Can a Just Transition for Workers and Communities Begin Here?
The Bay Area is home to one of the largest fossil fuel companies in the world. In October 2020 Chevron overtook ExxonMobil to become the largest U.S. oil company as measured by market cap. On October 7, the total value of shareholders’ stock in Chevron reached $142 billion, surpassing Exxon’s $141.6 billion. Since then, ExxonMobil retook the lead and valuations reinflated from their pandemic lows, but Chevron remains an oil industry giant with tentacles reaching out to more than 180 countries.
Headquartered in San Ramon, California, and operating Northern California’s largest refinery in Richmond, Chevron has already found itself in the crosshairs of Bay Area activists for its routine pollution of working-class neighborhoods and its contributions to climate change. The Richmond Progressive Alliance’s radical struggle against Chevron’s domination of Richmond’s city government has been a central story in Bay Area left environmentalism in recent decades.
Much bigger contests over the power of Chevron and its ilk lie directly ahead. Increasingly, it has become clear that a direct government takeover of our fossil fuel industries may be a strategic necessity for at least three reasons:
1. Reductions in oil, coal, and gas production must begin immediately to avoid catastrophic degradation of the planet. Chevron and every other fossil fuel company must begin the process of downsizing at a rapid pace. As long as the fossil fuel companies are being run to maximize profits, any downsizing will be accidental and haphazard. Management which puts people and planet first must take over to ensure that the necessary reductions take place.
2. Public ownership is the only way to break the back of the fossil fuel industries’ death grip over climate policy. Fossil fuel capitalists will not go quietly into the dark night. They have enormous sunk costs in their existing infrastructure. They will furiously resist any reduction in their profits and any attempt to make them “keep it in the ground.”
3. A just transition for workers and communities requires social control of the process of decommissioning fossil fuel infrastructure and deploying green energy infrastructure in its place. Private capital has no interest in building the democratic energy commons that our future requires or in ensuring that workers’ interests are fully protected. Even if the carbon tax championed by Joe Biden’s treasury secretary, Janet Yellen, could achieve sufficient reductions in carbon emissions to avert climate disaster, it would do nothing to ensure that reductions in carbon emissions are achieved without misery to workers and communities.
What is to be done?
In An Ecosocialist Path to Limiting Global Temperature Rise to 1.5°C, historian Richard Smith outlines the urgent tasks in broad terms:
Declare a State of Emergency to suppress fossil fuel use: Ban all new extraction, ration gasoline and diesel, ban production of new fossil-fuel vehicles. Nationalize the fossil fuel industry to phase it out. We do not call for expropriation. We propose a government buyout at fair value (fair to both owners and society). Nationalization will need to extend beyond fossil fuel producers to dozens or hundreds of industrial fossil-fuel dependent industries from pipelines, refineries, distribution networks to power generation, autos, aviation, petrochemicals, some manufacturing, tourism and others whose business is irreversibly based on fossil fuels and which without a government buyout would be bankrupted.
In his 2020 book, People’s Power: Reclaiming the Energy Commons, climate justice activist Ashley Dawson also sees nationalization of the doomed fossil fuel industries as essential:
A convincing program for the dismantling of fossil capitalism might be based on the policies the Federal Reserve adopted in the wake of the financial crash of 2008. The government would slash current massive subsidies to fossil capitalism and enact robust regulations that would cause the value of fossil fuel corporations to drop. The state would then buy out these corporations at a relatively low cost, one that reflects the unburnable reserves on their books as well as their historical culpability for ecocide. In order to avoid the moral hazard implicit in government ownership of still-lucrative but doomed industries, explicit plans would be articulated for the speedy dismantling of fossil capitalism: all new exploration would be banned, the moratorium on fossil fuel exports from the United States would be reinstituted, and plans to wind down existing production would be laid out. In tandem, a democratized Federal Reserve or similar national Green Investment Bank would ensure that renewable energy got the economic lifeline that it needed during the transition, and current investors in fossil capitalism— particularly public and worker pension funds— would be encouraged to roll over their investments into these green funds. A series of schemes to help workers and communities currently dependent on fossil capitalism transition to equivalent jobs in other sectors would be a key element of the phaseout program. In this manner, a speedy and just transition away from fossil capitalism would take place.
