Managing the Energy Transition: A Place-Based Approach

About Local Solutions for the Clean Energy Transition

The world’s energy and fuel systems are undergoing a profound transition. For many years, the Industrial Revolution and ensuing industrial economies, trade, and globalization were underpinned by fossil fuels. Today, this geoeconomic system is shifting in response to climate change, with a focus on moving away from fossil fuels toward lower-carbon alternatives. Though it may be tempting to try and solve these issues at the global level, the only way to successfully navigate this transition is to take a place-based approach: to design policies and projects that work in specific places in order to solve specific economic and energy challenges and provide tangible benefits to workers and communities. Some critics may view this approach as too slow given the urgency of climate change or too complicated given the need to get to “speed and scale” in clean energy technologies. But this series argues that the only way to achieve the clean energy transition—particularly the only way to build political will and community support—is by taking a place-based economic development approach.

 In 2023, at the end of the United Nations Climate Change Conference held in Dubai, member states promised an “orderly and equitable” transition away from fossil fuels. Getting to the point where all parties approved this phrasing was no small task. While the language has been criticized from many sides, its very existence is a step forward in global negotiations that took years to accomplish. As usual, reality moves faster than diplomacy: it has been clear for decades that the only real way to fight climate change is to transition away from fossil fuels.

As this shift and the effects of climate change and requisite policy responses become more tangible, what will happen to traditional energy communities? Specifically, what will happen to American culture and politics when we move from an energy system run on place-based extractive industries—the engine of our entire economic system—toward one run on a diverse set of energy technologies based not on the location of underground resources but rather on the availability of sun, wind, and waves? What will happen when we abandon extractive industries for something new and less grounded in place?

Some in the climate community would argue that we’re already moving in this direction, pointing to the oft-quoted statement that there are more solar jobs than coal jobs in America. Indeed, at the end of 2023, there were only about 43,000 workers in or around coal mines in the United States, split between the eastern Appalachia region and the Intermountain West. In contrast, the Department of Energy estimates there were over 300,000 solar workers spread across the country the same year. And while coal jobs generally continue to decline, solar jobs continue to tick upward.

But the numbers hide some important details. To begin with, coal miners, like many others in fossil fuel industries, nearly always enjoy permanent, unionized jobs with benefits, while solar panel installers and many others in newer “clean energy” industries often assume temporary, low-paid, nonunionized jobs.

And just as important, there is a spatial, or place-based, difference. Coal miners, and the coal industry generally, are tied irrevocably to specific places. The coal is there and, hence, the mine is there, the community is there, and the supporting industries such as transportation and logistics are there—not to mention restaurants, barbershops, hospitals, and other services. The existence of resources led to the birth of a community. This is the story not just for coal, but for other extractive industries such as oil and natural gas and to a lesser extent agriculture and forestry as well.

Communities that emerge because of resource availability are highly tied to those resources for not only jobs but also for their tax base and overall economic health. Often, these rural areas—without significant infrastructure other than what’s been created to move the coal or oil out to ports or population centers—lack strong and diversified economies. This makes them highly vulnerable when the coal or oil runs out, the market moves in a new direction, or the company goes bankrupt. That dependence on a single industry, or related set of industries, complicates any discussion of a transition away from that resource.

A 2015 ethnographic study of coal country, conducted on behalf of several foundations interested in funding efforts to transition Appalachian communities away from coal and toward cleaner and more sustainable energy sources, underscores the relationship between the coal industry and the culture of coal communities, including the deeply held value of “independence through work.” It states that “the primary reason for people’s affection for coal jobs is that they [the jobs] have represented a clear, well-trodden path to economic security and independence—not just for coal miners, but for others in the community as well.”

The study’s interviews also highlight the strong place-based nature of coal mining as an economic driver. Coal was found in Appalachia (and Wyoming) and was then sold to those outside the region, bringing economic value back to the area. This export-oriented approach, common in resource economies, is a strong feature of the Appalachian identity:

These findings illustrate the integral relationship between coal industries and coal towns, as well as the relationship between place-based extraction and export activities and the local economy. It’s no surprise then that the relationship between these industries and the places they are located goes beyond job statistics and the economy—to the essential culture of the places. Jobs in extractive industries are often passed down from generation to generation. Because the towns grow up around the industry, the industry is infused into the towns. For example, sports teams are named after the industries: the now-renamed Houston Oilers for the oil industry, or the minor league Southern Illinois Miners. During the nineteenth century, there were at least ten minor league baseball teams with some variant of “coal heaver,” “coal miner,” or “coal baron” in their names. Labor unions representing these industries contribute to the local culture, as union halls are the loci of social interaction as well as political engagement.

