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Beyond Fossil Fuels: Planning a Just Transition for Alaska's Economy

By John Talberth, Ph.D. and Daphne Wysham - Center for Sustainable Economy, October 2017

Of the 50 United States, Alaska best exemplifies the types of problems the rest of the country may well face in a matter of decades, if not years, if we don’t wean ourselves from fossil fuels. The U.S. is in the middle of an oil and gas production boom, one that has caused oil and gas prices to plummet, with devastating consequences for Alaska, a state that has grown dependent on revenue from the oil and gas industry for its public funds.

However, if one only looked at the prominent outlines of the boom-and-bust, oil and gas economy in Alaska, one would miss a subtler shift happening on a much smaller scale: A more sustainable, self-reliant economy is beginning to take shape in remote villages and towns throughout the state.

While this sustainable economy is beginning to take root, it needs special care. In a report, commissioned by Greenpeace USA, entitled “Beyond Fossil Fuels: Planning a Just Transition for Alaska’s Economy,” CSE’s John Talberth and Daphne Wysham write that this nascent economy in Alaska shows great promise but will require investments in the following key sectors if it is to thrive:

  • human capital—particularly in computer literacy in rural areas;
  • sustainable energy, including wind, wave, tidal and solar energy;
  • greater local self-reliance in food including produce, which currently is imported at great cost, and fisheries, which is often exported for processing, and manufacturing;
  • the clean-up of fossil fuel infrastructure, including abandoned infrastructure sites;
  • the protection of ecosystems;
  • tourism led and controlled by Alaska Native communities;
  • and sustainable fisheries.

But investment in these key building blocks is only the first step. Also needed are policy changes at the state and federal level that would remove subsidies for the fossil fuel industry, begin to internalize the price of pollution, and make federal funds available that are currently out of reach for many Alaska Natives.

Read the report (PDF).

Can Coal Make a Comeback?

By Trevor Houser, Jason Bordoff, and Peter Marsters - Columbia Center on Global Energy Policy, School of International and Public Affairs, and the Rhodium Group, April 2017

From the introduction: Six years ago, the US coal industry was thriving, with demand recovering from the Great Recession, and global coal prices at record highs along with the stock prices of US coal companies. By the end of 2015, however, the industry had collapsed, with three of the four largest US miners filing for bankruptcy along with many other smaller companies. While coal mining employment has been on the decline for decades – from a peak of more than 800,000 in the 1920s to 130,000 in 2011 – the pace of job loss over the past six years has been particularly dramatic. After campaigning on a promise to end what he called his predecessor’s “War on Coal,” President Donald Trump signed an Executive Order in March 2017 ordering agencies to review or rescind a raft of Obama-era environmental regulations, telling coal miners they would be “going back to work.”

This paper offers an empirical diagnosis of what caused the coal collapse, and then examines the prospects for a recovery of US coal production and employment by modeling the impact of President Trump’s executive order and assessing the global coal market outlook. In short, the paper finds:

  • US electricity demand contracted in the wake of the Great Recession, and has yet to recover due to energy efficiency improvements in buildings, lighting and appliances. A surge in US natural gas production due to the shale revolution has driven down prices and made coal increasingly uncompetitive in US electricity markets. Coal has also faced growing competition from renewable energy, with solar costs falling 85 percent between 2008 and 2016 and wind costs falling 36 percent.
  • Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic US coal consumption. Lower-than-expected demand is responsible for 26 percent, and the growth in renewable energy is responsible for 18 percent. Environmental regulations have played a role in the switch from coal to natural gas and renewables in US electricity supply by accelerating coal plant retirements, but were a significantly smaller factor than recent natural gas and renewable energy cost reductions.
  • Changes in the global coal market have played a far greater role in the collapse of the US coal industry than is generally understood. A slow-down in Chinese coal demand, especially for metallurgical coal, depressed coal prices around the world and reduced the market for US exports. More than half of the decline in US coal company revenue between 2011 and 2015 was due to international factors.
  • Implementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in US coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, US coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations.
  • While global coal markets have recovered slightly over the past few months due to supply restrictions in China and flooding in Australia, we expect this rally to be short-lived. Slower economic growth and structural adjustment in China will continue to put downward pressure on global coal prices and limit the market opportunities for US exports. Indian coal demand will likely grow in the years ahead, but not enough to make up for the slow-down in China. The same is true for other emerging economies, many of whom are negatively impacted by decelerating Chinese commodities demand themselves.
  • Under the best case scenario for US coal producers, our modeling projects a modest recovery to 2013 levels of just under 1 billion tons a year. Under the worst case scenario, output falls to 600 million tons a year. A plausible range of US coal mining employment in these scenarios ranges from 70,000 to 90,000 in 2020, and 64,000 to 94,000 in 2025 and 2030 -- lower than anything the US experienced before 2015.

