Economic development for communities in transition

Coal power plant with smoke stacks at sunset

EDF and Resources for the Future reviewed existing policies that can create economic opportunities for communities affected by the shift to a clean economy. This report is the first in a joint series on ensuring fairness for fossil fuel workers and communities in transition.

Many communities reliant on coal as an economic driver, which includes the families of workers, business owners, teachers, nurses, local government officials and more, have struggled to find new opportunities in the wake of its downfall. The effects of the COVID-19 pandemic have exacerbated this trend in the short term. And in the long run, the necessary move to a clean economy will not only disrupt coal communities, it will impact communities reliant on oil and gas and other industries reliant on fossil fuels.

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Economic development policies can be a lifeline for these communities, putting them on the path to diversify and revitalize local economies through public and private sector funding.

Key insights

Our review of these programs yields five key insights into how federal economic development policy can be utilized to ensure a fair transition to a clean economy.

  1. Federal intervention can play a positive role in local economic development. The available empirical studies, while limited, show that both geographically targeted programs and those with a broad geographic and economic scope can lead to increased employment, greater business stability and other local economic benefits.
  2. Government agencies and local stakeholders must coordinate closely to successfully serve these communities. A lack of coordination across federal economic development programs has been highlighted as a potential challenge by numerous researchers.
  3. Existing economic development programs can be augmented or redirected to support fossil fuel-dependent communities and workers, even if a given program was not originally designed for that purpose. Numerous programs examined in our report have offered support to communities facing economic challenges for over half a century or more.
  4. Federal programs explicitly targeting economic development have limited funding, with just $80 million designated to support economic development in fossil energy communities. This level of spending would need to grow considerably to support the many workers and communities affected by affected by the shift toward clean energy.
  5. Finally, because deep emissions reductions will have geographically concentrated economic effects, policies supporting economic development in the most affected communities will most likely need to be geographically targeted.

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