Place and culture matter to communities. But they’re also essential to American politics. When a district is built around an industry, the politicians in that district are often leaders in, or otherwise beneficiaries of, that industry. Sometimes, this is the result of outsize political contributions from a specific industry to the region’s political actors, resulting in overzealous attention to addressing that industry’s concerns through policy and regulation. But it’s often more complicated than that. When a region’s core industry is economically sound, it acts as the main driver of the economy, and contributions from company officials or affiliated unions play a major role in electing local politicians. When the industry is in decline, politicians are usually fighting for its survival and, by extension, the survival of its surrounding community.

Yet, however well-meaning the sentiment, comparing coal jobs and solar jobs can easily come across like a repudiation of the generations of workers and communities dependent on that industry to scratch—or drill, or dig—out a middle-class living. Is it any wonder that these industries, and the places that rely on them, have a considerable impact on American politics? Is it surprising that these industries are often viewed as existential threats by local communities? Can we fault these industries for making their voices heard, sometimes in an outsize fashion, in American politics?

 All Energy (and Climate) Is Local

While government officials and policymakers talk at a high level about a “just transition,” the actual work to move to more diversified and sustainable local and regional economies has been happening on the ground for decades.

The Apollo Alliance, which I helped to stand up in 2004, and later led as co-executive director, was one of the country’s first organizations focused squarely on the intersection of clean energy and economic development. It brought together business, labor, environmental, and community stakeholder groups to find common ground in developing policy strategies to advance a domestic clean energy agenda, with a primary goal of creating good “green jobs” in communities across the country. The organization worked at the national level (through the Institute for America’s Future) to develop a comprehensive set of policy recommendations on everything from renewable energy to fuels to broad infrastructure investments supporting a shift toward cleaner energy systems; and at the state and local levels (through the Center on Wisconsin Strategy) to develop more specific policy and operational solutions for a diversity of states and regions. While the policy, communications, and fundraising work was centralized, the Apollo Alliance had multiple coalitions across the country, all of which brought together the same four stakeholder groups to implement policy wins on the ground. The alliance advanced several renewable portfolio standards, renewable fuel standards, energy efficiency and green building codes, and more, as well as developed the green jobs platforms for the 2008 presidential campaigns of Barack Obama, Hillary Clinton, and John McCain.

The Apollo Alliance came to recognize a central truth—that energy policy is fundamentally local in nature. Every part of the United States has a profoundly different relationship to the energy it uses and, therefore, to the policies and politics governing that energy use. For one thing, some states have much more extreme weather than others and are more dependent on energy (for heat and/or air conditioning) as a result. For another, each state relies most on the energy sources to which it has the best access. Some states are still surprisingly coal-dependent—not only the big mining states but also industrial Midwest states such as Wisconsin and Indiana. Some rely on hydropower, such as Washington and Oregon. Some actually still burn diesel for electricity, including parts of Alaska. Some are lucky enough to have fairly mild weather and very strong solar and wind resources; California is one of these states, at least its heavily populated coastal areas. Ultimately, each state has a different understanding of what constitutes clean and reliable energy and what exactly constitutes a good green job.

That’s the national and subnational story. But the United States doesn’t operate in an energy vacuum—it’s part of a much larger global energy system, where trade flows and geopolitics have as much influence as local consumption. In the early days of the Apollo Alliance, from about 2003 to 2008, macroeconomic concerns dominated. At that time, the United States was importing most of its oil and nearly all of its natural gas. Political leaders in both red and blue states were looking for domestic energy alternatives, such as solar and wind power, and for ways to reduce electricity bills through energy efficiency measures. Gas at the pump was at a historic high price point, so this was also the era of alternatives like ethanol (including, briefly, cellulosic ethanol) and of notable moves toward more vehicle efficiency.

These years were characterized by neoliberalism, a paradigm of unfettered market capitalism that advocated the removal of government regulation and reduced state influence in the economy. The thinking was that capital, goods, and services would flow in an essentially flat and frictionless world, driving innovation, benefiting consumers, and maximizing shareholder value. The neoliberal era may be best summed up by that period’s most celebrated chief executive officer, General Electric’s Jack Welch, who noted in 1998 that ideally, “you’d have every plant you own on a barge to move with currencies and changes to the economy.” This approach had an impact on climate and energy policy, with an emphasis on getting to “speed and scale.” Manufacturing and commercialization happened mostly offshore, with the resulting cheap solar panels and wind turbines coming back for installation in the United States.

