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A Deep Dive to Answer Ken Bone’s Energy Question

| Written by John Farrell | No Comments | Updated on Oct 27, 2016 The content that follows was originally published on the Institute for Local Self-Reliance website at https://ilsr.org/ken-bone-energy-question/

placeholderAt the second presidential candidate debate, one red-sweater-wearing American earned notoriety for his question about little-discussed energy policy. The question deserved a thorough response, given that it brushes on some myths of the clean energy transition but also the challenge of guaranteeing justice for displaced workers.

Midwesterner Ken Bone asked this question:

What steps will your energy policy take to meet our energy needs, while at the same time remaining environmentally friendly and minimizing job loss for fossil power plant workers?

There’s a few items to unpack here:

  1. That energy policy must help meet our energy needs
  2. That energy policy should be environmentally friendly
  3. That we should minimize job losses for workers in fossil fuel power plants (and the fossil fuel energy industry more broadly)

Meeting the needs of the energy system is a basic issue of supply and demand, but what many Americans may not realize is that the options for supply are rapidly changing and that we have many new tools to manage demand as a way to meet our needs.

Meeting Needs with Supply, Switching, Savings, and Shifting

Take the supply issue. Most folks realize that we can produce electricity more cheaply from new wind and solar power plants than those powered by coal or gas.

What folks may not realize is that other energy uses, such as transportation and building heating, may also go renewable through electrification. Electric vehicles will allow us to switch from oil to power from the wind and sun. Renewably-powered heat pumps (basically air conditioners that can produce cold and heat with electricity) can supplant propane, fuel oil, and natural gas.

And although it’s conventional wisdom that the cheapest energy supply comes from conservation, Americans may not realize how big the potential savings are. Simply using smiley faces on bills to reward efficient energy users, Opower has motivated electricity customers to reduce energy use by 1% to 3%. Energy efficiency investments like Energy Star appliances and LED lighting go further, and the American Council for an Energy-Efficient Economy found that every $1 spent on efficiency yields $1.24 to $4.00 in economic returns. A McKinsey analysis backs this up, showing that many of the tools to reduce greenhouse gas emissions (and energy use) will save money.

u-s-mid-range-abatement-curve-2030

The question of supply doesn’t only concern total energy delivered, but also WHEN energy is delivered. A substantial fraction of the electric system (around 30%) is built just for redundancy in periods of peak use, similar to how many lanes on major urban freeways are filled only during the two daily rush hours. But smart thermostats and smart appliances offer new tools to reduce peak use by shifting when we use energy. We can run washers and dishwashers in the evening instead of the afternoon, for example, to avoid expensive and unnecessary grid expansion simply to serve those short periods of highest demand.

In other words, good energy policy allows us to take advantage of cost-effective renewable energy, enabling us to switch from fossil fuels to wind and sun, to replace fuels with electricity, to reduce our energy needs, and to maximize the efficiency of the whole system by diversifying when we use energy.

Easy Environmentally Friendly Energy Policy

We’re in an era when the cleanest energy sources are often the cheapest. Wind provides the lowest-cost electricity of nearly any new power source. Solar energy, whether vast fields of panels or small rooftop arrays, competes with electricity from fossil fuel resources.

But more importantly than what’s cheapest now is how we lay the groundwork for the future. Renewables will be the cheapest option everywhere well within the timeframe (40-50 years) that we plan new power plants and power lines. Smart strategies employed today ensure those investments will not be stranded as the cost of new technology continues its rapid descent, avoiding what economists call “path dependency.” Path dependency is what happens when you buy a Hummer and gas prices rise to $4.50 per gallon. Keeping the car is costly, but high fuel prices also lower its resale value, sticking you with poor options. (See more on path dependency in our 2015 report on Hawai’i).

In the energy sector, environmentally friendly policy means investing in low-cost renewables. It also means very carefully considering proposals for new fossil fuel power plants, gas pipelines, or other infrastructure that won’t serve the energy system of the next decades.

