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ESG Payroll Spotlight: Just Transition for the Workforce Toward a Net-Zero World

Deborah Tam, CPP  

Deborah Tam, CPP  

Environmental, social, and governance (ESG) issues are under increased scrutiny as evidenced by legislative efforts as well as corporate strategies.

Issues may include:
- Environmental: carbon emissions and mitigation efforts.
- Social: human rights, diversity, equity and inclusion, nondiscrimination, employee privacy, and the health and welfare of employees.
- Governance: executive compensation as well as appropriate compensation incentives and ethics.

In this ESG spotlight, we examine the environmental issue of equitably transitioning displaced workers as the nation moves toward clean energy.

What’s at Stake

The aptly titled 2021 United Nations Emissions Gap Report, “The Heat Is On – a world of climate promises not yet delivered,” warned that climate change was intensifying and despite climate pledges and mitigation measures, the world is on track for a 2.7°C temperature increase by 2099. To reach the goals of the Paris Agreement, the report states that within eight years, annual greenhouse gas emissions would need to be halved. The outlook is bleak, the report warned, because many climate plans do not act until after 2030. 

The U.S. Environmental Protection Agency explains that the combustion of fossil fuels (coal, natural gas, and oil) for energy and transportation is the main cause of carbon dioxide emissions, making up 79% of U.S. greenhouse gas emissions in 2020. Decarbonization, the systematic process of decreasing and eliminating dependency on fossil fuel energy sources, is essential to slow down global warming. 

 Biden-Harris Administration on Clean Energy

One of the priorities of the Biden-Harris administration is steering towards net zero emissions with clean energy policies. One step towards that goal was the signing of an Executive Order in December 2021, that ordered the federal infrastructure move toward zero-emission vehicles by 2035 and carbon pollution-free electricity in its buildings by 2030. The Executive Order also required the Department of Labor to launch a training course for senior leadership team on climate change management consideration. 

The administration also ties the clean energy revolution with job creation. An estimated 80,000 jobs will be created by the rapid build-up of offshore wind supply chain in areas like the Portsmouth Marine Terminal in Virginia and the Port of Albany in New York. 

But the clean energy revolution does come with issues. 

Just Transition

Global efforts as well as a handful of states are aspiring towards a just transition. The term “just transition” is not new and has its roots in the 1970s when labor organizations banded with environmental justice groups to address industrial pollution. The European Union has used the term since the 2000s to describe socially equitable policies when combating climate change. This includes not only environmental justice issues such as minorities being disproportionately impacted by industrial pollution, but also includes policies that make the transition to clean energy possible. Canada, Germany, the UK, Australia, and New Zealand have just transition policies in place.  

The 2021 Energy & Employment Report released by the U.S. Department of Energy revealed that while oil, natural gas, and coal fuel jobs declined, wind generation jobs increased, but job creation did not keep pace with job reduction. While the median wage of an energy worker was $25.60 per hour, 34% higher than the national median, there is also a wage and benefit gap between fossil fuel workers and clean energy workers. According to figures released by Bureau of Labor Statistics fossil-fuel workers earn $70,310 to $81,460 annually compared to $46,850 to $64,330 annually in solar and wind generation. Only 32% to 57% of clean energy workers receive health benefits. This gap may be explained by the fact that the unionization of clean energy workers is low as compared to gas, nuclear, and coal workers. 

In general, just transition may include policies that address fossil fuel worker reduction with programs that consist of job search help, training and education, early retirement assistance, and climate adjustment assistance benefits. Climate adjustment assistance benefits would mirror benefits available under the Trade Adjustment Assistance Reauthorization Act of 2015 for workers who lost jobs or whose hours or wages were reduced due to increased imports. The Trade Adjustment Assistance (TAA) Program allows a group of workers or a union to petition the DOL for benefits which would then be administered by the state workforce agency if approved. Benefits would include assistance payments as well as alternative job training, job search assistance, and relocation allowances. 

