It is clear that the world needs to turn away from fossil fuels such as coal and oil as a primary means of energy generation. Fossil fuels have contributed to the majority of greenhouse gas emissions, and their use poses a significant threat to personal and public health. However, moving away from coal, the dirtiest fossil fuel, will undoubtedly have a negative impact on communities that rely on coal mining and other coal-related activities as a source of income.
This has been one of the primary arguments for opponents of the green-energy transition: the green-energy transition could potentially rob thousands of Americans of their jobs. Mitigating this potential negative outcome will be critical to a smooth move to green energy that doesn’t leave anyone behind.
U.S. President Joe Biden hopes to breathe new life into these struggling communities by encouraging renewable-energy companies to set up shop in towns with closed coal mines and power plants. Opening new businesses in struggling towns and cities is a great way to revive economic activity. It creates new jobs, provides local governments with tax revenue, and generally increases the amount of money circulating within the town or city.
The current White House administration plans on using bonus tax credits for new renewable energy projects to attract clean energy companies to such towns and help rebuild the coal country.
Rather than placing fossil fuels and clean energy on opposite ends of a spectrum, President Biden is looking to use the proliferation of green energy to help revitalize places that traditionally relied on processes involving dirty fuels such as mining, drilling and power generation.
According to U.S. Energy Secretary Jennifer Granholm, encouraging green-energy companies to invest in coal country could allow it to “rise like a phoenix.”
Treasury Secretary Janet Yellen said that coal communities tend to have the kind of workforce and experience that would benefit the most from transitioning to green energy. Still, she noted that an initial public investment would help kickstart the process in many cases.
Through the Inflation Reduction Act, the Biden administration will provide investment into the clean-energy transition through tax credits and benefits as well as outright investments in renewable technology. It is offering an additional 10% tax credit for clean-energy projects built in old oil and coal towns to boost investment in these towns.
The administration has also invested $14 billion in old coal and oil towns over the past two years. However, some experts predict that rebuilding such communities will take a long time, a testament to how entrenched coal energy and extractors such as Arch Resources Inc. (NYSE: ARCH) are in the fabric of different communities around the world.
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