Likewise, Andreas Malm, in Corona, Climate, Chronic Emergency: War Communism in the Twenty-First Century, writes:
[I]f anything real is to be done, there will have to be a war with another aim: putting this industry out of business for good. This begins with a nationalisation of all private companies extracting and processing and distributing fossil fuels. Corporations on the loose like ExxonMobil, BP, Shell, RWE, Lundin Energy and the rest of the pack will have to be reined in, and the safest way to do that is to put them under public ownership, either through acquisition or – more defensibly – confiscation without recompense. Then their endlessly burning furnaces can finally be switched off. But they should not simply be liquidated, as in dismantling every platform, sealing the holes, closing the offices, sacking the employees and throwing the lot of the technology on the scrap heap. To the contrary, these units have a constructive task ahead of them.
The nationalization of Chevron is destined to play a central role in Bay Area struggles over climate.
Can we possibly afford it?
Some scoff that nationalization of the fossil fuel industry is pie in the sky because the government could not possibly afford to pay the compensation required under our current Constitution. Of course, the price to buy out the fossil fuel companies would be small compared to the costs of ruining the planet. As we’ve now become aware from the bailouts of 2009 and 2020, trillions of dollars are available to prop up the capitalist system when it stumbles. Saving the planet for future generations should be worth more than that. Perhaps more importantly from a practical standpoint, the price of the entire lot of major fossil fuel corporations may be smaller than is generally assumed.
As the investor website Motley Fool reported in 2020:
While Chevron is now the largest U.S. oil company, it’s a fraction of its former self. At its peak in 2014, the company had a $256 billion market cap. Shares have since fallen more than 45% from their high, with most of that damage coming this year as they’ve declined 39% due to crashing crude prices caused by the coronavirus.
At least part of the decline in Chevron’s market value is owing to increasing fears on the part of investors that oil companies’ balance sheets may be loaded with “stranded assets” if the world’s pivot to renewables gains momentum. Smith offer this back of the envelope tally based on valuations from the fossil industries’ boom in 2018:
Of course politicians will holler about the cost. The cost is significant but affordable, a bargain actually. The ten largest American oil and gas companies claim a combined value in 2018 of $968.1 billion (Exxon Mobil is valued at $344.5 billion, Chevron $239 billion, ConocoPhilips $79.3, and the others from $68 to $33 billion). The two major coal companies have trivial net worth (Peabody at $3.6 billion, Arch at $1.5 billion). But the IEA says that, in truth, the world’s fossil fuel industries are worth a fraction of their claimed value because most of their assets – the oil and gas and coal in the ground — are fast becoming valueless “stranded assets” as electric utilities and vehicle manufacturers shift to renewable power and because of growing political pressure to “leave it in the ground.” Given their looming existential profits crisis, the companies might actually welcome a buyout. But if society is to pay a fair price for those companies, their nominal retail value would have to be discounted by the harm their production has already done to people and planet. On any fair assessment, that would leave these companies owing the government, not the other way around. Yet even at their current retail value, just under a trillion dollars, by the standards of wasted U.S. expenditures, this is affordable. President Trump just gave away $2.3 trillion in tax cuts to the rich this year alone.
Honestly, if we can buy out the entire oil industry in order to manage its decline for under a trillion dollars, can any neoliberal pundit argue with a straight face that it would be too costly?
Chevron has made many enemies
Any Bay Area radical who hasn’t read Steve Early’s Refinery Town: Big Oil, Big Money, and the Remaking of an American City is in for a treat. The heroes of the story are green leftists (including democratic socialists) who turned a Chevron-dominated city of one hundred thousand into an example of what grassroots organization can accomplish. As the blurb explains, in Refinery Town, Early chronicles the fifteen years of successful community organizing that raised the local minimum wage, defeated a casino development project, challenged home foreclosures and evictions, reduced crime through community policing, and sought fair taxation of the oil behemoth in their midst.
What has happened in Richmond is nothing compared to the political earthquake that will emanate from the Bay Area when we take Chevron public. It will not happen without major organizing, but Chevron is an adversary that has few friends.