The State of States

The alarm has been sounding for years and yet, only a handful of states have just transition or similar policies in place. 

California Just Transition Roadmap

The Global Warming Solutions Act, passed in 2006, was amended in 2017 to direct the California Workforce Development Board to address education, training, and identify other resources that would allow the state to achieve its greenhouse emissions reduction goals. As part of this effort, in September 2020, Gov. Gavin Newsom issued an Executive Order directing the California Workforce Development Board to develop a Just Transition Roadmap. The state’s climate action plan for 2030 provides that just transition policies must include short-term assistance such as skills retraining and upgrade, unemployment benefits, and bridges to retirement with fully funded pensions and healthcare for older workers. The plan cites the recent closure of a Centralia power plant as an illustration of how just transition could work. Plant workers, through their union and negotiations with the plant facilitated by the governor, were able to negotiate worker retention during the process, early retirement for older workers, and retraining for younger workers. Gov. Newsom continues the efforts in the 2022 budget proposal where the governor wants to commit $50 million to address the needs of displaced oil and gas workers and another $15 million for a workforce training pilot to train displaced workers in oil and gas well capping activity. 

Currently, there are over 10 bills that the state legislature is considering. Some bills propose a formal state agency to tackle these issues such as an Office of Just Transition (A1634), a Just Transition Advisory Commission (A1423), or an Office of Clean Energy Workforce (A2204). Other bills are looking towards programs that would include workforce development in climate action plans (S989) while others seek to set wage standards for climate action projects (A2419). It’s clear that California does not feel its work is done in this area. 

Colorado Office of Just Transition

Where California works toward a formal state office on the issue, Colorado already has an Office of Just Transition. The Office was created to provide transition support for coal-related jobs. The Office provides funding to coal transition communities, to help secure new jobs for displaced coal workers, and to provide a path to retirement for older workers. The Timeline of Just Transition Work already notes numerous scheduled closures through 2070. The Just Transition plan notes that plant closures are scheduled in advance, allowing the state to work with the community, the plant, and its workers for feasible transition. The Just Transition Advisory Committee (JTAC) makes several recommendations in the plan including early engagement when a closure is known to allow for the development of individual transition plans that include education and training in other areas. In addition to training and relocation support, JTAC recommends not only training for new jobs but also training displaced workers to start a business. JTAC also recommends providing temporary “wage and health differential” benefits to displaced workers. 

Connecticut Requirements for Renewable Energy Employers

The state passed legislation in 2021 that requires renewable energy project developers to establish a workforce development plan that provides newly hired and existing employees a chance to develop skills for higher paying jobs, including through apprenticeship programs. Developers are also required to pay construction employees a prevailing wage and benefits as prescribed by state law. 

Illinois Clean Jobs Workforce Network Program

The state’s Clean Jobs Workforce Network Program is a 13-hub network that addresses the needs of displaced energy workers that may be impacted by low educational attainment and language barriers. The Network engages with potential employers for job matchmaking and job fairs and provides access to displaced workers to training and certification test preparation. The state has a Bill of Rights for displaced energy workers administered by the Department of Commerce and Economic Opportunity and the Department of Employment Security that includes requiring advance notification of a power plant or coal mine closure, informing displaced workers of the various assistance programs available, and financial planning services. The state also has an Energy Transition Workforce Commission that is tasked with accounting all workers in the fossil fuel energy sector as well as the anticipated closure dates of fossil fuel plants, nuclear power plants, and coal mines, and the impacts of closures including layoff numbers, early retirements, and salary changes. Finally, the state has set up the Displaced Energy Worker Dependent Transition Scholarship to assist children of displaced energy workers with a transition scholarship for higher learning institution. 

Proposed legislation would provide a living wage-equivalent stipend to participants of clean energy job training programs and job search help including resume creation, job interview coaching, and networking opportunities. 

