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Economic Performance in US Fossil Fuel Communities
Reports by Noah Kaufman, Ariane Desrosiers & Sarah Doctor • December 05, 2024
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Economic Performance in US Fossil Fuel Communities
Reports by Noah Kaufman, Ariane Desrosiers & Sarah Doctor • December 05, 2024
This report represents the research and views of the author. It does not necessarily represent the views of the Center on Global Energy Policy. The piece may be subject to further revision. Contributions to SIPA for the benefit of CGEP are general use gifts, which gives the Center discretion in how it allocates these funds. Rare cases of sponsored projects are clearly indicated.
For a full list of financial supporters of the Center on Global Energy Policy at Columbia University SIPA, please visit our website at Our Partners. See below a list of members that are currently in CGEP’s Visionary Annual Circle. This list is updated periodically.
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CGEP’s Visionary Annual Circle
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Corporate Partnerships
Occidental Petroleum Corporation
Tellurian Inc.Foundations and Individual Donors
Anonymous
Anonymous
the bedari collective
Jay Bernstein
Breakthrough Energy LLC
Children’s Investment Fund Foundation (CIFF)
Arjun Murti
Ray Rothrock
Kimberly and Scott Sheffield
Executive Summary
Rapidly reducing greenhouse gas emissions from fossil fuels to address the severe threats of climate change requires economic transformations that pose challenges for regions heavily dependent on coal, oil, natural gas, or other carbon-intensive industries. The United States is the world’s largest producer of oil and natural gas and the fourth-largest producer of coal, and communities across the country depend heavily on fossil fuel industries for jobs, investments, and public revenues that fund schools and other critical services. These communities will need considerable support to successfully navigate a global transition away from fossil fuels, and a better understanding of their local economies will help policymakers design and implement pragmatic support. However, scant evidence exists for such use today.
This report, part of the Resilient Energy Economies initiative co-led by the Center on Global Energy Policy at Columbia University SIPA, uses a novel dataset and case studies to establish a baseline of local economic performance in fossil fuel–dependent communities between 2004 and 2019. This period captures the peak and first decade of decline of the US coal industry as well as the shale revolution that boosted US oil and gas production.
The report finds:
- Weak economic performance in coal communities. In US counties with coal mines or coal power plants, gross domestic product (GDP) per capita and wages per capita grew slower than the national average and at a similar rate to small counties (populations less than 100,000) without fossil fuel infrastructure. Counties with coal mines also experienced relatively high levels of poverty and unemployment.
- Signs of economic distress in communities with substantial declines in coal production, but not with large coal power plant closures. Four of the five counties with the largest recent decline in coal production experienced sizable contractions of their economies. In some cases, this has led to restrictions of basic amenities for residents, such as school closings in Boone County, West Virginia. In contrast, the effects on economic outcomes of large coal power plant closures were unclear.
- Strong economic performance in oil and natural gas communities. Across US counties with wells or refineries associated with oil or natural gas production (but no coal infrastructure), GDP per capita and wages per capita grew faster than the national average.
- The most carbon-intensive communities are booming. GDP per capita in US counties in the top 10th percentile of most carbon-intensive jobs (using a metric that estimates the carbon dioxide emissions attributable to the supply chain of each industry) grew at more than twice the rate of the national average, while wages per capita grew nearly twice as fast.
- More diversified economies have been less vulnerable to fossil fuel declines The data show a strong positive correlation between economic diversity and the ability of local economies to better weather the decline of fossil fuel industries. For communities with the largest reductions in coal production, wages and GDP outcomes were worse in counties with less economic diversity.
While economic outcomes vary widely across regions, the analysis in this report indicates that, absent policy support, fossil fuel–dependent communities that fail to diversify their local economies face acute risks from the clean energy transition. The results of this report can contribute to forthcoming research assessing the effectiveness of government support for fossil fuel–dependent communities, which should enable improved policymaking going forward.
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