re right in that down the line, climate policy is likely coming. And it’s hard to imagine that some green jobs promoter is going to win that political debate and split fossil fuel communities who likely perceive themselves as relatively united with similar interests.
To return to the point that Dustin was making about jobs and job quality, in some ways, the lack of labor in a green, clean-tech world is one of the reasons why people see the transition as relatively low-cost. It allows the transition to happen, it’s possible to imagine a world of abundance going forward as opposed to a world of less. But on the ground, for the people who work in those sectors, the jobs may be of lower quality. The wages might be lower, they might be temporary. 
And more than that, if the jobs are mostly in construction and your community has never done this before, it probably makes sense for the developer to bring in people that have done this before: There’s a great start to one of the book’s chapters where someone is looking at license plates and just noting that this is exactly what happens: an itinerant workforce setting up the wind farms in Iowa, Minnesota, all these different places…. It’s not the locals that are getting these jobs in the construction, but others who have done this before from other places.
One can understand how that makes sense from an economic perspective. But politically, it’s just death for those trying to push the transition forward. And so, how should we be thinking about this? Is that just the rub?

Tingley: Just to reinforce the point, literally what I’m teaching Harvard Business School students about renewables is that the challenge is basically you’ve got upfront capital expenditures, and then your running costs are low. 

In one of our interviews, we were speaking to a union in the Midwest and they were telling us about their frustrations with some of these clean energy jobs. What’s maintenance on a solar field? It’s a weed whacker and Windex, right? I mean, it’s a little more than that. But at a coal-fired power plant, you need tons of maintenance people. So I asked, “Well, why is that? Why do you need more maintenance?” And after sort of a laugh, like you silly professor, he said: “It’s precisely because it’s dirty that you need all the maintenance.” 

So I think this is something that we will struggle with. Now I do think that there are some substantial opportunities that come with having cheap, clean energy. I’m very bullish on all the manufacturing that we could unlock. And Iowa’s been doing this for years. Iowa has a ton of cheap wind energy, and it’s made it work. It already has to some extent, and could further make them a manufacturing powerhouse right. It’s centrally located with clean, cheap energy. You know you have to deal with intermittency, but we’re well along the cost curve there.

So that’s where I become a little bit more bullish. Relatedly, there’s a debate about how much labor it takes to make EVs. It’s interesting to me that both the unions and the auto industry are saying it’s going to take less labor. But recently, there was an article written by a journalist saying I looked into some numbers, and maybe I don’t think this is gonna be the case. And then all the people on the pro-green side said maybe this EV stuff is gonna be okay. And I’m like, Wait, that’s not how we operate as scientists.This is something we have to figure out. Maybe it’s going to be that we build so many EVs that it won’t really matter that you need less labor [per vehicle]. I don’t know. 

President Joe Biden tours the General Motors’ Factory ZERO Facility in Detroit, Nov. 17, 2021. White House photo/Adam Schultz

The politics are going to rub here. It’s people coming from outside of your community to do the jobs, that’s not a good look. When the wages are lower, that’s not a good look. And this is why, for example, in the IRA legislation, the impetus to include prevailing wage provisions and have union labor provisions as part of the legislation was a very smart design. The IRA legislation had that flavor of grappling with how do we create local jobs that are durable and well paying – because otherwise, who are you fooling? 

Gazmararian: Two points to make. The first is building on what Dustin said. It’s one thing to have an economic model that says, Okay, you’re gonna create this many jobs. But as political scientists, the questions we care about are: Who gets those jobs? Where are those jobs? When are they created?

They’re not always in the same place for some structural reasons. Solar energy doesn’t have the same capacity in all different places. Southwest Pennsylvania is simply not as good for solar as Arizona. Maybe we should be building some solar in Pennsylvania but not to the same extent, and perhaps some other resource might be more suitable there.

The other point is that there’s a lot of focus on clean energy jobs. But these aren’t the only types of jobs that could be created in these areas. From the perspective of trying to create good local economic opportunities for people, it could be any other industry, from my perspective, as long as it’s something that is sustainable for the planet. But it can create a pathway to provide a source of local tax revenue, a source of employment. Talking to people in these counties, they would like a company like Amazon or Google to build a data center there. So there’s lots of different types of opportunities. 

And it’s important not to focus just on clean energy jobs because that can circumscribe the type of options that people think about. There are often options that, from our surveys and interviews, are not always appealing or credible to people in these communities, whereas other industries would be more effective.

And there’s so much that we haven’t talked about. The book includes surveys of individuals, local policymakers, and even middle schoolers! There’s so much data, and there’s so much richness in the work. Are there pieces I haven’t asked about that you’d like to draw attention to without giving away too many spoilers?

Tingley: A big part of the book is about solutions. We’ve talked a lot about the problems today. Take the title – Uncertain Futures – the first part is the problem. The second part is the solution side. It’s all well and good to call out all these problems, but we then go through a host of ways to design policies to help unlock some of them. 

I’ll give away one – think about transparency. We look at a state where they enacted a policy where you had to report the percentage of local workers that were employed in, for example, a wind installation and how that can help. In developing these solutions, we draw on a very rich political economy literature where people have thought about the theoretical models. And we’re able to apply them in interesting ways in this policy domain. So you know, come for the problem, but stay for the solutions.

Gazmararian: I think what was most remarkable for me just looking across different people – at policymakers at the federal level, people at electric power companies, at oil gas majors, people in communities, people who work in this industry, children thinking about what their future careers can be – is that we found a consistent set of concerns about credibility. Not everyone uses the same language to say, “this is a credible commitment problem,” but the types of concerns that people are echoing were around this common theme. For me, that was quite powerful in motivating the set of solutions that we look at.

It really is a success, and I thank you. Both for writing it, and for sharing it with all of us. Thanks so much.

Tingley: Jeremy, thanks so much. For all that you’re doing, and the sort of group that you’re sort of working with to sort of bring these concepts to a broader set of folks. We’re really honored to be here with you today.

Gazmararian: Awesome. Thank you, Jeremy. Very excited to be on Good Authority. And this is really important work – what you’re doing is so very much appreciated.