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11/04/2024 | Press release | Distributed by Public on 11/04/2024 14:50
Meet Them Where They Are: Lessons Learned from the Federal Interagency Working Group on Energy Communities
Meet Them Where They Are: Lessons Learned from the Federal Interagency Working Group on Energy Communities
This report provides an insider's perspective on lessons learned from the first three years of the US federal government's Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization.
Abstract
The federal Interagency Working Group (IWG) on Coal and Power Plant Communities and Economic Revitalization (informally, the IWG on Energy Communities) was established in 2021 to improve economic conditions in US communities that rely-or have relied-heavily on the coal, oil, and natural gas industries. This report describes the origins of the IWG and its evolution, noting challenges and offering lessons. We describe how, at the local level, changes in the energy system can have profound local economic consequences. Although a raft of new federal programs seek to transform the US energy sector and provide more equitable economic outcomes, numerous barriers make it difficult for fossil fuel-dependent communities to access new federal resources. To bridge this divide, the IWG has sought to address the needs of affected communities, but this work requires significant time and effort to build relationships and work toward solutions. We find that expanding the IWG and providing it with additional resources would improve its ability to enhance economic outcomes in fossil fuel-dependent communities.
Executive Summary
This report provides an insider's perspective on lessons learned from the first three years of the US federal government's Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization ("IWG on Energy Communities"). The IWG was created in 2021 to coordinate federal government assistance to US communities that have been, or are likely to be, harmed by reduced coal, oil, and natural gas demand in the domestic and global energy system.
The IWG's efforts have been informed by related programs from previous years and staffed in part by civil servants with experience in those programs. During its first three years, the IWG has grown and evolved, primarily in response to the needs articulated by the communities it works with. This evolution has led the IWG to become a truly "place-based" federal program: it works directly with local stakeholders to align, as much as possible, the assets of the federal government with the needs and priorities of local stakeholders.
We highlight five lessons:
- The IWG's creation was prescient. The IWG was created in the Biden-Harris administration's first week, demonstrating forethought and the importance of the topic to political leaders. As soon as major federal legislation was passed that could affect energy communities, the IWG was firmly established and ready to respond.
- Connecting federal resources with local needs is challenging and requires time, effort, and relationship building. Perhaps the IWG's most important innovation has been the establishment of rapid response teams (RRTs), which bridge policy and information gaps between federal programs and communities The RRTs promote relationship building, serve as problem-solving mechanisms, improve coordination between federal agencies, and more. However, they lack resources, making it difficult for them to deliver on all the needs of priority energy communities.
- At the local level, energy transitions are primarily economic transitions. A downturn or closure in the coal, oil, or natural gas sector creates the same kinds of challenges as deindustrialization and other previous economic disruptions. To build more resilient local economies, federal policy needs to support not only clean energy investment but also the development of an economic strategy that covers housing and infrastructure issues while ensuring meaningful participation by community members.
- Federal programs are complicated and unwieldy. Many energy communities lack internal capacity to access federal programs, and an industry downturn makes this even harder. The IWG has developed multiple strategies for helping communities take advantage of federal opportunities, but additional resources and process reforms are needed to improve access.
- The IWG offers a promising model. Although it would require additional resources, an expanded IWG could provide substantial benefits for energy communities across the United States.
1. Introduction
One week after taking office, President Biden signed Executive Order 14008, "Tackling the Climate Crisis at Home and Abroad" (White House 2021), with the goals of reducing greenhouse gas emissions, addressing environmental justice, building resilience to climate impacts, protecting human health, and supporting workers and communities through the transformation of the energy sector. Section 218 of the order established the Interagency Working Group on Coal and Powerplant Communities and Economic Revitalization (informally, the IWG on Energy Communities), a partnership of 12 federal agencies. In this report, "agency" or "agencies" refers to executive branch departments, agencies, commissions, and similar entities in the federal government. The IWG partners are the Office of Management and Budget and Domestic Policy Council (from the Executive Office of the President); the Departments of Energy, Treasury, Interior, Agriculture, Commerce, Labor, Health and Human Services, Transportation, and Education; the Environmental Protection Agency; and the Appalachian Regional Commission. Housed and administered by the Department of Energy (DOE), it created a base from which federal agencies could collectively learn about the needs of energy community members, elected leaders, and other stakeholders and help "revitalize" In some communities, particularly those in major oil- and gas-producing regions, the term "revitalization" is somewhat inappropriate, as many are experiencing record levels of production and very strong local economies. In practice, the IWG has focused its efforts primarily on coal mining and coal-fired power plant communities, including those where plants and mines continue to operate. these communities. In Section 2017, EO 14008 also calls for the remediation, reuse, and reclamation of mine lands and sites previously used in the fossil energy economy, and for the mitigation and cleanup of legacy pollution from the energy sector.
