The Production Gap, a recent report from the United Nations and several partners, delivered some unsettling news: Countries around the world are ramping up production of fossil fuels, despite an urgent need to meet climate goals and the increasingly uneconomic future of the fossil fuel sector. According the the report, global production of coal, oil and gas must decrease by 6 percent each year until 2030 for countries to cap global temperature rise at 1.5 degrees Celsius as agreed upon in the Paris climate accord. But nations are instead planning production increases of 2 percent a year. Further, G20 countries have committed $233 billion in COVID-related funding to the fossil fuel sector, compared to $146 billion for clean energy.
Before the coronavirus pandemic, fossil fuels had started to become more and more uneconomic compared to renewable energy. Since the pandemic began, renewables have tipped into being a cheaper electricity source than fossil energy. But as the U.N. report shows, the bulk of energy-related money in U.S. COVID-19 recovery stimulus has gone toward the fossil fuel industry with no strings attached. The second biggest chunk of funding went to clean energy, but with conditions. Right out of the gate, the market signals are skewed: At this point, propping up fossil fuels looks like putting a dying industry on life support rather than easing the economy’s transition to a cleaner, more resilient future.
The longer the inevitable end of fossil fuels is prolonged, the more disruptive the end will be. A gradual, managed decline will not only allow investors to realign their portfolios and goals, but also give governments and businesses time to prepare for a shift in economic processes and for a more just and equitable transition for affected communities.
Overall, the U.S. receives a relatively small share of its GDP from fossil fuel production because of its diversified economy. However, production is concentrated in select regions of certain states — oil in parts of Texas, coal in parts of Kentucky, natural gas in parts of Pennsylvania. The end of fossil fuel production will be disruptive to those communities. But managing the transition will enable those communities to adjust and adapt with support from governments and investors.
Many of the affected communities will require financial, technical and capacity-building support. Job training and education, as well as social safety nets during the transition, will be required. It cannot be left to local governments or nonprofits alone to provide support. The federal government is equipped to help. If it does, it will send a powerful signal to investors to put private money into promising communities. During the American Recovery and Reinvestment Act of 2009, for example, the U.S. Department of Energy provided technical support to help states develop energy-efficiency programs and set up funds to transition workers into well-paying energy-efficiency jobs. These energy-efficiency jobs then boosted local economies and enabled $150 billion of private investment in communities across the country.
In addition to high-quality jobs, clean energy has other knock-on effects that benefit communities, especially low-income communities and communities of color — those who not only bear the burden of climate change, but are also being hit hardest by the COVID-19 pandemic. Fossil fuel production has detrimental effects on air and water quality, creating public health problems long before COVID hit.
A transition from fossil fuels to renewable energy will not be easy for communities that currently rely on fossil fuel production for their economic wellbeing. But a managed, planned transition will make it much smoother. Such an effort must be inclusive, engaging with the communities that it will affect. Change is a daunting prospect — especially in communities that have relied on one source of economic prosperity for generations, as is the case in many oil and coal towns across the U.S. It will require a different way of doing things, but it can also mean a turning point.
For example, many west Texas oil communities suffered in the years after the oil bust in the 1980s, with some towns close to shutting down. But in 1999, Texas passed a renewable energy standard for wind energy, and the money poured in as developers aimed to take advantage of an opening in the market. Communities once on the brink are now vibrant, buoyed by wind farms that stretch as far as the eye can see — and Texas is now a global leader in wind energy. Many people didn’t like the wind turbines when they first arrived, but after 20 years, they are as much a part of the landscape as the cattle that graze beneath them.
Stalling the inevitable transition to a clean energy economy is a short-term strategy. Better to make a plan with clear regulatory direction, financial and technical support, and opportunities for the private and public sectors to work with communities to make a better economic and environmental future. It’s a clear direction for long-term gain.
Image credit: Zukiman Mohamad/Pexels
Kate is a writer and policy wonk, with a focus on water, clean energy, climate change and environmental security. She spent over a decade running energy-water nexus and energy efficiency programs at Environmental Defense Fund as well as time at the U.S. Departments of Energy and Defense, U.S. Government Accountability Office, and state and federal legislatures. She serves as an Advisory Board member of CleanTX, which aims to accelerate the growth of the clean tech industry in Texas.