Maine Clean Energy Workforce Partnership

The Energy Office has established a Clean Energy Workforce Partnership to prepare residents for clean energy jobs. Clean energy employers in the state have noted that there is a lack of employees that resulted in slow growth. 

Maryland Climate Solutions Now Act

The state passed the Climate Solutions Now Act that continues and renews the commitment made with its Greenhouse Gas Emissions Reductions Act. It directs the Maryland Commission on Climate Change (MCCC) to establish the Just Transition Employment and Retraining Working Group to study various issues and opportunities related to workforce development, training, job loss, and job creation. The study would include a review of how many workers would be displaced as well as the jobs and skills required for clean energy jobs. 

Massachusetts Clean Energy Workforce Equity Program

The program identifies potential clean energy industries, the skills and training required for jobs in those industries, and make recommendations for policies that promote employment in the clean energy industry. $50,000 Planning Grants are available for partnerships of organizations serving environmental justice neighborhoods to develop a workforce training plan aimed at training residents for priority occupations and working with employers to hire or apprentice trainees. Proposals are due July 1, 2022. 

The state has several proposed bills that would add to their climate action work. One bill would establish the Next Generation Green Workforce Fund to provide training to displaced energy works in green technology with comparable wages, benefits, and union representation. Another bill directs the Massachusetts Clean Energy Technology Center to develop a five-year workforce development plan for outreach and recruitment for the clean energy industry for displaced fossil fuel workers and individuals at high risk for climate change. One proposed bill would provide climate adjustment assistance benefits to displaced workers that resemble trade adjustment assistance benefits and provide various training opportunities. 

New Jersey Office of Climate Action

Under an Executive Order, the state established the Office of Climate Action and the Green Economy in February 2021. Among the goals was the acceleration of green jobs growth and green workforce development. One month later, the state announced a $1M grant for clean energy jobs training. A new bill seeks to create the Clean Energy Technology Center and Alternative and Clean Energy Investment Trust Fund to create clean energy employment opportunities. 

New Mexico Energy Transition Act

The state’s Energy Transition Act, passed in 2019, provides workforce training to displaced workers and transition assistance to impacted communities. The Act established an Energy Transition Economic Development Assistance Fund that helps employers to qualify for tax relief for hiring displaced workers. The Energy Transition Displaced Worker Assistance Fund provides funds for programs for displaced workers as well as pay for certified apprenticeship program participation by displaced workers. 

New York Climate Action Council

The state’s Climate Action Council is a 22-member committee that includes Roberta Reardon, Commissioner of the New York State Department of Labor. The Council includes the Just Transition Working Group. The Council has released its draft scoping plan that includes displaced worker support strategies that consist of education, registered apprenticeships, certifications, licensing in trades, securing wage support, and career coaching. The plan also will evaluate labor standards to promote good wages and benefits as well as providing incentives for hiring workers in disadvantaged communities. Finally, the plan will provide entrepreneurship training and small business startup support for displaced workers. 

Just this February, Gov. Kathy Hochul announced that the state proposed a $25 million statewide federal grant to reskill and train workers, including displaced fossil fuel workers. The training would focus on clean energy opportunities in offshore wind, solar, and advanced manufacturing. 

Oregon Climate Change Adaptation Framework

The state’s plan includes identifying innovation sectors and pivoting towards these sectors and looking towards training and retraining workers. 

Vermont Climate Council

The Council has released its Initial Vermont Climate Action Plan. The plan includes recommended strategies for workforce development that include training and an apprenticeship program in the clean energy sector. 

Washington Clean Energy Workforce Transition Workgroup

 In its recently passed budget bill, the governor is required to convene a clean energy workforce transition workgroup that will include the Washington Employment Security Department. The group is tasked with assessing the impacts of climate change and developing policy and practice recommendations on emerging issues in workforce development related to climate change. 