This report outlines the IWG's genesis and emergence as an important element of the administration's interrelated climate and economic development strategies; its efforts to support and advance equity; and its approach to building economic diversification, primarily in coal communities. We discuss how the IWG developed innovative strategies to address the divide between existing federal programs and community needs, and how it serves as an entry point for advocates, practitioners, and researchers working on related topics. We then describe major activities, lessons learned, and remaining challenges.
2. Why an Interagency Working Group?
Two overarching motivations supported the creation of this IWG. The first was to demonstrate the administration's commitment to communities and workers that have historically powered the US economy, underpinning the nation's prosperity and security. Establishing the IWG in the first week of the administration demonstrated forethought about the challenge faced by energy communities, drawing in part from interagency efforts under the Obama administration. It indicated a commitment to addressing the specific challenges faced by fossil energy communities and workers in the broader context of concern for places "left behind" economically.
Second, the IWG was designed to serve a coordinating function within the federal government, identifying the challenges and supporting the goals of coal-dependent communities across the country. Although these communities often face broadly similar economic challenges-for example, an economic driver packs up and leaves-federal programs have not developed a unified strategy to address many common challenges. What's more, these programs can often be difficult for communities to access and deploy efficiently. As we discuss throughout this report, the IWG has sought to make it easier for communities to identify and access the most appropriate federal programs, allowing, as much as possible, the needs of each place to drive solutions from the bottom up rather than the top down (Gazmararian and Tingley 2023).
The IWG leadership describes its efforts as follows:
… pursuing a whole-of-government approach to create good-paying union jobs; spur economic revitalization; remediate environmental degradation; and support energy workers in coal, oil and gas, and power plant communities across the country.
- (IWG 2024b)
Because federal agencies typically work in silos (Community Solutions Task Force 2016), one important purpose of the IWG has been to develop a method and process to coordinate the delivery of resources and expertise to coal communities, whatever their needs and capacity. Although collaborations across agencies exist on a wide range of policy topics, this IWG focuses on a specific and well-understood geography (primarily coal-dependent communities) to deliver resources and programs that can address needs ranging from housing to infrastructure to environmental remediation. Although this intersection of place and policy is not unique (see, e.g., Executive Order 13509, establishing the Obama White House's Auto Communities Council, June 2009), it is not typical. One goal of the IWG has been to deliver the most appropriate policies and programs to the right places at the right time. A companion goal has been to make sure energy communities have access to agency staff who can help local stakeholders identify which programs and policies best fit their needs.
2.1. Origins of the Interagency Working Group
The IWG on Energy Communities, a place-based effort, grew out of past efforts in the federal government to better coordinate across agencies and meet communities' needs. Elements of this IWG emerged at least as early as 2009. In that year, the Departments of Housing and Urban Development (HUD) and Transportation (DOT) and EPA created the HUD-DOT-EPA Partnership for Sustainable Communities (PSC). The PSC sought to coordinate the three agencies' programs and resources that had significant connections with communities across the country. The PSC's launch in 2009 was aided by budget guidance from the Office of Management and Budget (OMB), issued in 2009 and 2010, calling for interagency and place-based budget proposals and programming (Orszag et al. 2009, 2010). Programs that followed from the PSC's initial efforts and the OMB guidance included EPA's Local Foods, Local Places (EPA 2016), the White House Council on Strong Cities, Strong Communities (Executive Order 13602, White House 2012), The White House Council on Strong Cities, Strong Communities (SC2) had an organizational structure that may have been the model for this IWG. Through EO 13602, SC2 was led by two co-chairs, the Secretary of Housing and Urban Development (HUD) and the Assistant to the President for Domestic Policy. The HUD Secretary appointed the SC2 executive director and housed the day-to-day management of SC2 at HUD the White House Rural Council, and the HUD-led Promise Zones initiative (Abramson and McGuinness 2016).
By 2016, the Obama administration began to wrap up its work with communities through interagency collaboration. The effort, known familiarly as the Community Solutions Task Force, is most evident as a written legacy in public essays and in Executive Order 13748, establishing the White House Council on Community Solutions (White House 2016). Although the structure and organization of the interagency, place-based work of the Obama years did not survive long, the experience of career staff and appointed leaders, and the information they developed, led to the IWG on Energy Communities.
3. Major IWG Activities
In 2021, Executive Order 14008 established the IWG's structure, designating three co-chairs from leadership of the White House's Climate Policy Office (CPO) and the National Economic Council (NEC). Energy Secretary Granholm has been considered de facto a co-chair of the IWG because of the directive in EO 14008 to administratively support the IWG and for the secretary to name the IWG Executive Director in consultation with the co-chairs. Additionally, after the passage of the Inflation Reduction Act in 2022, President Biden, through the September 12, 2022, Executive Order 14082, amended Section 2018 of EO 14008, adding another co-chair, the senior advisor for Clean Energy Innovation and Implementation (the head of the Office of Clean Energy Innovation and Implementation, established in the same EO), to the IWG's leadership.
