When Green Meets Blue: the Clean Power Plan and its Effect on Jobs

The Clean Power Plan: An Overview

On August 3, 2015, President Obama and the EPA announced the Clean Power Plan, an ambitious initiative to take action on climate change by reducing carbon pollution from power plants. It does so by establishing carbon pollution standards, called carbon dioxide (CO2) emission performance rates. States are required to develop and implement plans that ensure the power plants in their state meet those standards. The plan incentivizes the development of clean energy through a Clean Energy Incentive Program, which awards credits for electricity generated from renewable energy sources.

The Clean Power Plan has evoked a fierce debate over its constitutionality. The power industry and over two-dozen states have mounted a legal challenge to the plan, and on February 9, the Supreme Court granted their motion to block the plan’s implementation until the legal challenge is resolved. The Court’s order overturned that of the D.C. Circuit, which just a few weeks earlier had denied the motion. The D.C. Circuit has put the case on an expedited schedule and plans to hear arguments on June 2.

Another element of the Clean Power Plan – less-discussed in the legal world, but of particular salience to those outside the academy – is its effect on jobs. The EPA estimates that the plan will lead to a net gain of 60,000 to 80,000 jobs by 2020. Many of the plan’s supporters think those estimates are too modest. The National Resources Defense Council, for example, estimated that the plan could produce a net gain of 210,000 jobs by 2020. Critics of the plan, however, claim that it will lead to lost jobs and a suffering economy. As Republican leaders of the House Energy and Commerce Committee put it, “it’s lights out for jobs and the economy.”

The Clean Power Plan, Jobs, and Unions

Josh Bivens at the Economic Policy Institute has conducted an independent analysis to further evaluate and extend the EPA’s findings. Bivens’s study found that the plan will result in a net gain of 96,000 jobs (120,000 jobs created and 24,000 jobs lost) by 2020. Moreover, each job created or displaced will create “ripple effects” in other sectors, meaning that the plan will also lead to the indirect creation and displacement of jobs. Clean energy investments require more labor than equivalent fossil fuel investments and, according to a study by the Center for American Progress, use a higher proportion of labor within the United States. Each “direct job” creating clean energy will produce .7 “indirect jobs” for suppliers and .4 “induced jobs” that result from the wages workers spend. When these ripple effects are taken into account, the net number of jobs supported by 2020 is approximately 360,000. However, the gains will taper off, in part because displaced industries tend to have slightly higher employment multipliers than do jobs in gaining industries. According to Bivens, about 24,342 net jobs will be supported by the year 2030 – still a net increase, but below the EPA’s estimates.

Despite the overall job gains, workers in the coal mining and electrical utilities industries will suffer: by 2020, there will be approximately 12,600 fewer coal-mining jobs and 11,633 fewer electrical power generation, transmission, and distribution jobs. Coal-mining jobs have been declining due to numerous factors, including falling natural gas prices, decreasing demand from Asia, higher mining costs, and declining productivity. Nonetheless, the Clean Power Plan will accelerate job losses in the coal-mining industry. Displaced jobs are also more likely to be unionized and relatively well paid than the jobs created, more likely to be held by men, and likely to be geographically concentrated. As the Center for American Progress notes, “the heavily fossil fuel-dependent regions…such as Texas, Louisiana, and Oklahoma, and coal-producing areas such as the Appalachian region, Wyoming, and Montana” will “inevitably experience disproportionate negative impacts.” The plan has drawn bitter opposition from the United Mine Workers of America, which has organized protests against it and issued a statement opposing the final plan.

UMW opposition notwithstanding, numerous labor and environmental groups have teamed up to form the BlueGreen Alliance, a 15 million-member coalition of labor and environmental groups. The Alliance is backed by ten major unions including the United Steelworkers, the Utility Workers Union of America, the United Association of Plumbers and Pipefitters, the American Federation of Teachers, and the Service Employees International Union. The Alliance has released a statement supporting the new rule. Other coalitions designed to forge an alliance between labor and environmental goals include Trade Unions for Energy Democracy and the Labor Network for Sustainability. Both coalitions have missions to bridge the historic divide between the environmental and labor movements and work in solidarity towards shared goals.

Addressing Job Displacement

In an attempt to tackle the effects of job losses, the Obama Administration has proposed the Partnerships for Opportunity and Workforce and Economic Revitalization (POWER) Plus Plan. The POWER+ Plan specifically targets regions most likely to be hard-hit by the effects of the Clean Power Plan, and provides for over $1 billion in investments in those regions.

Those investments include $75 million for economic diversification and job creation, targeted at communities “impacted by changes in the power sector and coal industry.” It also includes $120 million for the Appalachian Regional Commission (ARC), $50 million of which is directed specifically to Appalachian communities most affected by coal economy transitions. In addition, the plan provides $1 billion over five years to restore lands and waters degraded by mining and to support related sustainable development projects. It also includes reforms to strengthen health care and pension plans for retired miners, as well as grants to federal agencies and programs that support job training and economic development.

The POWER+ Plan was first introduced in President Obama’s 2016 budget, and re-introduced in the 2017 budget. Congressional Republicans have already rejected the 2017 budget, thereby inviting the question: will the POWER+ Plan succeed?

Conclusion

If the court ultimately upholds the Clean Power Plan, it will likely have a net benefit for both workers and the environment. The challenge will be to ensure that the POWER+ Plan succeeds in protecting vulnerable workers, and that the recently forged labor-environmental coalitions accomplish their goal of creating a powerful new alliance for the future.