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How does transitioning away from fossil fuels impact fuels sector jobs?
Today, the Northwest supplies 98% of its fuel demand with fossil fuels. Achieving net-zero emissions by 2050 would require both decreasing the total amount of fuel needed and lowering the carbon intensity by producing alternative clean fuels (hydrogen, ammonia, biofuels, and synthetic hydrocarbon drop-in fuels), as modeled in the NZNW Energy Pathways-Clean Fuels analysis.
After achieving aggressive reductions in end-use fuel consumption with energy efficiency, clean electricity, and electrification, there are still energy uses that are difficult to decarbonize and therefore must rely on low-carbon liquid and gaseous fuels. The Fuels sector experiences simultaneous job loss in fossil fuel subsectors and job growth in clean fuels subsectors due to the need to end fossil fuel use and the requirement for clean fuels.
In November 2023, CETI released regional findings, which are discussed on this page. In April 2024, CETI added state-specific results, which can be seen on the State Analysis page or by selecting the view by state in the interactive figures below.
Table 1. Fuels Subsector Descriptions and Example Jobs*
*For a list of resources consulted, see NZNW Workforce Analysis Resources
Despite Displaced Jobs in Fossil Fuel Subsectors, Fuels Sector Supports Net Jobs Increase by 2040, Largely Driven by Increases in Hydrogen-Related Jobs
In 2021, the Fuels sector was responsible for supporting more than 39,500 jobs in the Northwest region, across direct (associated with the initial economic impact of a given investment or activity), indirect (associated with the supply chain connected to that initial economic activity), and induced (based on the additional household spending resulting from direct and indirect jobs) employment.
The Other Fossil Fuels subsector, which includes petroleum and coal, accounts for 35% of Fuels sector jobs, Natural Gas Distribution supports another 33%, and Natural Gas Fuels jobs accounts for 5%. The remaining 27% of jobs are supported by the Biofuels subsector, and Hydrogen does not support any jobs in the Northwest in 2021.
Despite displaced jobs in fossil fuel sub-sectors, the Fuels sector as a whole supports a net increase of nearly 7,400 jobs between 2021 and 2030. Hydrogen drives this growth, adding more than 11,000 jobs, while Biofuels adds more than 1,400.
Of the remaining subsectors that see declines in employment, Natural Gas Distribution drops the most, with more than a quarter (27%), or nearly 3,500 jobs, displaced due to decreased natural gas usage in buildings from electrification measures. However, the modeling does not include potential continued employment associated with leak detection, repair, and decommissioning work, nor opportunities for displaced Natural Gas Distribution workers to transition to clean fuels such as hydrogen and biofuels.
Natural Gas and Other Fossil Fuels combine for an additional 1,600 jobs displaced. These declining fossil fuel subsectors point to the importance of having a targeted strategy to mitigate negative impacts to displaced workers in Natural Gas Distribution, Natural Gas, and Other Fossil Fuels. These trends continue through 2050, with Hydrogen and Biofuels employment growth more than outpacing the displaced employment seen in Natural Gas Distribution, Natural Gas, and Other Fossil Fuels, for significant net employment growth.
The NZNW Energy Pathways-Clean Fuels analysis found that the need for clean fuels is more acute in the Northwest than in other parts of the United States, and Inflation Reduction Act (IRA) incentives for renewables, hydrogen production, and carbon capture mean that hydrogen production is economic by 2030 in this analysis. These results drive the increase in Hydrogen Fuels jobs shown in Figure 1.
Employment Grows Mostly in Fuels Construction and Manufacturing Industries
Figure 2 shows Fuels sector jobs by industry category. Like other sectors, the manufacturing and construction industries see the most net growth, adding 2,200 and 1,400 jobs by 2030, respectively, as construction and operations of new hydrogen and biofuel production facilities and infrastructure take root in the region.
Installation/Repair and Production/Manufacturing Occupations Grow to Meet Construction and Clean Fuels Facility Demand
In addition to looking at job growth by industry category (Figure 2), this analysis also explored job growth by occupation (Figure 3), which includes direct and indirect jobs, but not induced jobs.
The increase in construction and operation of hydrogen and biofuel production facilities in the region highlights the need for installation/repair and production/manufacturing occupations. These are expected to grow by 1,700 and 1,200 workers by 2030, respectively. Managerial and professional roles are also expected to expand significantly, bringing with them good wages.
Job Growth in Clean Fuels Outpaces Losses in Fossil Fuel subsectors
The combination of the Northwest’s relatively clean electricity grid and stringent emissions targets drives early clean fuels development in the region. Unlike many parts of the country, projected job growth in clean fuel subsectors (Hydrogen and Biofuels, shown in shades of green in Figure 4) outpaces losses in fossil fuel subsectors by 2030 for the Northwest as a whole.
Jobs related to Fischer-Tropsch liquids are captured in the Biofuels subsector. Figure 4 shows these Biofuels jobs grow significantly in 2040 as construction and operations of new production facilities and infrastructure take root in the region. This job growth is largely driven by increased construction jobs, followed by other supply chain and professional services industries.
Over 50% of Fuels Sector Jobs Pay Less Than $30 an Hour in Both 2021 and 2030
The share of jobs paying below $30 an hour increases slightly from 2021 (52%) to 2030 (54%). Therefore, when considering workforce needs for this sector, strategies that increase wages and benefits should be strongly considered. (See NZNW Workforce Analysis—Key Findings for further discussion of these strategies).
BW Research based these wage tiers on the MIT Living Wage Calculator at median living wages for different living circumstances in each of the four Northwest states, weighted by employment in each state. The modeling team relied on this national source to maintain consistency across the four Northwest states, rather than introduce state-specific sources.
Conclusion
The Fuels sector provides significant opportunity for transitioning workers from fossil fuel jobs to clean fuels jobs, particularly because of the finding that the Northwest needs to develop a clean fuels industry earlier than other regions of the country. However, a complicating factor to this transition could be location: while it is most economic to co-locate production of hydrogen and subsequent clean fuels with high-quality renewable resources, these resources may not exist in the same locations as workers from existing natural gas and fossil fuel job.
To make best use of available skilled labor and to mitigate negative impacts to workers in the transition, resources should be allocated specifically to training and transitioning displaced natural gas, natural gas distribution, and other fossil fuel workers into these new opportunities, such as hydrogen and biofuel production, distribution, and storage.
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