It directed the secretary of DOE to staff and fund the administration of the IWG. It also directed the IWG to deliver an initial report to the president on its planned activities. To prepare this report, DOE and the White House convened leaders from the participating agencies and requested information on each agency's program investments in coal communities, along with any authorities or programmatic criteria that could be used to direct additional funds to coal communities. DOE and the White House also reached out to energy community members, union leaders, philanthropists, private sector investors, and public policy leaders outside the federal government for input on the work of the IWG. At the same time, staff began analyzing data to identify where it would focus its attention.
In April 2021, DOE Secretary Jennifer Granholm named the IWG executive director and deputy executive director, and the IWG delivered its initial report to the President (IWG 2021). Embedding the IWG in the bureaucracy across agencies with high-level leadership, formalizing its day-to-day operations, assigning it specific tasks to complete, and providing dedicated (if modest) funding helped legitimize the IWG as an important part of the administration's agenda.
Based on informal conversations with other agency staff, this IWG appears to be more structured and focused than some other federal working groups, policy councils, and task forces that have flourished since 2021. From the beginning, its work was aimed at coal and power plant communities and workers. It also benefited from experienced staff from DOE and the White House's CPO, NEC, and Domestic Policy Council. The IWG soon identified specific geographies to work in and specific tasks to complete. The combination of strong leadership and a geographic focus for its work provided unusual clarity for IWG participants across the federal government, boosting its effectiveness. Dalbey participated in several interagency, place-based policy efforts going back to 2009. The importance of effective senior leadership at the White House and federal agencies combined with a geographic focus could be a best practice for this type of policy work.
The IWG used data from the Bureau of Labor Statistics to identify statistical areas that were highly dependent on coal, oil, and natural gas for local employment (IWG 2021). This list of the top 25 areas did not preclude the IWG from working elsewhere, but covered broad geographic regions, including much of the Southwest and Gulf Coast, Intermountain West, Appalachia, and Alaska (Figure 1). In subsequent years, the IWG would narrow its focus to a subset of coal-dependent cities, counties, Tribal nations, and other stakeholders within these regions.
Figure 1: Interagency Working Group Priority Map
Source: National Energy Technology Laboratory, Research and Innovation Center. Reproduced from IWG (2021). Because the IWG selected data that categorized "communities" as metropolitan or nonmetropolitan statistical areas, the geographic scope of its priority communities depicted here is very broad. In practice, its work with communities has been more narrowly targeted.
Along with identifying areas of geographic focus, the initial report stipulated several near-term goals. In addition to staffing the IWG, the report recommended establishing four subcommittees on the following topics:
- Community engagement: Engage with energy community leaders, workers, community members, and other stakeholders.
- Investments: Identify encourage federal investments that would support job creation and economic diversification in coal communities.
- Integration: Integrate and coordinate the delivery of federal programs and initiatives to coal communities, including creating one-stop-shop access to federal programs.
- Policy: Identify policy reforms and/or policy initiatives that would support the economies of energy communities.
Those four subcommittees provided guidance for the IWG in 2021 and 2022. The community engagement subcommittee identified key stakeholders, then held meetings with several goals in mind. The first was to understand better the concerns, needs, and priorities of coal communities by engaging with community members, elected leaders, public and private actors, and others. As we discuss in Section 3.1, this effort ultimately evolved into the Rapid Response Teams (RRTs), a central element of today's IWG. Engagement efforts also included webinars on Infrastructure Investment and Jobs Act (IIJA) programs and Inflation Reduction Act (IRA) programs, best practices for accessing federal funds, and other tools and resources produced by the IWG and its constituent agencies.
The investments subcommittee focused on identifying federal funding set aside or prioritized for energy communities through legislation. Examples include $300 million from the Economic Development Administration (EDA) dedicated for coal communities, $4 billion in tax credits for clean energy manufacturing, and an "energy communities" bonus tax credit for certain clean energy projects (Clarke et al. 2024).
The integration subcommittee worked with other interagency efforts, such as USDA's Rural Partners Network, the White House Council on Native American Affairs, and the administration's Justice 40 initiative, to ensure coordination among these initiatives where geographies overlapped (IWG 2023c). The subcommittee also learned that IWG agencies could work together most effectively when community members identified specific problems or projects that catalyzed coordination between agency staff. Like the work carried out by the community engagement subcommittee, this insight contributed to the development of the RRTs (Section 3.1).
