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Offshore wind project under construction with union labor could be exactly what energy workers need

That an offshore project is actually under construction in the United States is remarkable, given the licensing and litigation difficulties that tend to drag plans along. But the South Fork Wind project, backed by the Danish renewable energy giant Orsted and utility Eversource Energyand expected to begin operations in late 2023, it is also known to have been built almost entirely with union labor, following the terms of a one-of-a-kind project National Offshore Wind Agreement signed in May 2022 by Orsted and North America’s Building Trades Unions (NABTU).

That project labor agreement, coupled with the passage of the federal Inflation Reduction Act (IRA) this year, have fueled hopes that a long-sought “just transition” for workers impacted by the shift to clean energy may finally take hold. form. For years, unions and allied environmental organizations have argued that high-quality jobs can and should fuel the move away from fossil fuels, and that communities economically dependent on those fuels should not be left behind. But the reality is that while wind and solar jobs have grown in recent years, often don’t pay as well like, say, a job at a coal-fired power plant. This has implications for America’s already shrinking middle class.

The IRA isn’t perfect, but it’s a historic step toward a just transition, says Jason Walsh, executive director of the BlueGreen Alliance, a coalition of labor and environmental groups. The legislation invests an unprecedented $369 billion in climate-related investments and for the first time ties federal clean energy tax credits to union-level (aka “prevailing”) wage standards. This effectively establishes a minimum wage which ensures that workers working on skilled renewable projects are well paid. Another crucial component of the IRA Walsh points out: its requirement that registered apprentices be employed on renewable energy projects above a certain size. It may seem arcane. But in essence, it can ensure a nationwide network of high-quality career-oriented training programs, many run by build unions— is integrated into the future of the country’s renewable energy sectors.

Taken together, the IRA’s wage and apprenticeship arrangements mean that the jobs of the future in renewables are more likely to offer a pathway into the middle class. “We shouldn’t have to choose between a good job and a clean environment, it’s always been a bad choice,” says Walsh. The IRA “will create high-quality jobs; it will reduce pollution; it will create benefits for workers and communities. This is really a big deal.

New template for clean energy projects

In several ways, the South Fork Wind project resonates with the Biden administration’s vision of energy transition. Orsted’s approach may anticipate what will happen as the policies and investments made by the IRA reshape the country’s renewable energy landscape.

Orsted’s agreement with NABTU covers contractors and subcontractors and the entire onshore and offshore scope of the project, from transmission and substation works to offshore turbine construction works. The agreement establishes provisions and training terms for NABTU members to build all of Orsted’s East Coast offshore farms in the future. It also creates apprenticeship opportunities and sets workforce diversity goals, among other initiatives.

We shouldn’t have to choose between a good job and a clean environment.

Jason Walsh, executive director, BlueGreen Alliance

Orsted had practical reasons for negotiating all of this with NABTU. It provides the company with “consistent access to a pool of skilled labor,” says Allison Ziogas, U.S. labor relations manager at Orsted, helping to ensure safety, quality and timely project completion. While organized labor is generally more expensive than a nonunion workforce, she says, it ultimately makes projects “cheaper.” But the company also had larger goals in mind with the deal.

“We want to make sure that the workers who are currently in the fossil fuel-based economy have somewhere to switch,” he says. “But we also want to make sure our projects create opportunities for those who have been underrepresented in the energy sector.”

All of these goals dovetail with the climate transition and workforce approach of the Biden administration, which wants to see 30 gigawatts of offshore wind generated by 2030. (South Fork, one of the first commercial-scale farms in the country, will produce 132 megawatts.) The administration wants to create “union jobs in America in this clean energy economy,” US Energy Secretary Jennifer Granholm said last year while visiting an Orsted facility in New London, Connecticut. The working arrangements should support all dimensions of the energy transition currently underway, she said, drawing applause from union workers.

Accelerate change

The reality, however, is that most commercial wind and solar farms across the country are not built or operated by union workers. According to 2021 US Energy and Employment Report. This is above the national rate of private sector unionization, but well below the rates seen at natural gas, coal and nuclear power plants across the country. Solar farm development companies in many states rely on temporary staffing agencies build structures; much of the work, like putting solar panels on racks, doesn’t require highly skilled workers. And companies, competing for contracts with utilities, see low labor cost as a path to profits.

