Whose Jobs Are at Risk During a Transition to Green Energy?

To combat the negative effects of climate change, making a transition to green energy is vital. But what will happen to people whose jobs are significantly linked to fossil fuel use? And what policy options are available to mitigate the employment effects of such a transition?

That was a question explored at a September 2024 session of the MIT Institute for Work and Employment Research (IWER) weekly research seminar. While most sessions of the IWER seminar focus on just one scholar’s research, this special session consisted of a shorter presentation by MIT Sloan Professor Christopher Knittel, followed by comments from a panel of three MIT faculty members with differing areas of expertise. The aim? To foster a multidisciplinary discussion about the intersection between the transition to a greener economy with work and good jobs concerns. 

“The costs of climate change are not uniform,” observed Knittel, who is the MIT Sloan School’s Associate Dean for Climate and Sustainability, as well as the George P. Shultz Professor and a Professor of Applied Economics at MIT Sloan. Research Knittel conducted with a former MIT graduate student, Kailin Graham, mapped the carbon intensity of jobs across the U.S., capturing 86% of U.S. carbon emissions through a measure Graham and Knittel call the “employment carbon footprint.” In their analysis, Graham and Knittel sought to measure, on a county-by-county level, not only direct carbon emissions at a workplace, but also emissions related to its electricity use, as well as those embedded in products made from fossil fuels.

Through their research, which was published in the journal PNAS, Knittel and Graham found that, during a transition to green energy, jobs in the U.S. are most vulnerable in the inland areas of the country. And the carbon-intensive jobs are not all related directly to energy extraction, Knittel explained; many, for example, involve agriculture or manufacturing. 

“Middle America is at risk here,” Knittel said, adding that “it’s not surprising that…the policymakers inside of Middle American are pushing back on aggressive climate legislation.”

“This is something that has to be addressed through the policy discussions,” added Knittel, who is the Faculty Director of the MIT Climate Policy Center. He suggested that, unless the country can find ways to help areas whose economy will be negatively impacted by a transition to clean energy, deadlock about climate policy will likely ensue. Knittel observed that there are examples of areas whose economic base has changed dramatically and successfully over time, such as Pittsburgh, Pa. But he also pointed out that there are considerable areas of the country where there is limited access to nearby community colleges that can provide worker retraining.

After Knittel’s presentation, Paul Osterman offered a perspective on retraining options that drew on his years of research on both training programs and community colleges. Osterman, who is a Professor Emeritus of Human Resources and Management at MIT Sloan and a member of the MIT IWER faculty, noted that, in the U.S., jobs in energy-related industries pay non-college educated workers better than jobs in the rest of manufacturing. He suggested that investments in attracting big new plants to regions that lose a lot of jobs related to fossil fuels could help the overall labor market in those areas. Osterman also indicated that retraining programs for younger workers can be successful if designed well. “There are good retraining models out there,” he explained. 

But, on the other hand, Osterman said the track records of programs that seek to retrain older dislocated workers for new jobs are “pretty grim.” Instead, he suggested that policymakers focus on getting such workers into “a job that has some dignity” and providing income support to help make up for their loss in pay. He also noted that U.S. community colleges vary greatly in quality. 

Christine J. Walley, the SHASS Dean’s Distinguished Professor of Anthropology at MIT and a Faculty Affiliate of IWER, shared insights from her years of research on the effects of steel mill closures in the southeast Chicago and northwest Indiana area on the communities there; in that area, she explained, more than 100,000 jobs in the steel industry were lost beginning in the 1980s. Since then, she said, the region has suffered from both the health effects of job loss (such as more suicides and stress-related illnesses) and the health effects of environmental pollution. She noted that many new economic development projects in the region yield only a comparatively small number of jobs.

Namrata Kala, an Associate Professor of Applied Economics at MIT Sloan, spoke about the effects of climate change on employment in India, which has high baseline temperatures and is a country where more than half of workers are in the agricultural sector, where work is often performed outdoors. She noted that, although temperatures of 120 degrees Fahrenheit were reported this past summer in India, India has no regulatory standard for maximum allowable heat in the workplace. She pointed out that research shows that heatwaves and environmental shocks have negative on both worker and firm productivity. 

Kala emphasized the need to think both in terms of climate resilience for jobs and “green skills.” “When you talk about climate change and jobs, you have to…talk about both adaptation and mitigation,” she said. She pointed out the importance of other employment options for workers. “Labor market mobility can increase resilience in the face of environmental shocks,” Kala said.

During the group discussion after the presentations, John Sterman, who is the Jay W. Forrester Professor of Management at MIT Sloan as well as Director of both the MIT System Dynamics Group and the MIT Sloan Sustainability Initiative, underscored that Graham and Knittel’s work is designed to help the U.S. develop a stronger climate policy by identifying regions that will need assistance.  This is essential because, Sterman noted, we don’t, as a society, have very much time to address climate change. “We don’t really get to choose to delay,” he said. 

Interesting in learning more? Read more about Graham and Knittel’s research or visit an interactive map showing their county-by-county findings.