Finally, the policy subcommittee began to identify potential avenues for policy change to support fossil fuel-dependent communities. Internal analyses considered such policy levers as enhancing local capacity to identify and procure federal resources, the need for time and space to develop a vision for the evolving local economy, data and analysis to assess which public investments to pursue and when to pursue them, and improving the connections between near-term private sector investment (particularly investment catalyzed by the IRA) and longer-term local or regional economic development goals.
By 2023, the IWG's day-to-day operations had evolved away from the subcommittee structure into two primary work streams. The first, which grew out of the community engagement and integration efforts, was centered on the RRTs, which worked directly with communities to assess needs, execute projects, and overcome barriers (Section 3.1). The second was focused on coordination and information sharing, largely centered on funding opportunities available under the IIJA and IRA (Section 3.2).
3.1. Community Engagement and Rapid Response Teams
During the Covid-19 pandemic, initial engagement with priority communities occurred online. These meetings had two purposes. First, they allowed the IWG to hear directly from community members about the challenges they were facing, such as lack of broadband access, limited capacity to identify and apply for federal grants, and difficulties coordinating with federal agencies. Second, they allowed the IWG to make communities aware of the resources that it could bring to bear, including making it easier to access federal funding opportunities that could help catalyze economic growth.
As the Covid-19 pandemic ebbed and travel became easier, community engagement moved to in-person meetings, becoming consistent and sustained. At the same time, IWG leaders determined that effectively executing their mission required deeper engagement to better understand the specific needs and opportunities of priority communities. As one example, the IWG sought to identify which federal programs would be most helpful in supporting Wyoming's goal of energy transformation, then organized a series of "listen and learn" sessions with community members from four counties, followed by meetings with state and local leaders and representatives from organized labor, business groups, and environmental organizations, among other groups.
In the following months, IWG leaders committed the federal team to continue supporting Wyoming communities. This federal team was dubbed the Wyoming Rapid Response Team, formalizing a model that the IWG would soon replicate in the Four Corners region, Illinois Basin, Pennsylvania, Ohio, and Kentucky, with more RRTs under development (Table 1).
Table 1: Rapid Response Teams Established Under the Interagency Working Group (IWG)
Each RRT has a coordinator from one of the IWG's member agencies. RRTs meet regularly with staff from state agencies and governors' offices and local leaders to tackle the challenges they identify. This model provides an opportunity for information to be shared across as well as up and down levels of government. The teams also enable community members to meet with public and private sector actors and to gain access to the entire federal family of agencies. RRTs benefit federal staff by improving their understanding of local needs and aspirations, and the suite of federal government programs that other agencies can bring to bear.
3.2. Coordination and Sharing Information
The IWG has emerged as an information hub, producing tools that make it easier for energy communities to identify and access federal resources and expertise. One tool is a searchable online clearinghouse that identifies the federal funding opportunities available to energy communities (IWG 2024c). Another, developed in conjunction with communities, NGOs, and others, is a "getting started" guide that offers detailed steps communities can take to plan for events such as a power plant closure. It identifies implementation strategies, potential funding sources, and other resources that communities can use (IWG 2023a).
The IWG has developed other web-based tools to support energy communities. For example, it hosts and archives online events that provide information on topical focus areas (e.g., taking advantage of IRA funding) or examining the challenges and opportunities in specific regions. It serves as a hub for information on locations that are eligible for bonus tax credits under the IRA, such as the "energy communities" bonus. It also highlights communities' success stories to facilitate exchange of best practices and other lessons.
Finally, the IWG website offers a type of concierge service or "navigator" team that connects communities and community organizations to federal staff who run programs that can be useful to them. Through this service, community members, investors, government staff, and others can ask questions about federal programs, eligibility, and other topics that are then handled by IWG staff. Because of the sprawling nature and complexity of federal programs, even federal government employees have found the navigator team helpful (IWG 2024a).
4. Lessons and Challenges
As part of the IWG's community engagement efforts, community members, elected leaders, and other stakeholders are asked to identify needs, capacities, and outlook for the future of their economies. Federal programs are not typically set up to strategically adapt to a community's needs or capacity issues and are therefore not typically nimble enough to meet each unique situation. Further, economic reinvention is not simply a matter of identifying a new industry or new technology and inserting it into the vacuum created by the declining or departed legacy economy. Early on, IWG leadership recognized that it would be most effective when it could connect communities to tailored solutions, rather than tailor the community's needs to a federal program.
4.1. Extensive engagement is needed to align federal programs and community needs
One crucial need that the IWG identified was supporting communities in developing a vision for the future. Like other communities going through economic transition, coal communities need time and a facilitated process to assess their assets, identify economic opportunities, and develop a vision for their economic future (EPA 2015; Fallows and Fallows 2018). Federal funding, however, does not generally underwrite identifying local assets, nurturing leaders, building capacity (particularly in distressed rural communities), or finding public and private sector partners that can support implementation of the vision. Such programs do exist: for example, DOE's Communities Local Energy Action Program, LEAP, a technical assistance pilot program that focuses on clean energy deployment (NREL 2024); and DOE's Capacity Building for Repurposing Energy Assets program, which supports community planning to address the economic, environmental, and other impacts of energy facility closures (DOE 2024c). These programs are not well funded, however, and therefore not widely available to energy communities. Expanding such programs to focus more on economic transformation and less on energy-specific issues (e.g., clean energy deployment or site remediation) could improve their effectiveness.