Minimizing Job Losses for Existing Workers

The questions of the employment future for fossil fuel workers, power plant or otherwise, is the most insightful and challenging element of Ken’s question. It’s also the one to which we have the fewest well-developed answers.

Handling transitions in technology isn’t new. We’ve seen cars replace horses, computers replace typewriters, and smartphones replace point-and-shoot cameras. But few of these evolutions have been as policy-driven and fast-moving as the growth of renewable energy. There’s a moral obligation to account for those whose livelihood has depended on jobs in the fossil fuel industry, and whose skills may not translate well to the renewable energy future.

One important note is that job losses across the fossil fuel industry thus far have not been driven by renewable energy, but rather by automation and competition among fossil fuels. The demise of many coal power plants in the past decade has had as much or more to do with the exploitation of inexpensive (not counting environmental harms) natural gas with new fracking techniques. Mechanization of tasks also drove the demise of jobs in the coal industry, replacing humans with machines (a process that continues).

The following chart shows how the productivity of the coal mining industry rose significantly even as jobs decreased three-fold.

u-s-coal-jobs

Although automation may be the major culprit behind job losses in the past, there’s no question that either economics or sound environmental policy will render many (if not all) existing jobs in the fossil fuel industry obsolete by mid-century. So where to turn?

Future Employment for Fossil Fuel Industry Workers

Employment in the fossil fuel industry falls into two categories that will be most impacted by the shift to renewable energy. Oil, gas, and coal extraction jobs will fall sharply as the U.S. reduces dependence on fossil fuels. Employment in traditional power plants will also drop, with those jobs displaced by a 21st century power grid with wind and solar power plants.

In short, we can’t protect the jobs IN the fossil fuel industry, but we can help workers OUT of the industry and into a better future.

As of May 2015, the U.S. coal-mining and oil and gas extraction industries employed 263,000 people, doing everything from digging up coal to processing forms for environmental compliance. Another 60,000 worked in coal power plants, all facing shutdowns due to competitive clean energy.

The good news is that, based on the age of the existing workforce in the extraction business, about 70 percent of the job losses (resulting from a 60% drop in production over the next 20 years) can be addressed through retirement as the workers reach age 65. The remaining 30 percent would need (five years of) wage and benefit insurance, as well as retraining and relocation funds. In a 2016 article in the American Prospect, University of Massachusetts Amherst researchers Robert Pollin & Brian Callaci showcase results of their study pricing these benefits at $200 million per year. Programs like these already exist, such as Solar Ready Colorado that helps displaced coal miners in western Colorado learn skills in the solar industry. Rapid growth ahead signals that employment growth in solar and other renewable energy industries will far outstrip job losses in the fossil fuel sector.

The Prospect article authors also include $90 million per year in their plan to fully fund pension programs for coal miners, which given the recent bankruptcies of multiple coal mining companies are unlikely to be made whole otherwise. Additionally, the authors dedicate $200 million to community-level transition, directing investment in clean energy technology into communities disproportionately impacted by the shrinking fossil fuel industry, such as oil and gas towns like Odessa, TX or Midland, TX.

They peg the total cost of these initiatives around $500 million per year over 20 years, or about 1/500th of a percent of the annual U.S. gross domestic product. Put another way, if every American paid 10¢ more per month on their electric bill, we could fully fund a smooth transition for most fossil fuel industry workers.

It’s also worth noting that leaving behind fossil fuel jobs also means leaving behind significant health and safety hazards. Extraction jobs are among the riskiest in America, as measured by fatalities per worker, and jobs like mining threaten permanent health impairment via conditions like black lung.

Ken Bone has earned notoriety for his red sweater and his online indiscretions, but he should be given credit for a question that gets at the complexity and nuance of good energy policy. The answers aren’t always easy, but they’re worth taking time to address.

Photo Credit: Washington Post

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Energy Democracy weekly update.