by Devashree Saha – May 19, 2020, WRI Print
Long before the coronavirus (COVID-19) hit and oil prices collapsed, the U.S. fossil fuel industry and its workers were vulnerable. Threats included increasing cost-competitiveness of renewable energy compared to fossil fuels, investor concerns about financial risks and stranded assets, and a changing policy landscape (at state and local levels at least) seeking to meet decarbonization goals.
The U.S. coal industry in particular entered 2020 as a shadow of what it used to be, with employment its lowest in decades and companies struggling to avoid bankruptcy. The industry has been driven to the brink in the last decade by record low gas prices and steady addition of wind and solar.
Now, with the economy spiraling into recession and millions of people getting laid off, accelerating the transition to a low-carbon, resilient economy while ensuring the transition is fair for fossil fuel workers is more urgent than ever.
The coronavirus outbreak has dampened oil demand as cars, trucks, trains and airplanes sit idle. Despite a recent OPEC agreement to cut production, oil prices have crashed to levels where U.S. shale oil companies cannot make profit and are laying off thousands of workers. Last month U.S. oil prices went into negative territory for the first time. More oil and gas jobs are likely to be lost if prices stay this low for a prolonged period. Similarly, declining electricity demand is further weakening U.S. coal demand, leading Moody’s to forecast significant closures and bankruptcies within the coal industry.
In response to COVID-19, the fossil fuel industry is seeking financial relief as well as deregulation of climate and energy policy. The coal industry, for instance, is requesting relief from taxes that support abandoned mine cleanup and workers suffering from black lung disease. While the fossil fuel industry was left out of the $2.2 trillion phase three stimulus bill, the industry will likely continue making these requests in the next phase of stimulus plans. The Trump administration is mulling a bail out of the oil industry to help it survive a historic drop in prices.
In forthcoming stimulus packages, it would be a mistake to spend federal dollars on fossil fuel assets. This would lock in inefficient and polluting infrastructure for decades and slow down the low-carbon transition at great expense to the planet’s health, its people and the economy. Furthermore, analysts argue that COVID-19 highlights pre-existing malaise in the fossil fuel industry and that the disease’s economic impacts are only going to bring forward peak demand for first coal, and then oil and gas.
This doesn’t mean that all coal mines, oil and gas wells, and fossil-fueled power plants are closing tomorrow. But it creates space for policymakers to start crafting strategies to diversify fossil fuel-based economies and retrain workers for different industries and occupations.
As federal lawmakers race to prepare economic rescue plans, both low-carbon investments and a fair transition for the nation’s fossil fuel workers should be central components. Investment in low-carbon infrastructure and industries can create jobs and boost economic activity at a time when the U.S. economy needs it the most. For instance, every $1 million in spending creates approximately eight full-time-equivalent jobs in energy efficiency and renewables, nearly three times the number of jobs created in fossil fuels.
And strong policies to protect fossil fuel workers and their communities will ensure their livelihoods as we gradually phase out fossil fuel use. Absent such policies, workers are likely to face job losses and falling incomes, while communities will face declining state and local budgets to provide essential services. This will only increase political resistance to the low-carbon transition.
A Fair Transition Framework to Guide U.S. Economic Recovery
Support for fossil fuel workers and communities should cover income, training and relocation for workers facing job loss, as well as transition programs to help diversify economic activity in communities currently reliant on fossil fuels. In developing and implementing these programs, four points should guide federal policymakers to improve justice and equity outcomes.
Renewable energy is creating work, but policymakers need to address job quality, training and location. Photo by Stephen Yang/The Solutions Project.
1. Consider the “megatrends” of automation and digitization.
Automation and digitization are fundamentally reshaping the nature of work and the job market. Increasingly these trends intersect with the low-carbon transition and amplify the disruption in carbon-intensive industries.
The mining industry, for example, has been moving towards automation for many years and this has been one of the factors causing job loss in U.S. coal mining. At just over 50,000 workers, U.S. coal mining hit a new low in 2019 and is expected to contract further this year. Automation has impacted the oil and gas industry too, with technology taking the place of labor in drilling operations and rig management and monitoring.
The low-carbon sector is not going to be immune from the impacts of automation either. Automation and digital technologies are affecting sectors such as transport, buildings and industry, which are major end-users of energy, in ways that reduce energy consumption, increase efficiency, and contribute substantially to climate and environmental protection. These trends can lead to lower labor intensity across the energy system, raising questions about workers and communities dependent on those jobs.