Without a clear vision for how they wish to grow, communities find it difficult to identify which federal programs (e.g., infrastructure, business development, education) should be prioritized and pursued. The IWG, through its RRTs, has found that communities that have developed a vision for their economic future are typically better prepared to assess how federal programs can help. But many communities that the IWG works with have little capacity to create community-driven visions for their future. These are the communities that need the most support: time-intensive tailored assistance, capacity building, and nurturing. For example, local elected officials may need help identifying which programs are best suited for upgrading, expanding, or maintaining water and sewer infrastructure, in part because different types of projects may be funded by different programs across multiple agencies.
Although it can stretch IWG resources, this "retail scale" technical assistance can provide spillover benefits to federal program implementation elsewhere, in several ways. "Retail scale" is being used to describe targeted, direct technical coordination between federal employees or contractors for federal programs and community members, local leaders, and private sector entities, in efforts meant to solve specific challenges at the project level, the neighborhood level, or the community level. As connectors and relationship builders, RRTs are able to assist in solving challenges down to the project level. Successes have been shared up through the IWG institutional structure and among the leads of each RRT through meetings. For an example of retail technical assistance, see EDA (2024). Working directly with local stakeholders to understand how programs can be delivered in one community informs the efforts of program managers in other communities. Facilitating regular and direct engagement between different levels of government builds relationships and trust among community members, local leaders, federal staff, and others, improving the likelihood of successful federal intervention. And although challenges for accessing federal funding remain in many instances, helping communities apply for federal programs has given the IWG insights into how access can be improved.
Of course, many programs across the federal government enjoy strong person-to-person relationships with community members-something that has not always been the case. But RRTs afford a new opportunity for building relationships between federal and local leaders, an important element of program implementation (Corridan and Haggerty 2024). In addition, the IWG, through its RRTs, provides a feedback loop about the importance of the relationship building to program managers and policy leads in federal agencies. As Corridan and Haggerty (2024) write, "Agency staff who participate in collaborative efforts such as interagency working groups, rapid response teams, or partner networks report gaining valuable knowledge about partner agencies and are more effective at delivering resources where they are needed most."
4.2. Housing is a major challenge for coal communities
The deficit in housing supply and the complementary lack of affordable housing have become endemic in the United States (Parrott and Zandi 2021). Causes vary across locations but include slow rates of housing construction in recent decades, restrictive local land-use policies, high labor and material costs, and relatively high interest rates (Schaeffer 2022; Minott and Selby 2022). In some regions, the consequences of climate change (e.g., increased severity of wildfires and flooding) create additional challenges by changing where and how new housing can and should be built and, in many cases, rebuilt (Cohen et al. 2024; Druckenmiller et al. 2024).
Through the RRTs and other interactions with energy community stakeholders, the IWG has confirmed that housing is a major challenge in coal communities, with variation across regions. In Appalachia, for instance, housing is often in need of repairs or retrofits, and vulnerability to flooding has put additional pressure on housing supply. Access to developable land, local permitting issues (e.g., land use and development), and capacity to take advantage of existing federal housing programs all add to the challenge of increasing supply and affordability (Scally et al. 2018).
Solutions to such challenges are not so simple as finding and implementing a particular housing program or even a range of housing programs. The IWG has found that eligibility requirements (e.g., income levels, poverty rates) and restrictions on the types of housing that can be financed make it difficult for federal housing programs, such as USDA's Rural Housing Service, to work efficiently in energy communities. For example, the eligibility requirements for loans, loan guarantees, and grants for single-family and multifamily housing preclude them from being used as the comprehensive solution to the housing supply and affordability challenges. Based on Dalbey's conversations with housing advocates in Wyoming and eastern Kentucky, as well as ongoing conversations with housing and economic development experts in the public and private sector. Solving the housing challenges in coal communities will vary, depending on local conditions: Is the community growing now or on the verge of growing? If it is growing, what type of industry is spurring on the growth and what type of housing is needed? What are the barriers to building housing in a growing economy? What is the industry's role in housing development? What is the public sector's role? If the community is not growing, what are the housing challenges? What are the barriers to building new housing (e.g., costs, land, labor, permitting)? How do other factors like natural disasters (in some cases exacerbated by climate change) affect housing supply?