The world has changed since 2008, however. Today, the United States is a net energy exporter. While prices fluctuate—in the past few years, oil and gas prices have hit both historic lows and historic highs—wind and solar prices have consistently declined. Now, the urgent rationale behind reducing energy use, and especially fossil fuel use, is not domestic production but climate change. 

At the same time, neoliberalism has come under renewed criticism, with heightened focus on local economies that create tangible benefits for people and places. This new model, a central component of the current U.S. administration’s economic strategy, has many drivers, not least the realization that neoliberalism, while it clearly helped to build a middle class in developing countries such as China, also increased inequality within developed countries as they hemorrhaged middle-skill manufacturing jobs. The United States and many other countries also experienced a stark wake-up call during the COVID-19 pandemic, when supply chains broke down and it suddenly became apparent there were many items the United States no longer knew how to manufacture.

These shifts in the U.S. energy economy and the broader approach to economic growth have refocused attention on the importance of local economies. In part, this is because of the recognition that investing in a new industrial economy could breathe new life into some of the same places that lost their industrial bases years ago (through reinvestment into those same facilities and infrastructure). In contrast to the coal jobs versus solar jobs argument, this new attention to place-based policy recognizes that jobs in new clean energy industrial activities, including critical mineral mining, have more in common with past fossil-based industrial jobs—including more overlap in geography and worker skills—than do jobs in renewable energy and energy-efficient system installation. In part, it’s because of the growing understanding that entire communities have not benefited from the prosperity brought by both the early Industrial Revolution and the more recent Digital Revolution. The emerging modern industrial policy recognizes the importance not just of GDP growth and jobs, but also of sustainability, resilience, and equity as core economic goals.

So, energy is local. But what about climate change, the core historical change pushing policymakers and industry to focus on the energy transition? It was once easy to think of climate change as a vague global phenomenon that didn’t really touch individual lives, but that era has long passed. Climate change is, if anything, even more of a local phenomenon than energy extraction and use.

The impacts of a warming climate happen at a very local level. In 2014, the Risky Business Project, co-chaired by Mike Bloomberg, Hank Paulson, and Tom Steyer, set out to bring the esoteric global discussion of climate change down into the realm of place-based policy and investment. The project, which I led as the founding executive director, was launched to better understand the economic impacts of climate change on specific U.S. regions and industries. It determined that climate impacts, such as extreme heat, sea-level rise, and storm surge, not only happen in different parts of the United States, but also impact these regions differently depending on the core industries and economies that power each region. Since the initial report’s publication ten years ago, this focus on the regional differentiation of impacts has been taken up by scientific bodies in the United States (for example, the U.S. Global Change Research Program’s National Climate Assessment) and internationally (for example, the Intergovernmental Panel on Climate Change).

The Risky Business Project, and studies that followed, revealed that there will be highly varied but increasingly significant regional climate impact differences across the United States. In the Southwest, it will get so hot by mid-century that workers in “high-risk” outdoor industries such as construction will likely only be able to work at night. Along the Eastern Seaboard and Gulf Coast, sea-level rises and warming oceans will mean more frequent and severe storms and more properties entirely under water. For Midwestern agricultural economies, hotter temperatures will impact core crops such as corn and soy. In the Northwest, things at first look pretty stable, but this region will experience increased wildfires, higher threats to oyster and salmon fisheries from ocean acidification, and influxes of climate refugees moving north. Climate impacts are even more variable and extreme outside the United States, especially in the Global South. There is no global policy answer to the question of how individual communities, workers, and industries will adapt and become more resilient in the face of these impacts.

At the same time, policies intended to reduce greenhouse gas emissions and slow down future climate impacts are equally local, because, of course, energy production and consumption—historically the main contributor to climate change—are local. Reducing emissions in a state that relies on coal for jobs and electricity is a far different proposition than in a place that has never had a coal plant and where solar energy is cheap and plentiful. Similarly, reducing emissions in a country that has already gone through a productive Industrial Revolution is a far different proposition than in one just beginning to build out its infrastructure, supply chains, and export markets.

