How Federal Economic Development Can Help Drive a Fair Transition in Fossil Fuel Communities

(Washington, DC – August 11, 2020) In communities across the country, from West Virginia to Texas to Wyoming, fossil fuels have supported economic prosperity for generations—but times are changing. In the last decade, coal power has fallen significantly as cheaper energy alternatives have become available, leading to job loss and economic decline in regions that have been dependent on the industry for decades. Experts worry that even more communities reliant on fossil fuels may suffer as the United States begins the transition to a clean economy.

“With one or two exceptions, federal economic development programs have not focused on coal, oil, and natural gas communities,” says Daniel Raimi, senior research associate at Resources for the Future and coauthor of the report. “But a move toward clean energy and away from fossil fuels will have major consequences for these local economies and workers. As a result, federal economic development efforts might need to step up to support new opportunities for the people and places who are negatively affected by a transition to a low-emissions economy.”

In a new report, researchers from Resources for the Future (RFF) and Environmental Defense Fund (EDF) examine which economic development policies and programs might be best suited to promote fairness for these workers and communities, ranging from job training initiatives to infrastructure projects. These, and other concepts, are embodied in the idea of a “just transition,” offering a path forward for regions that are disproportionately impacted by a move to clean energy.

This report, the first in a series from RFF and EDF, is designed to help policymakers assess strategies to address economic challenges associated with a shift away from fossil fuels. Many of these challenges are being brought to the forefront by the COVID-19 pandemic, which has accelerated job loss in the energy sector, especially in regions already struggling.

“This series can provide policymakers the insights they need to ensure that fossil fuel workers and communities have the necessary tools and support to thrive in a stronger and more equitable clean economy,” says Derek Walker, Vice President for US Climate at EDF. “The first report in this series will address a key challenge in this transition: ensuring that communities reliant on fossil fuels can successfully diversify their economies.”

In this report focused on federal economic development programs, the authors develop five big-picture insights into how these programs may inform just transition policies and programs going forward:

1. Federal intervention can play a positive role in local economic development, although available data suggests that the benefits so far have been limited. It is unclear whether larger programs would create more widespread benefits.

2. Coordination across government agencies and with local stakeholders is a vital part of an economic development program’s success.

3. Existing programs can be adjusted to support communities and workers in a just transition context, even if the original program was not designed for that purpose.

4. Federal economic development programs are modestly funded. The level of government spending on these programs would likely need to grow considerably to support changing communities.

5. Economic development policies will most likely need to be geographically targeted, tailored to local circumstances, and carried out in collaboration with local stakeholders. However, there is a risk that political considerations could steer funds away from the areas that need them most.

To learn more about these findings, read the report, “Economic Development Policies to Enable Fairness for Workers and Communities in Transition,” by Daniel Raimi (RFF), Wesley Look (RFF), Molly Robertson (RFF), and Jake Higdon (EDF). Read EDF’s summary blog on the first report here.

Future reports in the series will focus on programs that support investment in environmental remediation, infrastructure, workforce development, clean energy deployment, and public benefit programs.