The economic downturn caused by the coronavirus could accelerate automation as employers look to maintain their bottom lines. One study found that 88% of easily automated jobs lost in the United States since the 1980s disappeared within a year of a recession.
Policymakers should take these “megatrends” into account when planning a fair transition and provide adequate safety nets and training opportunities to help workers left behind. One option put forward would require companies receiving public subsidies from state or local governments to conduct technology impact assessments estimating the number of jobs automation might eliminate, the type and number of jobs it would create, and informing a plan to retrain impacted workers. This can help address some of automation’s adverse impact on workers, while preserving automation’s benefits in terms of increasing productivity and cost savings.
2. Plan proactively and include all carbon-intensive industries.
So far, the fair transition conversation has focused on the coal industry, with good reason. An abundance of cheap shale gas and the ascendance of renewables has led to widespread job cuts in the U.S. coal industry. However, what is happening in coal may be a harbinger for other carbon-intensive industries as the low-carbon transition and other global trends pick up.
For instance, the shift to electric vehicles, which require fewer parts and workers to build, is expected to disrupt the auto industry. Already, the abrupt decline in oil demand as COVID-19 forces people to stay home is pushing small oil and gas producers out of business.
Proactive transition planning for industries like oil and gas will provide time for workers to build skills needed to transfer to other industries. Companies, either on their own or as a requirement by the government in exchange for receiving public subsidies, can also shore up pensions and remediation funds while they remain profitable, and policymakers would have time to find ways to pay for transition costs (for instance, by converting fossil fuel subsidies to fair transition funds).
In the near-term, using stimulus money to hire laid off fossil workers to clean up abandoned oil and gas wells and coal ash ponds would be one way to provide local jobs for workers while also addressing a growing environmental problem.
The city of Chicago is also a potential model. In addition to committing to 100% clean energy — similar to a number of other countries, states and cities around the world, including Canada and Colorado — Chicago is developing a fair transition plan identifying strategies, milestones and a timeline for an equitable low-carbon transition. Among other things, Chicago intends to leverage its significant procurement power to invest in companies that hire and retain displaced fossil fuel workers and traditionally marginalized workers to manufacture clean energy infrastructure at a prevailing wage with comprehensive benefits.
Cleaning up abandoned fossil fuel infrastructure could provide local jobs for displaced workers. Steve Hillebrand/US Fish and Wildlife Service.
3. Ditch the assumption that all fossil fuel workers can find clean energy jobs.
News articles touting how clean energy jobs are surpassing fossil fuel jobs can create the illusion that the low-carbon sector will employ most displaced fossil fuel workers. Clean energy jobs are indeed creating significant economic opportunities. Still, policymakers need to account for differences in skills, geography and even timing when thinking about replacement jobs for displaced fossil fuel workers.
Losses in coal mining jobs are concentrated in West Virginia, Kentucky, Wyoming and Montana. Solar and wind jobs, on the other hand, are concentrated in California, Texas, Florida, Colorado and New York, which collectively account for 45% of the national total.
The wages and quality of low-carbon job opportunities will also be important to transitioning workers. As of now, union representation for fossil fuel workers is higher than for renewable energy workers. This is perhaps not surprising given that the fossil fuel industry has been around a lot longer. In moving to non-unionized workplaces, fossil fuel workers could face lower-paid jobs with fewer benefits or guarantees of working conditions.
Job quality is especially important in today’s political climate, when millions of job losses pressure policymakers to direct stimulus money toward shovel-ready projects that can create immediate jobs.
COVID-19 has highlighted the pitfalls of low-wage jobs that provide no benefits. Policymakers should pass an economic stimulus package that not only delivers a cleaner, more resilient U.S. economy but also provides secure, quality jobs — with living wages, benefits and opportunities for training and advancement.
4. Take bottom-up approaches to investing in communities.
There is no universal blueprint for a fair transition, and what works in one community may not work in another. Given the scope of the challenge, governments at all levels need to engage, but their roles may vary.