Wisconsin Clean Energy Plan

Gov. Tony Evers signed an Executive Order that created the Office of Sustainability and Clean Energy (OCSE). The Office has released the state’s first Clean Energy Plan. The plan seeks to create more than 40,000 jobs by 2030 and would invest in job training and apprenticeship programs in the clean energy sector. The plan would fast track workforce development and just transition. As part of a Just Transition plan, OCSE will track facility closures and job layoffs in fossil fuel industries and identify the economic impact as well as design tax credits or incentives to bring redevelopment to job sites such as clean energy. Finally, OCSE will adopt a displaced workers program that would include a bill of rights, including incentives for hiring displaced workers. 

What’s on the horizon

Congresswoman Pramila Jayapal (WA-D) has introduced the Climate Resilience Workforce Act. Under the bill, the Climate Resilience Equity Advisory Board would make recommendations to the newly created Office of Climate Resilience regarding climate resilience jobs and training opportunities. Climate resilient sectors include transportation, energy, industry, commercial and residential buildings, and agriculture. The bill creates the Center for the Climate Resilience Workforce which would serve as a public resource of job quality, training, and job creation as well as disseminate information regarding the climate resilience workforce. The bill would also provide Climate Resilience Workforce Grants to fund projects that create local jobs to support climate resilience as well as implement climate resilience action plans. Workforce Development Training and Hiring Grants would be made available to establish new apprenticeship programs, maintain and expand current apprenticeships, provide direct financial support to apprentices while they are enrolled in an apprenticeship program, help workers obtain credentials, accreditations, and licenses for climate resilience careers. The legislation sets minimum labor standards for climate resilience workers. 

States also have just transition on their radar and there are many bills proposed in 2022. 

Hawaii

The state has a proposed bill would provide funding to the Hawaii Natural Energy Institute to make recommendations to aid in the transition of the state workforce to meet the needs of a decarbonized economy among other items. 

North Carolina

A recently proposed bill would allow the Department of Commerce to make grants to private businesses with fewer than 100 workers to help grow a green economy in the state. The bill would establish the NC Clean Energy Innovation and Research Fund for clean energy innovations and research and for the development of small businesses and encouragement of entrepreneurship in this area. 

Pennsylvania

The 2021 Clean Energy Industry Workforce Development Needs and Assessment Gap Analysis recommended that the state create a pipeline for displaced workers to transition into the clean energy workforce. A proposed bill would address the need by establishing the Council for Renewable Energy Workforce Development who would be tasked in the identification of the employment potential of the clean energy industry and evaluate the skills and training required for those fields, recommend policies that would promote employment growth, prioritize employment opportunities for displaced fossil fuel, and establish a target for job created that provide at least the prevailing wage rate for similar work. 

Rhode Island

The state has two proposed bills in the legislature. One bill would establish the Just Transition Office to support displaced fossil fuel workers as they transition to a green economy. This plan would include establishing incentives for hiring displaced workers, requiring energy employers to submit workforce reduction plans, and increase access to employment and training. Another bill would create the Clean Energy Workforce Transition Commission that would evaluate, plan, and coordinate efforts to increase access to employment and training opportunities in clean energy industries and related fields. 

South Carolina

Proposed legislation would require the Department of Commerce to conduct an economic development study to create a roadmap to effectively compete in attracting offshore wind energy supply chain industries to the state. The study would require estimating the number of and type of direct manufacturing jobs, potential benefits to local tax bases, and next steps to recruit and/or expand existing offshore wind supply chain companies. 

West Virginia

There are two bills in the state legislature currently that aim to help coal communities. One bill would create the Coalfield Communities Grant Facilitation Commission to administer state funds to provide eligible local entities the required local matching portion for certain grants for vocational and entrepreneurial training for displaced miners. The other bill would address the impact of coal communities as the workforce has been reduced. This includes identifying and estimating the timing of closures and job layoffs and the reemployment of impacted workers. Coal employers would be required to submit a Workforce Transition Plan that would include how many workers will not be offered an alternative position as well as how many workers will be offered early retirement. 

Checkpoint Edge will continue to report on the latest payroll developments as legislation progresses. 

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