The Impact of Energy Companies on Communities

Fossil fuel jobs have a substantial economic footprint in the communities where they operate. These companies generate revenue for local businesses and schools, provide workers with specialized experience, and offer higher pay than many other sectors.

A quick transition to renewables poses challenges for these communities. It is essential to design policies that support them through the transition.

Economic Development

The energy industry provides mining, refining, and electricity generation jobs in fossil fuel-dependent communities. These jobs provide workers with specialized training and career pathways. Fossil fuel industries also offer jobs in downstream industries, such as parts suppliers and transportation. In the transition to clean energy, policymakers should focus on supporting workers and communities in fossil-dependent sectors to transition to new opportunities.

In addition, electricity company in Texas have a responsibility to invest in community economic development. This includes investing in infrastructure and business-building programs and helping communities adapt to the changing energy landscape. For example, a solar farm project in the indigenous communities supported the indigenous nations in developing their energy literacy, which allowed them to manage the project without outside assistance. They also could reuse wood from the site to create a wood-fuel business that brings additional income to the community.

Energy community projects support citizen participation in the clean energy transition. They can offer direct benefits to citizens through their use of green energy, reducing electricity bills, and offering electric mobility services. These initiatives can have a wide range of social impacts, including job creation and contributing to flexibility in the electricity system through demand response and storage. They can take various forms, from an association or cooperative to a non-profit organization and even an ordinary company.

Job Creation

As climate-friendly energy technology becomes more cost competitive, it’s attracting previously locked jobs into fossil fuel sectors. For instance, solar energy jobs now exceed coal employment. Declining oil prices, coal plant closings, and automation have all contributed to the shift toward renewable energy.

These jobs are more well-paying than those in traditional energy sectors and often require high technical skills. One example is the electric vehicle industry, where manufacturing and assembly jobs have emerged for batteries, charging stations, and other electrical equipment, with workers earning average wages of more than a dollar per hour.

New jobs are a welcome addition to local economies in some areas. Similarly, energy efficiency initiatives can keep more money in regional pockets by decreasing electricity costs.

Energy communities can also help to ensure the new jobs are locally oriented. For example, a community solar initiative in Indonesia trained local staff to monitor solar photovoltaics and track household payments to ensure they made their electricity purchases on time.

Companies that work with community energy can promote these job opportunities by making public their commitment to hire diverse suppliers and to include communities in all aspects of the clean energy transition. For example, electric aims to spend 15 percent of its supplier budget on minority- and women-owned businesses by 2022.

Tax Revenues

The fossil fuel industry brings substantial tax revenues to communities where it operates, from oil exploration to power generation. Those funds benefit the state and local economies and help fund social programs such as disaster prevention, education expenditures, and arts and culture initiatives.

Fossil fuel industries also bring employment benefits to the areas where they operate. The jobs they create often pay higher wages than the national average and may not require advanced education beyond high school, providing a pathway to middle-class incomes.

Energy companies can build on these strengths by investing in community-based energy infrastructure and implementing strategies to foster more equitable decarbonization. One example is legislation requiring utilities to support their energy transition and justice spending into disadvantaged communities, including renewable energy investment, low-income energy assistance, air quality improvements, and workforce development.

Developing local energy resources typically requires the creation of an organizational entity that connects and serves multiple community members, such as an association, business, homeowner group, non-profit organization, or cooperative utility. Those entities can then collaborate to identify and develop energy projects, finance them through the local financial market, and share the benefits with their member communities. This approach can be used to scale and accelerate energy communities and can be modeled on the successful model of the indigenous communities.

Environmental Impact

Fossil fuel production and energy consumption create a variety of environmental impacts. These include air pollution, water pollution, and thermal pollution. Fossil fuel combustion is the leading cause of air pollution, including smog and particulate matter. It also produces sulfur dioxide and nitrogen oxides, contributing to ozone formation and greenhouse gases. Oil spills and other petroleum-handling operations also pollute water resources.

In addition to boosting the economy, energy companies can help improve communities’ quality of life by reducing the environmental impact of their activities. One way they do this is by providing access to renewable energy. In addition to being environmentally friendly, this energy source can lower household electricity costs. This is particularly important for low-income households, often disproportionately burdened by high energy costs.

Many fossil-fuel-dependent communities view the clean energy transition with skepticism or fear. This perception is unsurprising, given that workers susceptible to job displacement must find new careers and repurpose industrial infrastructure. However, utilities that embrace place-based and just transition strategies can help these communities reframe the transition. 

Utilities can play a critical role in the energy transition by partnering with communities to ensure everyone benefits from clean and green technologies. For instance, local solar PV systems built by community members can be used to support e-car programs. This can create a positive feedback loop that amplifies benefits in the community and beyond.