The federal government should partner with state and local policymakers to identify locally appropriate priorities for fossil fuel workers and support regionally-led actions. Federal funds and grants should be flexible enough that states and localities can allocate the resources according to their local challenges and needs. The federal government should also incentivize bottom-up solutions driven by partnerships between state and local governments, unions, businesses, and colleges and universities. This will help align education and workforce training with regional and local economic development and with local businesses’ specific needs.
The resulting diverse range of transition programs can further enable communities to share and learn from experiences of both successful transitions and failed experiments to restructuring regional economies.
The existing federal Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) grants give Congressional funding to communities losing coal mining jobs, especially in Appalachia. Projects identified under local and regional economic development plans and collaboratively produced by diverse groups of stakeholders receive priority funding. Congress could consider expanding the POWER initiative beyond the coal industry to other energy industries and regions perceived to be in decline, and adjust the level of funding to match the scale of the challenge.
Any transition is challenging, creating winners and losers. However, a well-managed transition, which includes early planning, broad stakeholder involvement, financial commitment and political will, can mitigate many of the challenges. More importantly, a fair transition for fossil fuel workers can create a more inclusive economy while putting the United States on a path to decarbonization.TAGS: coronavirus, economy, energy, fossil fuels, low carbon, renewable energy, united states, us policy
1. Renewables replace fossil fuel energy on the grid.
In the U.S. and in virtually every region, when electricity supplied by wind or solar energy is available, it displaces energy produced by natural gas or coal-fired generators. The type of energy displaced by renewables depends on the hour of the day and the mix of generation on the grid at that time. Countless studies have found that because output from wind and solar replaces fossil generation, renewables also reduce CO2 emissions. For example, an NREL study found that generating 35% of electricity using wind and solar in the western U.S. would reduce CO2 emissions by 25-45%.
Solar and wind farms have dominated new power plant builds in the U.S. in recent years, while fossil fuel plants—particularly coal-fired plants—continue to be retired at record pace. In 2019, wind (9.1GW) and solar (5.3GW) represented 62% of all new generating capacity, compared to 8.3GW of natural gas, while 14GW of coal-fired capacity was retired. The U.S. Energy Information Administration (EIA) has also projected that most new electric generation added in the U.S. in 2020 could come from wind and solar, with new natural gas plants projected to represent less than a quarter of new generating capacity. Certainly, some of these installations may be delayed by the COVID-19 pandemic. While natural gas builds exceeded those of renewables in 2018, reversing the earlier trend of renewables leading, there were 12.9GW of coal-fired capacity and 4.6GW of gas-fired capacity retired in that same year, according to EIA.
Source data: EIA, Tables 4.2.A and 4.2.B, Existing Net Summer Capacity by Energy Source and Producer Type (https://www.eia.gov/electricity/annual/html/epa_04_02_a.html, https://www.eia.gov/electricity/annual/html/epa_04_02_b.html)
2. Clean energy has created millions of jobs – and can create more.
At the start of 2020, the clean energy sector employed about 3.4 million workers in the U.S., with much of the workforce concentrated in the energy efficiency industry. In 2019, clean energy jobs outnumbered jobs in the fossil fuel sector 3 to 1; across 42 states and the District of Columbia, the clean energy workforce was larger than that of the fossil fuel industry. The quality of these jobs is also important. According to research by the Brookings Institute, clean energy workers earn higher and more equitable wages when compared to workers nationally, with mean hourly wages exceeding the national average by 8 to 19%.
Clean energy jobs are only expected to continue growing — notwithstanding the hit to the sector as a result of COVID-19. Through 2028, the U.S. Bureau of Labor Statistics forecasts that the two fastest-growing jobs in the United States will be solar installers (projected to grow by 105%) and wind technicians (projected to grow by 96%). Under the International Renewable Energy Agency’s “Transforming Energy Scenario,” the number of renewable energy jobs worldwide could more than triple, reaching 42 million jobs by 2050, while energy-efficiency jobs would grow six-fold, employing over 21 million more people. By contrast, the fossil fuel industry is expected to lose over 6 million jobs over the same time period, even without the impact of the virus.
3. Wind and solar plants can be built with minimal environmental impacts, and often with co-benefits.
All power plants, including renewables, result in some environmental impacts during siting, development and operation. Over the past two decades, siting practices for U.S. wind projects have become more sophisticated and effective at minimizing impacts. As a result, wind projects have fewer impacts than other types of projects, falling near the bottom on lists of developments that can have negative effects on the environment and wildlife, according to the U.S. Department of Energy. What’s more, these projects often provide co-benefits. Wind farms sited in rural areas benefit farmers and ranchers by providing annual revenues from $4,000 and $8,000 per turbine, while allowing landowners to continue to use the sites for agriculture or grazing. Additionally, wind farm owners pay county property taxes that support schools, recreation centers and other county activities.
