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News from EPI EPA Proposed Clean Power Plan Will Have a Modest, Positive Net Effect on Overall Employment, with Job Gains and Losses in Different Industries

In June 2014, the Environmental Protection Agency (EPA) issued a proposed regulation, known as the Clean Power Plan (CPP), which requires that states develop plans to reduce greenhouse gas emissions from existing fossil fuel-fired power plants by 2020. This rule is the most substantial U.S. regulatory undertaking to date aimed at mitigating global climate change. In A Comprehensive Analysis of the Employment Impacts of the EPA’s Proposed Clean Power Plan, EPI Research and Policy Director Josh Bivens builds on EPA estimates to provide a complete overview of the effects—both positive and negative—that the mandated emission reductions may have on employment, as well as to compare the composition of employment in job-gaining versus job-losing industries.

Bivens finds that when employment multiplier and price effects are included, the proposed CPP is likely to lead to a net increase of roughly 285,000 jobs in 2020—the result of significant gains and losses across different economic sectors and industries. Net job creation falls significantly by 2025 and 2030, but still provides a boost relative to a non-CPP baseline in those years. By 2030, overall net employment gains as a result of the CPP will equal roughly 24,000.

“The proposed CPP is not an employment policy—it’s a policy to mitigate carbon emissions, which is a crucially important goal. But while job creation is not a primary goal, it’s still useful to know that the proposed CPP will provide a small boost to overall employment growth in coming years.” said Bivens. “However, it will also place disproportionate burdens on some economic sectors and communities, and policymakers should address these challenges with complementary policies.”

The majority of gross job losses will occur in coal mining and coal-fired electric power generation, transmission and distribution, with additional modest losses in some manufacturing segments that supply these sectors or have particularly energy-intensive production processes. The largest gross job gains will occur in construction and manufacturing sectors related to investment in energy efficiency and renewable power generation.

Industries that will experience gross losses tend to have fewer workers with a four-year college degree or more. However, they also have more middle-wage jobs and fewer low-wage jobs, in part because job-losing industries are significantly more unionized than job-gaining industries. Job losses are also likely to be concentrated geographically, while job gains will likely be spread throughout the country.

These data indicate that while the CPP is likely to cause a net increase in jobs, the job loss that does occur poses particularly difficult challenges for displaced workers. Generally, older workers with fewer formal education credentials have more difficulty with job displacement than other workers. Bivens outlines a number of policies that could aid with these transitions, as well as keep particular economic sectors from bearing a disproportionate burden, and increase the efficiency of the proposed regulation in mitigating carbon emissions.