These findings indicate that President Trump’s efforts to roll back environmental regulations will not materially improve economic conditions in America’s coal communities. As such, the paper concludes with recommendations for steps that the federal government can take to safeguard the pension and health security of current and retired miners and dependents and support economic diversification. Attracting new sources of economic activity and job creation will not be easy, and even at its most successful will not return coal country to peak levels of past prosperity.

But responsible policymakers should be honest about what’s going on in the US coal sector—including the causes of coal’s decline and unlikeliness of its resurgence—rather than offer false hope that the glory days can be revived. And then support those in America’s coal communities working hard to build a new economic future.

Read the text (PDF).

Red state rural America is acting on climate change; without calling it climate change

By Rebecca J. Romsdahl - The Conversation, February 21, 2017

President Donald Trump has the environmental community understandably concerned. He and members of his Cabinet have questioned the established science of climate change, and his choice to head the Environmental Protection Agency, former Oklahoma Attorney General Scott Pruitt, has sued the EPA many times and regularly sided with the fossil fuel industry.

Even if the Trump administration withdraws from all international climate negotiations and reduces the EPA to bare bones, the effects of climate change are happening and will continue to build.

In response to real threats and public demand, cities across the United States and around the world are taking action to address climate change. We might think this is happening only in large, coastal cities that are threatened by sea-level rise or hurricanes, like Amsterdam or New York.

Research shows, however, that even in the fly-over red states of the U.S. Great Plains, local leaders in small- to medium-size communities are already grappling with the issue. Although their actions are not always couched in terms of addressing climate change, their strategies can provide insights into how to make progress on climate policy under a Trump administration.

The Chevron Way: Polluting California and Degrading California

By various - International Transport Federation, et. al., November 2016

In the recent election, Chevron-backed campaigns lost bigtime, despite the $61 million the company has spent to influence California elections since 2009. That’s far more than any other oil company spend in state elections. The report, by the International Transport Workers Federation, was released Nov. 17 at the Chevron gates by a coalition including the Richmond Progressive Alliance (RPA), Alliance of Californians for Community Empowerment (ACCE), Communities for a Better Environment (CBE), and more.

Members of the coalition said the report, The Chevron Way: Polluting California and Degrading Democracy, will educate the public about the corrupting influence of corporate money and alert politicians that they will be judged on whether they act in the public interest or in Chevron’s interest.

In this election, in State Assembly and State Senate races, candidates heavily backed by Chevron lost. In Monterey County, Chevron spent $1.5 to oppose a ballot measure to ban fracking and expanded oil drilling. Despite being outspent 33 to 1, the measure passed.

In Richmond, Chevron sat out this election, having spent $3 million in the last election, when its candidates lost anyway. This year, two additional progressive candidates won seats on the city council and a longstanding Chevron candidate was voted out.

Chevron makes billions in profits from its huge retail and refining business in California, but has aggressively cut tax payments to federal, state and local governments. In 2015, the company paid no net income tax in the US, but instead banked nearly $1.7 billion in tax credits.

In 2015, Chevron had over $45 billion stashed in offshore accounts, including the company’s 211 active Bermuda subsidiaries, and the company’s global effective tax rate fell to below 3%.

Read the report (PDF).