In Wyoming, the RRT learned that housing concerns resonated across the entire state, making it difficult to hire across economic sectors and deterring investment in new energy technologies (Jean 2022). In spring 2023, the Wyoming RRT worked with the Gillette College Foundation's Office of Economic Transformation in Campbell County (the nation's top coal-producing county) and the City of Gillette (its county seat) to conduct a financial analysis to determine whether building new supply could be profitable (assuming developers could be identified). This analysis, a draft pro forma, used publicly available data for prevailing market rate rents and sales data on the one side, and costs of construction, land, financing, and other developer side costs on the other side. The draft financial analysis showed that construction costs for single-family and multifamily units exceeded the likely revenues that could be realized through rents and sales (WY RRT 2023).
In June 2023, the Office of Economic Transformation convened local and regional housing developers, local business owners, and local, state, and federal agency staff (among others) to discuss the housing supply challenges in Campbell County. Builders and developers confirmed the draft conclusion-that costs to build housing exceeded what the market could support through rents and sales. The main contributors to this dynamic were high construction costs (labor and materials), high financing costs, and local land-use policies. Further, builders and developers were able to earn greater returns on investments in large metropolitan areas with dynamic housing markets, like Denver and Seattle.
Although stakeholders noted the potential local economic benefits of energy sector investments driven by the IRA, potential investors were deterred by the prospect of volatility, an issue that Wyoming has experienced for decades (Merrifield 1984; Jacquet and Kay 2014; Gazmararian and Tingley 2023). HUD and USDA Rural Development staff identified cases where federal housing programs could play a role, but their scale was not sufficient to address local needs. Similarly, nonprofit housing developers working in Campbell County could not build enough housing to meet current or expected needs in an expanding economy. Based on Dalbey's participation in the housing convening, June 19-20, 2023, in Gillette, Wyoming.
Based on observations during the convening in Gillette and conversations among RRT leads, solutions could emerge from a mix of factors but are highly uncertain. For example, if federal efforts to steer investment and employment toward fossil fuel-dependent regions yield stable economic expansion, private housing developers may naturally gravitate toward these communities. Reforming local land-use policies and permitting processes, including allowing more multifamily housing where it is needed, could play an important role. Wyoming Business Council worked with researchers at the Harvard Growth Lab to examine policy reforms that could support economic expansion. See Wolfson (2023). Private sector collaboration with philanthropy, local and state governments, and public sector initiatives to invest in infrastructure might reduce housing costs and lower the risks of investment in housing. For instance, companies seeking to invest in an energy community with limited housing supply could partner with philanthropy to create a fund to provide lower-cost financing or grants to a housing developer that commits to building housing. Similar partnerships could emerge to finance water and sewer infrastructure upgrades or expansion for new housing. Further, reforms to federal lending guidance The Wyoming RRT housing subcommittee discussed the potential of manufactured or factory-built housing to solve the supply and affordability challenges. Subcommittee members learned that among the barriers were regulations in HUD loan programs that made lending for manufactured homes difficult. In February 2023, HUD announced new efforts to modify these regulations to increase lending for energy-efficient manufactured homes. See HUD (2024). for factory-built, high-efficiency housing could also increase housing supply and affordability. New or expanding businesses could partner with developers directly to finance housing development.
In an August 2024 email update on Campbell County's housing supply challenges, Wyoming's Office of Economic Transformation noted progress on several fronts since the June 2023 convening. The City of Gillette and Campbell County have made some regulatory changes to make it easier to build accessory dwelling units; a developer has decided to invest in a 228-unit apartment complex in Gillette; and several smaller developers, including some who attended the June 2023 meeting, have started on multi-unit infill projects. Rusty Bell, pers. commun., August 22, 2024.
4.3. Effective strategies will align economic and workforce development
To support coal workers, the IWG has worked with labor unions, community colleges, workforce boards, industry, and others. One recurring challenge is knowing where and when new employment opportunities will arise. Although some place-based policies involve federal government decisions that designate specific locations as hubs for certain technologies (such as hydrogen manufacturing or direct air capture of carbon emissions), when and where the private sector will invest and create new employment opportunities for workers in energy communities are hard to predict. Without specific information, it is difficult for local stakeholders to plan workforce development efforts, since they cannot anticipate which skills will be in highest demand.
In some situations, governments can provide more certainty for select communities by transparently steering investment toward certain geographies. For example, states can encourage and perhaps incentivize project developers to repurpose retired coal-fired power plants or other sites that have valuable features, such as ready access to the electricity grid. Indeed, the DOE Loan Program Office's Energy Infrastructure Reinvestment program and the IRA's "energy communities" tax credit bonus are two federal programs that take this approach(Raimi and Pesek 2022; DOE 2024b). In addition, investment announcements from data tools, such as the Clean Investment Monitor, can help communities understand what scale of energy-related investment may occur at the local and regional levels, informing them about future job opportunities as well as coming demand for infrastructure and education (Rhodium Group and MIT CEEPR 2024).
