The best policies to help coal towns weather the switch to renewables

A new report singles out Colorado, Illinois and New Mexico as trailblazers in just-transition laws. Could fossil strongholds Wyoming and West Virginia follow suit?

A large coal-fired power plant next to snowy foothills
Craig Station, one of Colorado's largest coal-fired power plants (Hyoung Chang/MediaNews Group/The Denver Post/Getty Images)
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In the face of competition from cheaper and cleaner sources of energy, coal mines and plants have been shutting down across the U.S. for the past decade. 

We’ve lost 45,000 coal [mining] jobs since 2012,” said Jeremy Richardson, manager of the carbon-free electricity program at RMI, a clean-energy think tank. The energy transition is already happening.” (Canary Media is an independent affiliate of RMI.)

For towns living through this transition, it can be devastating. Coal workers lose well-paying jobs, and communities lose a bedrock of their economies. How communities weather these choppy seas depends on the level of support they receive, which varies from state to state. That’s one of the takeaways of a new report by RMI, which analyzed 16 bills passed by states since 2011, all aimed at easing the transition away from fossil fuels and into the clean energy economy. 

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The report’s findings enable lawmakers to learn from what has been done before to support a just transition for coal communities, Richardson told Canary Media.

Map of US states introducing or passing coal transition legislation since 2019
States in dark blue have passed coal transition legislation since 2019. States in light blue have introduced such legislation since 2019. The new RMI report analyzes bills that have passed. (RMI)

Three states in particular stand out for their policies, according to Richardson: Colorado, New Mexico and Illinois. Here’s what they’re getting right.

Colorado: Office of Just Transition

In 2019, Colorado passed a bill to create a groundbreaking” office dedicated solely to supporting coal communities, Richardson said. The first in the nation, the Office of Just Transition put together a roadmap, the Colorado Just Transition Action Plan, which clearly lays out the steps it would take to help communities transition their economies away from coal. This includes funding, which the office has started distributing this year, for specific economic development projects such as business parks and outdoor recreation.

Proposed by Democrats, the office wasn’t a popular idea across the aisle. Republicans initially balked at the legislation and refused to support it when it passed in 2019. But with grant money going to their communities, some have since changed their minds — and their votes, with some Republicans now backing boosts to the office’s funding.

The concept has gained traction, even in the top coal-producing states, West Virginia and Wyoming. However, bills in those states were significantly altered between when they were introduced to their final votes, and they ultimately failed to pass. 

Those bills didn’t go anywhere,” Richardson said — but it’s encouraging that even in states where talk of coal closure has historically been political poison, lawmakers are starting to have these conversations. 

In Colorado, a 2021 law enables the state’s Office of Just Transition to provide immediate relief to workers and their families. It can test innovative coal transition work support programs,” which could potentially include temporary wage replacement or differentials” (payments to make up for the difference between their current and former job salaries) for three years, according to Richardson. 

To shore up a town’s tax base — the majority of which may have been generated by the coal industry — the state also requires utilities to file plans that show how they’ll compensate governments in the wake of coal industry closures and lost tax revenue. Xcel Energy, for instance, will continue to pay property taxes to the city and county of Pueblo through 2040 to compensate for shutting down Comanche Generating Station in 2031, decades ahead of schedule.

New Mexico: Just transition funds

New Mexico passed the Energy Transition Act in 2019, which, according to Richardson, stands out for creating dedicated pools of funding. These are allocated for the economic development of impacted communities, assistance for displaced workers and support for tribal communities, totaling $40 million. As the RMI report states, recognizing tribal communities is important because they must recover from not only coal plant closure but also a historical legacy of dispossession and disinvestment.”

Richardson said that New Mexico was one of the first states really to say, Look, we’re going to actually try to invest in the places that are going to be harmed by the shift away from coal.’” 