Climate Impacts on Extractive Communities—A Double Whammy

For communities with extractive industries, especially those focused on fossil fuels, climate change is a double threat. The emissions humans have already put into the atmosphere at a global scale will cause local impacts that will, in turn, disproportionately affect the very parts of the United States where fossil fuels are concentrated: the Gulf Coast, Appalachia, Alaska, and the Intermountain West. And extractive industries, with their highly capital-intensive facilities and industrial installations, will be particularly sensitive to place-based climate effects. Already, Hurricane Katrina in 2005, Hurricanes Harvey and Irma in 2017, and countless more recent events—including some of the twenty-eight billion-dollar disasters in 2023—have taken out significant parts of our national oil infrastructure at least temporarily, disrupting national and even international supply and prices. 

At the same time, state and federal efforts to slow down the march of climate change—efforts that are absolutely necessary to avoid near-apocalyptic impacts later this century—will ultimately require a dramatic decline in fossil fuel use. It’s generally understood that to bring global temperature increases toward a more stable level (and ideally to below 1.5 degrees Celsius), the world will need to do three things: electrify nearly everything, use renewable or low-carbon energy wherever possible to power that electricity, and use far less electricity in general. Those steps will lead the globe toward a more stable climate, but they also may signify the end of economic stability for places that have grown up around extractive industries such as coal, gas, and oil.

Managing the Transition

The United States has undergone economic transitions before, a historical fact that becomes all the more evident when considered from a regional perspective. Many factories that anchored the industrial Midwest and northern New England economies in the mid-to late-twentieth century have since been shuttered—first moving to Southern and Western states with lower wages and fewer labor protections and then eventually moving overseas. The timber industry is a perfect example of a resource-based economy moving overseas; wood became cheaper and easier to import, leaving entire communities in northern California, Maine, and the upper Midwest without a strong job or tax base.

While globalization was the key economic transition driver at the end of the twentieth century, today it’s likely to be automation and artificial intelligence. As pundits wring their hands about the potential for autonomous vehicles to displace millions of truck drivers across America, automation can seem like a new phenomenon. But it’s not new to the energy sector: coal miners in West Virginia were laid off in waves throughout the 1980s as a result of the switch from strip mining to mountaintop mining, which requires fewer workers and more machines. The manufacturing, agriculture, and construction sectors—which mostly provide good middle-class jobs—have also experienced layoffs, as robots have taken over key jobs.

Many of these transitions advanced overall U.S. economic growth and prosperity, but this positive GDP growth and national competitiveness sometimes masked the pain felt by specific industries, workers, and communities.

Tomorrow’s transition drivers won’t just be globalization and automation, but rather a combination of them plus climate change. These three global trends are already moving our world from one where people and jobs are rooted in place to one where mobility is the key to survival. Those industries that are the least mobile—those where jobs and culture are most tied to physical places—will have the hardest time adapting, which may result in serious political and social discontent.

Here’s the good news, however: the pain and discontent can be mitigated. American history is full of success stories about moving from one industry to another. Workers left agriculture in droves to move to cities during the Industrial Revolution. Manufacturing towns such as Pittsburgh have been recast as hubs of healthcare innovation and education—though, in fact, the bulk of the region’s economic progress this decade has come from the shale gas boom in southwestern Pennsylvania. Still, Pittsburgh has successfully transitioned away from its roots as a steel town, while holding onto some of its industrial culture and traditions (the Pittsburgh Steelers haven’t changed their name, and the town is still home to the United Steelworkers headquarters). The “Tobacco Road” that used to run through North Carolina is now a road leading through the Research Triangle, known for biotech innovation. These transitions weren’t accidents; they were the result of careful planning by the government, civic institutions, and the private sector.

The United States knows how to do economic transitions well—but the country also has plenty of experience creating ghost towns when their industries go overseas or become obsolete. Think of the communities once anchored by steel and auto plants in Gary, Indiana and Flint, Michigan; the gold rush towns in California and Nevada; and the coal mining towns in West Virginia.

Over the coming decades, the world will see a whole new crop of extractive industry communities either hammered by climate impacts or hollowed out by declining consumer demand. This series of essays looks at the question of what happens to American culture and politics when place-based industries are threatened and, ultimately, how to make these transitions less scary and more equitable for workers and communities. This challenge is both moral and political, and U.S. policymakers and industry leaders will not be able to contribute to global climate goals if they do not make the energy transition work for real people in real communities.