The 2012 explosion that sent more than 15,000 Richmond residents to the hospital sparked mass anger, resulting in a number of demonstrations and the birth of the Sunflower Alliance, a left environmental and climate organization that now operates under the umbrella of 350 Bay Area. On August 3, 2013, 1,200 people marched from MacDonald Avenue to Gate 14, the main gate of the Chevron Refinery. Outside Chevron, the crowd swelled to more than 2,500 people.
Sunflower and other radical environmentalists organized a campaign to cap Chevron’s emissions so that Chevron could not expand its refinery capacity to handle highly toxic tar sands oil from Canada and the north central U.S. Sunflower’s campaign was on the verge of success in 2017 when the Western States Petroleum Association and Governor Jerry Brown collaborated on a “market forces will save us” cap-and-trade bill that included provisions to knee-cap the Bay Area Air Quality Management District’s ability to adopt limits on Chevron’s pollution. The controversy over the cap-and-trade bill produced a bitter and clarifying split between the radical environmental and climate justice organizations on one side and the Big Green liberal establishment (National Resources Defense Council, Audubon Society, Environmental Defense Fund, on the other). The Sierra Club distinguished itself from the rest of the Big Greens by siding with the grassroots. Governor Jerry, the climate faker par excellence, rammed it through the Legislature two weeks after the bill became public knowledge.
The struggle against the Bay Area’s refineries has also been a major focus of activities by Indigenous activists. Idle No More SF Bay has organized numerous events including Healing Walks connecting the Bay Area refineries. Part of the story is told in this brief video:
Labor’s Key Role
Without strong support from labor, the project of building a successful movement to close the Bay Area’s refineries and create a just and equitable transition for workers and communities will fail. Trade unionists are justifiably concerned that workers who lose their old fossil fuel industry jobs will not be able to feed their families on rhetorical commitments to “just transition.” As United Mine Workers Association President Cecil Roberts complained, “I ask anybody who has been uttering those two words over the last 30 years — point to one, one ‘just transition’ in this country. And you can’t.”
California, one of the most unionized states in the country and among the most committed to combatting climate change, may be the place where a breakthrough occurs, where green unionism and pro-labor environmentalism may be able to forge an alliance that can fight for a just transition that is real and not just a slogan.
In June 2021, 19 labor unions, including a major refinery workers union, endorsed a 200-page California Climate Jobs Plan prepared by University of Massachusetts economist Robert Pollin and a team of his colleagues at the Political Economy Research Institute. The report lays out in detail a plan to implement the climate goals that have already been adopted by the State of California.
“An absolute front-and-center feature of our proposal is the just transition program for the state’s fossil fuel-dependent workers and communities,” Pollin told an interviewer from Truthout. “About 112,000 people are employed in California in fossil fuel-based industries, amounting to about 0.6 percent of the state’s total workforce in 2019. Workers in the state’s fossil fuel-based industries will, of course, experience job losses as the state dramatically reduces consumption of these CO2-generating energy sources. We estimate that about 3,200 workers per year will be displaced in these industries in California between 2021 – 2030 while another roughly 2,500 will voluntarily retire each year. It is critical that all of these workers receive pension guarantees, health care coverage, re-employment guarantees along with wage subsidies to insure they will not experience income losses, along with retraining and relocation support, as needed.”
According to the report, this protection is well within the state’s economic capacity
“We estimate that the costs of a generous just transition package for all fossil fuel industry-based workers experiencing layoffs would come to about $470 million per year,” said Pollin. “This is equal to about 0.02 percent (two one-hundredths of one percent) of the state’s average GDP between 2021 – 2030.”
The significance of the union backing for the plan cannot be overstated. Organizations like Labor Network for Sustainability have been working for years to bring labor and climate activists together around a common agenda. The Pollin report gives labor and climate a clearer vision of how to move forward at the policy level.
The challenge to the Green Left has been obvious for many years. A clean energy economy cannot be built by destroying the lives of workers and their families. Yet finding a path forward has been challenging in a capitalist framework. Time and again, labor and environmental groups have been pitted against each other as if only one side can prevail. As long as climate justice and economic justice movements remain mired in contradiction, the prospects of winning a radical Green New Deal, much less ecosocialism, are dim.