What Did the 2010 Deepwater Horizon Oil Spill and Offshore Drilling Moratorium Mean for the Workforce?

By Joseph E. Aldy - Common Resources, August 22, 2014

On April 20, 2010, the Transocean Deepwater Horizon suffered a catastrophic blowout while drilling in a BP lease in the Gulf of Mexico’s Macondo Prospect. This accident resulted in the largest oil spill in US history and an unprecedented spill response effort. Due to the ongoing spill and concerns about the safety of offshore oil drilling, the US Department of the Interior suspended offshore deep water oil and gas drilling operations on May 27, 2010, in what became known as the offshore drilling moratorium. The media portrayed the impacts of these events on local employment, with images of closed fisheries, idle rigs, as well as boats skimming oil and workers cleaning oiled beaches.

In a new RFF discussion paper, “The Labor Market Impacts of the 2010 Deepwater Horizon Oil Spill and Offshore Drilling Moratorium,” I estimate and examine the net impact of the oil spill, the drilling moratorium, and spill response on employment and wages in the Gulf Coast. The spill and moratorium represented unexpected events in the region, and the resulting economic impacts varied within and among the Gulf states. Coastal counties and parishes were expected to bear the vast majority of the burden of these two events, while inland areas were expected to be largely unaffected. The moratorium was expected to affect Louisiana—with significant support of the offshore drilling industry—but not, for example, Florida, which had no active drilling off of its coastline. Beyond the economic impacts, the timing and magnitude of the spill response varied across the states over the course of the spill as well.

Despite predictions of major job losses in Louisiana resulting from these events, I find that the most oil-intensive parishes in Louisiana experienced a net increase in employment and wages. In contrast, Gulf Coast Florida counties south of the Panhandle experienced a decline in employment. Analysis of the number of business establishments, worker migration, accommodations industry employment and wages, sales tax data, and commercial air arrivals likewise show positive economic activity impacts in the oil-intensive coastal parishes of Louisiana and reduced economic activity along the non-Panhandle Florida Gulf Coast. The billions of dollars of spill response and clean-up mobilized over the course of the spring and summer of 2010 positively impacted economic activity, similar to the effect of fiscal stimulus. The geographic variation in labor market impacts reflects the focus of spill response efforts in Louisiana and the absence of oil and thus spill response along the Gulf coast of Florida south of the Panhandle.

Read the report (PDF).

Jobs Beyond Coal

By Jeremy Brecher - Labor Network for Sustainability, 2012

This manual is intended for anyone—communities, unions, environmentalists, native tribes, public officials, and others—involved with or affected by the retirement of coal-fired power plants. It is designed as a guide for those who wish to make the transition away from coal in a way that is most beneficial and least threatening to ordinary workers, consumers, and community members.

In the past decade, a broad-based campaign has formed to move America beyond coal and power the nation with clean energy. The movement includes people from all walks of life—medical professionals, faith leaders, environmentalists, business people, workers, decision makers, and local residents—who are working to address the serious pollution problems caused by coal and to seize the economic opportunity offered by clean, safe, renewable energy.

This campaign has been remarkably successful, preventing the construction of more than 165 new coal-fired power plants, and thereby keeping energy markets open for clean energy. In state after state, as newcoal proposals have stalled, advocates have launched campaigns to retire existing coal plants and replace them with clean energy, securing the retirement of more than 110 existing coal plants to date.The coal industry and their allies regularly claim that jobs, workers, and unions benefit from coal plants and that transitioning away from coal will harm them. Industry claims about creating or protecting jobs have often proved fallacious or hugely exaggerated. Still, this message resonates powerfully in tough economic times and presents a real challenge to coal retirement efforts.

Several recent campaigns have demonstrated that coal retirements can be structured in ways that take care of affected workers and the area economy, and even win the support of organized labor and local decision makers. As the case studies described in this manual show, addressing these economic challenges is most effective when the concerns of workers and the local economy are built into the campaign objectives, messaging, proposals, action, and interventions in policy arenas.

Read the report (PDF).

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