Additional information could help coal communities and others prepare for the economic changes that accompany a changing energy landscape. For example, what skills are needed to support the growing clean energy economy, how well do they align with the characteristics of fossil fuel workers, and when and where will demand for them arise? Some work on this topic has begun to emerge (Greenspon and Raimi 2024; Popp et al. 2024), but more is needed to better inform workforce development practitioners, labor groups, educators, policymakers, and the public. Understanding how infrastructure, housing supply, and other factors lead to investment in certain locations would also help coal communities plan, but such questions are difficult to answer.
One example of policymakers seeking to understand the future energy-economy landscape is in Colorado, where lawmakers passed House Bill 23-1247. This 2023 legislation directs the Colorado Energy Office to study how new energy technologies can support local economies where coal-fired power plants are slated to retire, what incentives might attract investment in those regions, and what skills workers would need to qualify for new energy-related jobs (Colorado House of Representatives 2023).
4.4. Main streets and downtown diversification can support coal communities
Historically, many rural towns and small cities grew from the natural resource base, whether agriculture, forestry, mining, or energy that surrounded them. They provided a place for workers to live, trade, and access more distant markets through major infrastructure routes. If the resource-based economy contracts, the town suffers: loss of tax revenue for public services, business closures, declining property values, and a cascade of other consequences.
One path toward economic reinvention is to focus on the town, its main street, and the infrastructure that previous generations built (Love and Powe 2020). Efforts start with examining assets and identifying potential economic drivers that could take advantage of the existing infrastructure, before investing in new infrastructure outside the town (Love and Powe 2020; Mishkovsky et al. 2010).
One observation from the IWG's work is that renewable energy projects in rural places may not directly benefit proximate rural towns and cities. These projects are often built with components sourced from far outside the region, constructed by itinerant contractors, and not labor-intensive once construction is complete. Further, wind and solar resources are not necessarily co-located with the most promising sites for value-added manufacturing, limiting the potential for economic or employment multipliers. To help address this issue, the IRA and IIJA require applicants grants and loans to submit community benefits plans, which become contractual obligations to the recipients of the funding. The plans must include community and labor engagement, worker training and education, advancement of diversity, equity, and inclusion in hiring, and a commitment to implementing the Administration's Justice 40 initiative (DOE 2024a)
Because clean energy projects may not provide large economic benefits for nearby cities and towns, the IWG has sought to support community efforts to boost downtowns through alternative federal programs identified during community engagement and RRT efforts. Two examples of such revitalization efforts come from EPA and IWG partnerships with community members in Webster County, Kentucky, and the Hopi Tribe in Arizona. These partnerships will include efforts to reuse coal infrastructure sites, conduct workforce training, and work with private energy investors to support local revitalization goals (EPA 2024).
Revitalization strategies will vary from place to place. In some coal communities, outdoor recreation providers or local food producers can benefit from the transportation networks and other infrastructure of historic main streets and downtowns. Conversely, historic main streets and downtowns can benefit from use of the land-based resources. For example, restaurants and food processors may flourish by featuring local agricultural products, and accommodations, outfitters, and other services may spring up to support outdoor recreation (EPA 2019). Although these industries generally pay less than jobs in coal and are unlikely to replace the tax revenues lost by the closure of a large power plant or mine, they can help fill the gap. Other economic options that may be promising in certain circumstances include small-scale manufacturing, broadband investment, and health care (Preuss 2021; Smart Growth America 2017; Sisk 2021; Mountain Association 2016).
4.5. Limited local capacity constrains access to federal opportunities
Although the American Rescue Plan Act, IIJA, and IRA specifically directed some funding for fossil energy-dependent communities, these laws are mostly aimed at broad industry sectors (e.g., low-carbon energy, microchip manufacturing), not at building capacity for communities to develop their own visions and strategies for the future. Additionally, the number and scale of opportunities are so vast that one major challenge for the IWG has been helping its priority communities identify which funding opportunities are most suitable for them. In some cases, IWG staff and community members determine that the best federal funding opportunities are outside the IRA or IIJA.
Communities' capacity limitations have made the IWG's work challenging. For example, many rural communities do not have dedicated economic development staff. Recent research from New Mexico has found that even medium-sized cities such as Carlsbad (pop. 32,000) and Farmington (pop. 46,000) struggle to identify, apply for, and manage federal grants (Raimi and Whitlock 2023). One solution comes from Building Resilient Economies in Coal Communities (BRECC), an initiative the National Association of Counties (NACo) that was funded by EDA (2022b). Funding for BRECC came from the American Rescue Plan Act's $3 billion appropriation to EDA. EDA's commitment to coal communities amounted to more than $550 million through its Economic Adjustment Assistance program and the Build Back Better Regional Challenge initiative (EDA 2022a).BRECC's aim is to support the economic revitalization and diversification efforts of coal communities from the bottom up. It connects community leaders with national experts in economic diversification, revitalization, coalition building, and energy sector transformation. Like the RRTs, BRECC offers a retail approach to capacity building. What's more, it builds on NACo's long-standing role of providing capacity-building services to energy-dependent communities.
