Op-Ed: Who should pay the price of clean energy?
It’s an environmental truism — the coal industry must be shut down to save the planet. But shuttering mines and coal-fired power plants carries with it a heavy human toll: It will crush the livelihoods of hundreds of thousands of people and impoverish scores of communities. Those working for coal’s demise envision a “just transition” from carbon to clean energy that would include an economic safety net for affected workers and communities. After all, a livable, physical environment is not much good if you can’t pay the bills.
So far, however, the just-transition plans in the United States — mostly produced by well-paid academics and environmental groups like the Sierra Club — propose a bare-bones net too many people would fall through. In hazy terms, they mention retraining and job placement programs, or tout redevelopment schemes and unproven estimates of the number of high-paying jobs clean energy itself will generate. That’s not good enough.
The problems start with the emphasis on retraining, which has at best a mediocre track record when it comes to preserving middle-class incomes and lives. In a 2005 report, Laura Powers and Ann Markusen of the Economic Policy Institute analyzed the effectiveness of retraining and job placement efforts for defense industry workers as the Cold War faded. “We estimate,” they wrote, “that a majority of the workers displaced ... between 1987 and 1997 now work at jobs that pay them less than their former wages and that fail to take advantage of their defense-bred skills, and a sizable minority has experienced a drop in earnings of 50% or more.”
Economic redevelopment also may represent more a mirage than a solution for displaced workers. At the coal-fired Huntley Generating Station near Buffalo, N.Y., workers know that their union jobs are at risk as energy companies are forced to turn to cleaner alternatives. SolarCity, Elon Musk’s company, is taking over a nearby steel mill and claims it will bring 3,000 permanent jobs to the region. But no one yet knows how many — if any — of those jobs will come close to the middle-class wages and benefits at Huntley. And though SolarCity may provide jobs in upstate New York, what about coal communities elsewhere?
What would a truly just transition look like?
As a baseline, coal workers (and ultimately workers in other phased-out carbon industries) must be guaranteed similar-paid replacement jobs, or failing that, income and pension payments to match what will be lost over their lifetimes.
Although we can debate the figures, a just transition will cost much more than the amounts being talked about now. The Center for American Progress recommends spending an insufficient $500 million a year just to retrain all workers in fossil fuel industries (it doesn’t specify a time frame). President Obama’s 2016 budget sprinkles a piddling $55 million on easing the transition to cleaner energy spread out among job creation investments, economic development in hard-hit communities and job training.
To understand the true magnitude of the costs, for the sake of argument let’s assume we set aside enough money over 20 years to guarantee 700,000 workers the standard middle-class salary a mine worker earns today: $80,000 a year . (The number of workers — in mining, coal transportation and power generation — is based on American Coal Council estimates; many will need support for the rest of their lives.) It works out to $56 billion a year, or $1.1 trillion over 20 years, and it would be significantly more if union-contract wage increases (2% a year) and pension payments are taken into account (the United Mine Workers paid out $1.1 billion to 120,000 retirees in 2013).
It’s a lot of money, and it’s only a beginning, because an adequate program would also have to include substantial community investments to mitigate the ripple effect on taxes and other businesses when a whole industry disappears. There are hundreds of U.S. communities whose economies depend on coal, and even if the displaced workers were guaranteed replacement jobs or incomes, those communities’ economic losses would be serious and long term. When you take into account how much is usually spent for redevelopment in similar situations and multiply it by the number of communities and 20 years, again we’re talking about trillions of dollars.
And yet, such sums aren’t unreasonable. In 2014 alone, the U.S. economy was worth $17.7 trillion. With just minimal growth, that figure will be far larger over the coming decades, and a just-transition cost of perhaps $4 trillion to $7 trillion over two decades is entirely doable. Most of these dollars would end up being spent, which would generate economic activity. And there would be relatively painless ways to pay at least part of the tab: A small charge added to the 145 million electric bills sent out in the U.S. each month, for example.
Finally, such an expenditure wouldn’t be unique. The debt-financed Iraq and Afghanistan wars, based on recent estimates, will have a price tag of $4 trillion to $6 trillion. To stave off the collapse of the world financial system during the Great Recession, more than $10 trillion was allocated by the government and more than $2 trillion was spent (as of a New York Times reckoning in April 2011).
For generations, we have assumed that workers and their communities are simply out of luck when corporate and national policy decisions torpedo the economy that supports them. The just-transition movement presents us with an opportunity to upend that assumption. Preserving the planet must be inextricably linked with a commitment to economic prosperity for all.
Jonathan Tasini, an economics and labor strategist, is working on a book on just transition. @jonathantasini
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