The US is on the cusp of a clean energy revolution — we can’t leave anyone behind

Although transitioning our nation’s economy from running on fossil fuels to clean energy is a big task, it’s never been a better economic decision than it is right now.

Clean energy is a major job creator in the U.S., employing 3.2 million Americans and accounting for more than 40 percent of all energy jobs in the country. In 2021, energy sector jobs grew at a much faster pace (4 percent) than overall U.S. employment (2.8 percent). These jobs are benefiting both red and blue states: California, Texas and New York currently employ the most clean energy workers.

Clean energy jobs are set to climb even more in coming years thanks to the massive investments in the Inflation Reduction Act (IRA) and bipartisan Infrastructure Investment and Jobs Act (IIJA) that will pour billions of dollars into clean energy technologies, invest in grid updates and electric vehicles, as well as make the U.S. more competitive in global markets. Sectors across the U.S. economy will see job growth from these climate-smart investments, most notably in the buildings and electricity sectors from energy efficiency, constructing new infrastructure for zero-emissions electricity generation, grid modernization and electrification.

In fact, new analysis from World Resources Institute finds that the U.S. can create nearly 1 million more net jobs by 2035 from federal climate measures included in the IRA and IIJA compared to business-as-usual. But the full employment impact can be significantly larger when you factor in provisions related to onshoring manufacturing of clean energy technologies, which could create up to 3.1 million additional net jobs during the same period. 

With the long-term tax policy certainty provided by the IRA, major corporations have announced multi-billion-dollar manufacturing investments across the country, including in states that have seen manufacturing decline in recent decades. Toyota recently announced a $2.5 billion electric vehicle battery plant in North Carolina, and First Solar announced a $1.2 billion investment to expand production of solar energy technology. Hyundai is considering accelerating its timeline to build electric vehicles (EVs) in the U.S. to take advantage of IRA EV-related tax provisions that require battery components and critical materials to be sourced from the U.S. or its free trade partners, with final EV assembly in North America.

As the U.S. transitions to a clean energy economy, however, it’s also important to account for sectors that depend heavily on fossil fuels and that will be impacted by the transition. Without policies incentivizing domestic manufacturing, the economy-wide net employment impact of decarbonization policies could be much smaller and some sectors, such as transportation and fuels, will witness a net job loss.

For example, EVs are expected to take less labor to manufacture, assemble and maintain than internal combustion engine vehicles. While engines and transmissions in combustion vehicles are manufactured domestically, battery cells for electric vehicles are currently mostly produced abroad. Scaling up domestic battery cell manufacturing capacity can generate jobs and economic growth as well as offset some of the job loss in the legacy auto industry.

Similarly, the clean energy transition risks creating job losses in the fuels sector associated with oil, natural gas, coal mining and extraction, as well as in the wholesale trade, distribution and transportation of these fuels. However, we already know which U.S. counties and regions are vulnerable to a transition away from fossil fuels, making it easier to direct clean energy investments and appropriate policy solutions to them.

Although federal decarbonization policies create net-positive employment benefits for the country overall, they must be complemented with targeted policies to avoid adversely affecting workers and communities with close ties to the fossil fuel industry. An unmanaged transition will not only impose economic costs on vulnerable workers and communities, but it could also create opposition to climate action that could delay this crucial energy transition. By incorporating additional smart policies, such as those incentivizing domestic manufacturing, targeting investment toward energy communities likely to see job loss due to the transition and requiring higher labor standards and worker protection, the IRA seeks to ensure that the clean energy transition will also be just and equitable.

However, we need to go further. Federal policymakers must build upon protections outlined in the IRA and develop additional policies that offer targeted support for communities and workers vulnerable to losses in jobs, public revenue and economic base due to a shift away from fossil fuels. Federal and state policymakers should also collaborate and co-develop clean energy projects with local communities to address concerns regarding pollution risks, ensure access to quality economic opportunity and integrate guidance on maximizing local benefits.

The U.S. has made impressive progress to stimulate the clean energy economy, but more action will be needed to reach net-zero emissions in the U.S. Taking additional actions to address the climate crisis, specifically to reach net-zero emissions by mid-century, can result in millions more clean energy jobs —  promising that if done right, the clean energy economy can benefit all Americans and ensure a more prosperous and equitable future for the nation.

Devashree Saha is a senior associate at World Resources Institute, United States. Follow her on Twitter:@Devashree_Saha

Dan Lashof is the director of World Resources, United States. Follow him on Twitter: @DLashof