Solar siting practices require environmental investigations to identify and minimize negative impacts. Plans can be developed that provide additional benefits such as protecting wildlife, improving soil health and water retention, nurturing native vegetation, or incorporating pollinator-friendly plants. Additional benefits can include lease income to farmers and county or city tax revenues. Payments to landowners vary widely across the U.S. and can range from $300-1,000 per acre.
And operating these plants, of course, requires no fuel-delivery infrastructure like gas pipelines, propane trucks, coal barges and railroads, all of which produce their own negative environmental impacts.
4. Solar and wind now provide the cheapest power for 67% of the world.
The costs associated with solar and wind have fallen dramatically in recent years. According to BNEF, the cost of energy globally for onshore wind and utility-scale solar is now $44 and $50/MWh (on a levelized basis), compared to $100 and $300/MWh only a decade ago. In the U.S., the levelized cost of energy (LCOE) associated with onshore wind ($24-46/MWh) and utility-scale solar ($31-111/MWh) is now less than that of almost all gas-fired power production. Battery storage, which is crucial to address the variability of wind and solar power, has seen the swiftest global price drop among all technologies, from nearly $600/MWh in 2015 to about $150/MWh in the first half of 2020.
This precipitous drop in the cost of utility-scale solar and onshore wind has made them the cheapest sources of power in two-thirds of the world. Today, solar projects in Chile, the Middle East and China, or wind projects in Brazil, the U.S. and India, are approaching figures lower than $30/MWh, lower than the costs of building and producing power from plants that use coal or even the cheapest gas. By 2030, upcoming innovations are likely to reduce costs even further.
5. Although wind and solar cannot produce energy every hour of the day, the energy they generate can be managed on the grid.
Wind farms produce electricity when it’s windy and solar farms produce power when there’s sun, leading to variability in the supply of energy. However, this can be — and is being — managed by utilities and grid operators through operational practices, forecasting, responsive loads and infrastructure such as storage and transmission. Electricity grids are designed to address variability in customers’ electricity demand, maintain continuous balance between generation and demand and maintain reserves for any type of outage on the system (e.g., power plant failure), so they are already designed to manage variability. However, grids need to be modified to be more flexible over time, to integrate larger amounts of wind and solar and address the additional variability that comes with heavier reliance on renewables. Increased investments in storage and transmission, as well as market reforms, can help.
Around the world, grid operators are managing larger amounts of wind and solar every year. In 2018, operators in California, the Southwest, and Texas used wind and solar for nearly 20% or more of their energy on an annual average basis, and in excess of 50-60% on an hourly basis. In Europe, several countries have managed even higher hourly penetrations of wind and solar, including Denmark (139%), Germany (89%) and Ireland (88%).
6. Battery storage is economically viable to address the variability of wind and solar and can help reduce emissions.
While most energy storage currently comes from pumped hydro storage facilities, the use of battery energy storage is growing rapidly, because of its increasingly cost competitiveness. Lithium-ion energy storage systems have seen dramatic price declines — as much as 85% between 2010 and 2018. Batteries are efficient carriers of energy, with round-trip efficiencies of 85-90%. If they are charged by renewable energy sources, they have no added GHG emissions.
Batteries can provide a variety of services to the grid, including smoothing the variability of wind and solar. Storage can provide the necessary back-up or standby power that the film implies must come from standby gas or coal-fired generators. Using batteries to replace fossil fuel backup will mean higher levels of wind and solar on the grid, less need for gas and coal and fewer emissions.
Batteries with four-hour discharges can’t solve all power-system requirements, of course. More work is needed — and is underway — on long-duration storage options as part of the suite of tools needed for a reliable, affordable, low-carbon power system.
7. Wind and solar projects can operate for decades and can be developed more rapidly than other generation sources.
All power plants and their components have a “useful life” before they need replacement or repair. The useful lifespan of renewable facilities can exceed two decades. Wind turbines, for example, are estimated to last for about 20 years, and photovoltaic systems often remain operational from 25 to 40 years. In some instances, as large wind turbines become more efficient and economic, equipment turnover has been accelerated. In these cases, smaller turbines have been replaced earlier than they might otherwise have been by larger, more efficient turbines, to substantially increase electricity production at existing sites.