Another approach taken by multiple RRTs has been hosting federal funding summits that bring federal agencies and their program leads together with state, local, philanthropic, and private sector community members. These summits have hosted broad-based and wide-ranging discussions about how federal programs could help solve community-identified challenges, as well as discussions about specific projects. In other cases, RRT leads have facilitated discussions to develop ideas on how to "unstick" a project and identify potential programs or resources that could incrementally assist in economic diversification and revitalization.
Two additional approaches to building local capacity have become available in 2024. Both are partially funded with federal resources and both support energy communities. First is EDA's partnership with the International Economic Development Council (IEDC) that created the Economic Recovery Corps. The corps supports 65 economic development fellows over 2.5 years who are working across the country with local and state government, tribal governments, and nonprofit entities seeking to revive and revitalize communities (IEDC 2024b). The IWG on Energy Communities is one of IEDC's federal partners, and more than a fifth of the fellows are working on economic transformation projects in fossil energy communities (IEDC 2024a). The second effort is a partnership between the IWG and AmeriCorps to place up to 150 AmeriCorps VISTA members in energy communities under the banner of the American Climate Corps. AmeriCorps VISTA members will work with community-based host organizations and connect with RRT leads to assist energy communities with their economic transformation efforts (AmeriCorps 2024).
4.6. Growing the IWG could enhance its benefits
Two interrelated challenges for the IWG have been coordination and resources. Despite the IWGs efforts, coordination problems still arise because agencies often implement programs using different rules, definitions, and schedules, making full collaboration and pursuit of common objectives difficult. (Partly as a result, those pursuing federal funds often face application processes, reporting requirements, and other factors that vary across agencies and increase the difficulty of accessing federal dollars).
As noted in Section 3, the IWG's experience suggests that interagency coordination across federal agencies can be most effective when federal staff (e.g., the RRTs) work directly on projects or initiatives at the community level. The RRTs could be significantly more effective, however, with more resources and an expanded scope (Corridan and Haggerty 2024). Currently, RRTs are supported by a memorandum of understanding between IWG agencies (IWG 2023b) and have no budgets. Nonetheless, existing RRTs have valuable connections with coal communities: they engage with community members, make connections across the federal family, and shepherd potential solutions to locally identified challenges through the federal bureaucracy.
Additional resources could fund dedicated RRT staff to enhance their benefits. Resources could also be used to provide technical assistance on economic development topics, such as economic visioning, identifying potential economic drivers, and assessing the effects of public investments.
RRTs, and the IWG, could also adapt lessons from existing models. Examples include the six federal regional commissions (e.g., the Appalachian Regional Commission), which are collaborative organizations that bring together the federal government, states, and economic development districts or regional councils (Community Solutions Task Force 2016). At the federal level, these commissions work across silos as a default setting, with major contributions from the USDA Rural Development program, EDA, and other parts of the Department of Commerce.
One final, if more modest, effort could support better interagency coordination. First, the Obama-era Community Solutions Task Force (see text box) developed a memorandum of agreement on interagency technical assistance, making it easier for agencies and departments to work together to assist community-driven economic revitalization efforts. The memorandum spelled out mechanisms for agencies to aggregate discretionary funds and jointly provide technical assistance to communities. Agencies could review this agreement and related materials to revisit lessons learned from previous administrations.
5. Conclusion
Despite very limited resources, the federal Interagency Working Group on Energy Communities has developed a novel and promising approach to supporting fossil fuel-dependent communities in the United States. It is working across federal agencies and with communities to develop place-based economic development strategies, access federal funds, and address other place-specific challenges.
Although the Infrastructure Investment and Jobs Act and the Inflation Reduction Act have made unprecedented resources available to energy communities, many lack the capacity to take advantage of this potential. The IWG is working to fill this gap but is itself resource constrained. What's more, many existing federal programs are not well aligned with the specific needs of coal communities. In short, the IWG does not have all the tools that it needs.
To use a metaphor, the IWG's current task is akin to building a model airplane using only pieces from a model train set. Building the model airplane is not impossible, but it does require generous portions of creativity, patience, and humility. In many ways, these traits, coupled with a dedication to working with and learning from communities, have been the hallmark of the IWG's work to date. Looking forward, expanding the IWG and providing it with more resources could offer significant benefits both for fossil fuel-dependent communities and for federal policymakers seeking to ensure an equitable energy transition.
Authors
Matthew Dalbey
Visiting Researcher