The Politics of Transferable Skills and Energy Transition

• In Event: Energy, Politics, and the Public

Abstract

As the world grapples with the imperative of transitioning to clean energy sources, it becomes increasingly essential to understand the political ramifications of this shift, particularly in regions where polluting jobs are a fundamental part of the economic fabric. Large chunks of climate change policy packages such as the Inflation Reduction Act (IRA) or the EU’s Just Transition Mechanism are devoted to helping voters and regions for whom polluting jobs are instrumental to their way of life. Yet a growing body of literature in economics explores the challenge that workers in “brown" and declining sectors of the economy are facing when they seek to relocate to “green” and growing sectors (Vona et al., 2018; Lim et al., 2023). Contrary to popular narratives, transitioning to a low-carbon future entails major economic dislocations and permanent income loss for many workers across a range of industries. This paper explores the political ramifications of challenges inherent to energy transition in Canada, an advanced economy where fossil fuel production remains an important growth driver for many communities across the country.

For the constituency-level part of the paper, I draw on the O*NET dataset from the BLS and Statistics Canada’s annualised employment data. I first build a “skill-distance” matrix to measure the skill and training-related ease of transition between polluting and non-polluting jobs. I then assign a “skill-distance” value to every constituency in Canada between 2006 and 2021, based on the number of jobs lost in polluting sectors and the ease with which displaced workers could theoretically find a new and less carbon-intensive job within the same economic region. Drawing on data from the Future Skills Centre, I also identify economic regions where green employment has been growing at a faster pace than the national average, with investments in wind, solar and hydro-electric manufacturing.

At the individual-level, I leverage data from the 2015, 2019 and 2021 Canadian Electoral Surveys. Respondents are geocoded at the constituency and economic region level. They are asked to describe the nature of their occupation. I assign each respondent a 6-digit SOC number and calculate the labour market ease of transition for workers who are at risk of being displaced because of energy transition.

Unsurprisingly, I first establish that workers in polluting industries are more likely to oppose carbon pricing and the Liberal incumbent which presided over a more aggressive climate agenda. Second, I find that this opposition is stronger among polluting workers who face limited chances of finding new employment in the same economic region because their skills lack applicability in green industries. This resistance is also influenced by the wage disparities between polluting and cleaner job options with similar skill requirements. Third, I find a similar dynamic at the constituency-level. In those ridings where a significant portion of the employment pool is at-risk of being uprooted because of energy transition, the backlash against the Liberal incumbent is the strongest. It remains significant and strong even in those places where employment opportunities in green manufacturing have emerged.

My study offers valuable theoretical insights, indicating that individuals currently employed in carbon-intensive industries are often hesitant to support energy transition. This hesitance is driven in part by their current high compensation and the perception that they might not maintain similar income levels in less carbon-intensive fields. At the constituency and regional-level, the emergence of green employment opportunities does little to minimise the backlash against the incumbent perceived as promoting energy transition when carbon-intensive sectors are simultaneously experiencing a decline. These results suggest that even strong vocational retraining programs, while necessary, might not be enough to assuage the concerns of workers apprehensive about energy transition. The fear of permanent income loss because of skill mismatch or lower pay in alternative sectors weighs heavily on polluting workers’ perception of climate policies, and therefore has an effect on their voting decisions.

Author

• Florent P.-Proulx