Furthermore, renewable energy facilities can typically be deployed more rapidly than fossil fuel plants. While solar and onshore wind farms normally take less than two years to build, gas-fired power plants usually take as many as four years to become operational, and can also require construction of gas pipeline infrastructure.
8. Renewables generate more energy than is used in their production, and produce fewer emissions than other power sources over their lifetime.
While all sources of electricity result in some GHG emissions over their lifetime, renewable energy sources have substantially fewer emissions than fossil fuel-fired power plants. One study estimates that renewable energy sources typically emit about 50g or less of CO2 emissions per kWh over their lifetime, compared to about 1000 g CO2/kWh for coal and 475 g CO2/kWh for natural gas. Most of the lifecycle emissions from fossil generators occur from fuel combustion, but also come from raw materials extraction, construction, fuel processing, plant operation and decommissioning of facilities.
While the manufacture of solar panels requires substantial amounts of energy, studies have found that they offset the energy consumed in production within about two years of operation, depending on the module type. Both crystalline silicon and thin-film solar panels contain toxic materials such as lead, silver and cadmium; therefore, efforts need to be accelerated to address proper disposal practices and module recycling, such as is done in Europe and by First Solar in the U.S., to appropriately capture and reuse these materials.
9. Electric vehicles reduce emissions substantially.
Electrification of passenger vehicles has quickened in recent years, with more than 1 million electric vehicles (EVs) now operating in the United States. Several studies suggest that number could grow to 20 million EVs by 2030, with over 4 million EVs in California alone.
EVs offer substantial emissions benefits — and associated health benefits — because they are two to three times more efficient than conventional internal combustion vehicles and have no tailpipe emissions. However, they do release GHG emissions during the fuel production, vehicle manufacturing and vehicle use stage. Studies find that approximately 50% of all EV battery lifecycle emissions come from the electricity used in the battery manufacturing and assembly facilities. Further, an EV’s net carbon footprint depends on the electricity used to charge it.
Across the country, many cities and corporations are converting their vehicle fleets to EVs and have made commitments to use 100% renewable electricity to meet the electricity demand. But, as we point out in a recent WRI report, new solutions are still needed to enable customers to charge their EVs with renewables more easily. Potential reductions in an EV’s overall lifecycle emissions could also be achieved by manufacturing EV batteries in facilities powered by renewable energy.
10. Private sector investment in clean energy is critical to lowering GHG emissions.
Aligning financial risk and reward with low-carbon energy investments is critical for shifting the economy in the direction of lower GHG emissions. Without substantial private sector investment in clean energy, it will be more difficult, more costly and more time-consuming to address climate change. Unlike in many other countries where energy providers, including in the electric sector, are publicly owned enterprises, most ownership and investment of electric infrastructure in the United States comes from the private sector. Shifting private investment toward renewables and other zero-carbon energy resources makes good sense and can be a safer investment.
Renewable energy is not perfect. No form of energy is. But people the world over need electricity, and pursuing clean energy sources is far better than continuing down the path of polluting fossil fuels. Renewable energy is an essential, although not exclusive, part of what is needed to address the urgent and important global challenge of climate change.TAGS: energy, renewable energy
The Next Frontier of Carbon Accounting
A Unified Approach for Unlocking Systemic Change
2020 | By
Pressure is building on companies to disclose the greenhouse gas (GHG) emissions that form both the direct and indirect carbon footprint of their operations. In aggregate, industrial supply chains are responsible for over 40 percent of all GHG emissions.
This pressure for more accuracy and transparency comes from investors, policymakers, and consumers. Increasingly, each of these players demand that industrial companies prove better alignment with carbon reduction trajectories commensurate with the goals set out in the Paris Agreement.
There is no pathway to keep global warming to less than 1.5°C without abating emissions in industrial supply chains. This will require adequate data, and the best way to provide this is to standardize carbon accounting across the variety of protocols, platforms, and standards that exist today. This will be a cross-sector effort based on leveraging existing efforts, meeting the needs of critical use cases, aligning GHG and financial accounting, and providing supply-chain-specific guidance.
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