Fossil fuels: Save the workers, kill the industry

The fossil fuel industry faces a turbulent future. As evidence for fossil fuels’ destructive climate impact has mounted, calls for replacing them with cleaner alternatives, such as wind and solar power, have grown louder. To avoid a climate disaster and prepare for a low-carbon economy, governments with oil, gas and coal resources must help fossil fuel workers find new jobs outside their industry.

Fossil fuels are still an enormously important source of employment across the world. Over 10 million people worldwide are directly employed by the fossil fuel industry. Most of these jobs may disappear in the coming years.

Even more people depend indirectly on the fossil fuel industry. In many countries, fossil fuel jobs offer higher salaries and better benefits than most jobs. Each fossil fuel worker generates a number of additional local jobs. Based on interviews with industry experts in India, for example, every coal miner on a monthly salary generates anywhere between 3-10 additional local jobs through their consumption. If the coal miner’s job is lost, these other local jobs also disappear

For all these people, phasing out fossil fuels will mean economic pain. Fossil fuel communities in many countries tend to be “company towns” with few alternative livelihoods. The dominant fossil fuel industry crowds out other sectors, and the local community becomes heavily dependent on this one source of income.

Saving the workers is ethical and politically savvy

In this situation, governments must step in to help fossil fuel workers. First, it is the right thing to do. Workers in the fossil fuel industry are not responsible for climate change. Just like everyone else, they are simply trying to make a living and provide for their families. They do not have much say over the ethically problematic decisions made by corporate leaders, such as denying the existence of climate change.

Second, adjustment assistance is essential for economic diversification. To avoid long-term economic stagnation, fossil fuel workers must find alternative jobs. This is a difficult thing to do because fossil fuel workers tend to have highly specialized skills. Government funding for training programs and relocation for a new job is essential to avoid an economic disaster and the social problems that may accompany unemployment, such as crime and addiction.

Finally, helping workers is a smart political move. If politicians want to reduce carbon dioxide emissions, they need to build a robust political coalition. This is difficult to do without the fossil fuel workers, who are often unionized and politically powerful. Political leaders who offer a plausible and appealing transition plan can garner the support of fossil fuel workers, thus breaking through a key barrier to sustainable energy.

Governments should focus their efforts on immediate job creation and training. Fossil fuel workers should be quickly trained to compete for jobs in growing industries, such as clean energy installation. In addition to training, governments should offer generous payroll subsidies to local companies that hire fossil fuel workers who were recently laid off. In countries with strong labor unions, such as Germany, support programs can be developed in collaboration with union leaders. In countries with low unionization rates, such as the United States, governments must lead the way themselves.

Killing the fossil fuel industry is necessary

In contrast, the fossil fuel industry itself does not need generous government support. Oil, gas and coal production must decrease if we are to stop climate disruption. Their business model is fundamentally incompatible with a low-carbon world economy. Their owners, including large institutional investors such as pension plans, knew the risks when they invested in ecologically destructive sources of energy.

To the extent that the fossil fuel industry needs any support to avoid a prolonged economic depression, it must be conditional on aggressive measures to stop additional exploration and extraction of hydrocarbons. The goal is not to save the fossil fuel industry, but to mitigate the pain as companies shut down.

For the coal industry, a bailout package could be conditional on a plan to stop coal mining by the year 2030. For the oil and gas industry, a more gradual transition over two decades might be the best way to go, because replacing these fuels is more difficult than replacing coal.

A just transition away from fossil fuels

As governments frantically prepare for economic stimulus to avoid a deep recession caused by COVID-19, they need to keep these principles in mind. Economic transition is always painful, yet it is by now unavoidable. To minimize the pain, workers and communities that depend on fossil fuel production need all the help they can get. If governments step up, they can create a just transition to a sustainable and resilient low-carbon future.

Johannes Urpelainen is the director and Prince Sultan bin Abdulaziz Professor of Energy, Resources and Environment at the Johns Hopkins School of Advanced International Studies. He also is the founding director of the Initiative for Sustainable Energy Policy (ISEP). Follow him on Twitter @jurpelai.