The state’s legislation also authorized $30 million for coal plant decommissioning and reclamation costs, though the timeline for implementing the law is unclear. However, when the funds do materialize, they will come from the financial wizardry of securitization — a process akin to refinancing a mortgage such that early closure of expensive coal plants results in savings. That savings can be passed on to workers, communities and utility customers. 

When the New Mexico legislation was enacted, securitization proposals had to be authorized at the state level. But the recently passed Inflation Reduction Act has essentially made the tool available nationally, according to Richardson. The climate law creates the new Energy Infrastructure Reinvestment Program in the Department of Energy Loan Programs Office. The new program allows utilities to apply for low-interest loans, guaranteed by the Loan Programs Office, to retire fossil plants early and invest in clean energy. The program can also finance coal site remediation, bolstering an area where state legislation has often been weak, according to RMI’s report.

Illinois: Centering workers and environmental justice communities

In September 2021, Illinois passed the Climate and Equitable Jobs Act, a law backed by labor and climate justice groups. It included especially powerful provisions for displaced workers and what the state classifies as environmental justice communities” that have borne the brunt of fossil fuel pollution. 

The Illinois legislation created an $80-million-a-year program for clean-energy job training hubs that prioritize displaced energy workers, residents of environmental justice communities, and underserved or disadvantaged individuals, including people who have been incarcerated or in the foster care system.

To help ensure the programs lead to employment, the law requires that developers of renewable energy projects hire a workforce that consists of at least 10 percent displaced coal workers and underserved groups. It increases that proportion up to 30 percent by 2030. Moreover, the law stipulates that workers at utility-scale renewables projects be paid prevailing wages and have protections under project labor agreements.

The law also calls for the state to partner with community-based organizations to get the word out and recruit for these clean energy worker-training programs.

The act includes other just-transition policies that hit common pain points. It stipulates that coal plant owners give more notice of mass layoffs, raising the federally required minimum of 60 days to two years. That’s meant to give workers and communities more time to seek assistance. 

Illinois is also the only state so far that has tried to address the cultural dislocation of the energy transition, according to the report. Its legislation created a grant program that can be used, for example, for counseling services or projects that commemorate a community’s coal legacy — a source of pride that can span generations.

Illinois is probably the most comprehensive of any of the states” in its just-transition policy measures, said Richardson.

A high bar for just transition policy

Besides comparing existing transition policies, the RMI team also laid out what an ideal policy could look like, proposing a three-part strategy that tackles the problems that transitioning coal communities face over time — immediately in the wake of coal closures, in the short term and in the long term.

Immediately, workers and their families need relief, including temporary wage replacement and stopgap benefits, for example. We don’t have a strong safety net in the United States; you lose your health insurance and your retirement benefits when you lose your job,” Richardson said. Local governments similarly need support to recover tax revenue lost when coal operations shut down.

In the short term, coal sites need to be cleaned up and reclaimed so that they can support future economic development, said Richardson. Coal ash ponds contaminated with toxic heavy metals can leach into groundwater if they’re unlined, abandoned or otherwise mismanaged, presenting a health hazard that’s also a liability for developers.

Who wants to invest in a community where the drinking water is poisoned? Why would you buy the property and try to do something with it?” said Richardson. You need comprehensive cleanup to set your community up for success.”

And in the long term, communities need well-coordinated, sustained funding to revitalize their economies post-coal. Economic development and diversification, to be successful, take decades,” Richardson said. It just really takes committed and robust funding.”

Ambitious policy that truly supports coal communities isn’t necessarily politically palatable in every state. But lawmakers can still take small steps and build momentum for these measures over time, Richardson said. He again cited the example of Colorado, where the Office of Just Transition garnered increasing bipartisan buy-in over the course of just a couple of years, he said.

For state lawmakers looking to help their own communities transition, Richardson said, Start at the place where the politics of your legislature will let you start.” It could be the seed that impacted workers and communities need. 

Alison F. Takemura is staff writer at Canary Media.