Orsted’s commitment to creating high-quality union jobs is a remarkable development, but offshore wind farms won’t create as many jobs in the bigger picture of the US economy, says Lara Skinner of the School of Industrial and Labor Relations at the Cornell University. “The majority of [wind-related] the jobs will be in the manufacturing supply chain,” he says, so the country must prioritize the development of domestic renewable supply chains. The IRA seeks to stimulate domestic production by offering an additional tax credit for renewable projects that they use American-made equipment, he notes.

The South Fork Wind project shows what a national supply chain for emerging industry can look like: It will feature the first offshore wind substation manufactured in the United States. But right now, there’s a big disparity in total U.S. employment across energy sectors. Wind, solar, and hydroelectric power generation (including construction and manufacturing) employs approximately 500,000 people. Natural gas, oil and coal? Of 1.4 million people.

Big economic changes in our society have not always gone well for workers.

Allison Ziogas, U.S. Labor Relations Manager, Orsted

The growth of the wind sector has been slowed by major licensing issues, which the IRA is only partially addressing. Most of Orsted’s projects, for example, remain in the permitting phase. Even assuming the IRA’s benefits are maximized, it will be years before the country sees “a massive development of projects” inspired by the legislation, Skinner says. Like more coal-fired power plants are being retired this decade, that anticipation may leave workers contemplating what comes next in the lurch.

But state governments can play a key role in accelerating clean energy-related job creation with solid wages and benefits, Skinner argues. “State-level labor standards are really important,” she says, noting that many federal dollars flow through cities and states, and most renewable energy projects are approved locally.

New York, Maine, Illinois and Connecticut have all passed laws that aim to improve the quality of clean energy jobs. For example, Connecticut now requires prevailing wages to be paid to all construction, operation and maintenance workers on projects of two megawatts or larger.

Some states, such as Illinois, are making targeted investments in job training and economic development to help historically disadvantaged communities, as well as communities and workers specifically impacted by the fossil fuel transition.

“It’s not just about creating good, high-paying jobs,” says Illinois State Representative Ann Williams (D-Chicago), who chairs the state legislature’s Energy and Environment Committee and has helped to the drafting of the state benchmark Climate and Fair Work Act, which became law last year. “It’s about creating opportunities for wealth in communities that have traditionally been left behind.”

Building bridges to the future

Jim Harrison has seen what happens when communities hard hit by the energy transition fail to reinvent themselves. A former coal-fired plant worker, Harrison is now director of renewable energy at the Utility Workers Union of America (UWUA). Its membership, spread across 22 states and across all energy sectors, has declined in the past 10 years as coal-fired power plants shut down.

“We’ve seen the effects of a transition, and it hasn’t necessarily been a just transition,” says Harrison, who sits on the state of Michigan’s Council on Climate Solutions. When a power plant shuts down, for example, it leaves big economic holes.

The IRA seeks to address this challenge by offering additional financial incentives to companies carrying out clean energy projects in communities where a coal-fired power station has closed since 2010. The legislation is “remarkable,” Harrison says, but it also has limitations. For example, the IRA’s prevailing salary incentives don’t extend to operational roles, such as solar and wind technicians, who ultimately keep the energy infrastructure clean. UWUA has 40 wind technicians among its members, and they average about $15 an hour more than their non-union counterparts, about $45 an hour.

Derek Mellema, a renewables engineer and a member of UWUA in Michigan, says a family-supporting salary is great, but it’s the job security and high safety standards afforded by his union that he likes most. Mellema also serves as an instructor in UWUA’s Renewable Energy Apprenticeship program, teaching people, including workers transitioning from traditional energy sectors, how to maintain commercial-scale solar and wind farms. The two-and-a-half-year program, he says, “helps build a pipeline of highly skilled workers” who can earn as they learn.

Orsted is currently developing an apprenticeship program for wind technicians who will take care of its wind farms after construction is completed. That program, coupled with its ongoing agreement with NABTU, will ensure that the job gets done right the first time, Ziogas says. Both businesses and workers will benefit.

“Big economic changes in our society have not always gone well for workers,” she says. “But we think offshore wind can help usher in a just transition. The economic benefits our designs can deliver to the communities in which we operate are just as important as the green electrons we are providing.”