As the global economy shifts toward cleaner and more efficient manufacturing and production, the U.S. has the opportunity to create healthier communities and increase climate resilience as it shapes a more prosperous economic future.
The U.S. industrial sector is both a backbone of the economy — employing around 8% of all U.S. workers — and a major source of pollution, accounting for nearly 30% of national greenhouse gas emissions and much of the country’s hazardous air pollution. People in places like Louisiana’s 85-mile stretch of Cancer Alley between Baton Rouge and New Orleans have long suffered from factories releasing harmful toxins into the air, land and water.
Decarbonizing the highest emitting industries — steel, cement and chemicals — by boosting energy efficiency, deploying carbon capture and storage where appropriate and shifting away from fossil fuels can simultaneously cut climate-warming greenhouse gases and the toxic air and water pollutants that endanger communities.
By leaning into the fast-growing global market for low-carbon products, U.S. industry can stay competitive without repeating past patterns of pushing pollution burdens onto people and ecosystems. However, if worker and community-focused safeguards are not considered, this shift could trigger job losses, disrupt local economies and, if technologies like hydrogen or carbon dioxide pipelines are poorly regulated, introduce new environmental and health risks for nearby communities.
A Tale of Two Industrial Communities
Government policies can make a big difference in the way workers and local communities experience the impact from decarbonizing industry facilities. Here we look at two examples:
Port Talbot, Wales, UK:
The case of Port Talbot in the United Kingdom highlights the economic risk to communities and the tradeoffs of industrial modernization without protecting workers. A steel hub since the early 1900s, the town hosted a steel plant with blast furnaces, which burn coal to produce primary steel from iron ore, releasing climate-warming carbon dioxide and other toxic pollutants.
Until recently, the plant owned by Tata Steel, employed thousands of workers, but pollution from its aging blast furnaces also exposed people in the nearby town to serious health risks. In October 2024, Tata Steel shut down the blast furnaces with a plan, supported by a 500 million pound (approximately $660 million) government grant, to replace them with a lower-polluting electric arc furnace installation.
However, this shift will result in 2,800 layoffs of workers with specialized knowledge and skills that are not easily transferable. Without an adequate transition plan, thousands of workers are at risk of being left jobless with few alternatives.
Middletown, Ohio:
Cleveland-Cliffs’ steel plant in Middletown, Ohio had the potential to demonstrate how decarbonizing its facility using proactive government policies could create and protect thousands of jobs, while reducing harmful pollution. But shifting U.S. policy priorities and waning investment have since blurred the future for clean industrial projects like this one.
In 2024, Cleveland-Cliffs was selected to receive up to $500 million from the Department of Energy through its Industrial Demonstrations Program (IDP). The funding would have been used to replace one of its coal-powered blast furnaces with a less emissions-intensive direct reduced iron plant, which was expected to curb greenhouse gas emissions by 1 million tons per year, while also reducing toxic pollution to Middletown’s air and water. The changes would have created 170 new permanent positions and an additional 1,200 temporary construction jobs, while also preserving Cleveland-Cliffs’ overall 2,500 person workforce.
In early May 2025, however, the company said it would prolong the life of the heavily polluting blast furnace it had planned to replace in an effort to “better align with [the Trump] administration’s energy priorities.” Shortly after, the Department of Energy terminated $3.7 billion in IDP grants and other clean energy projects. However, the Cleveland-Cliffs grant was not among this list of terminations.
Centering Communities in Efforts to Decarbonize
Over the past six months, several federal policy reversals have clouded the outlook for clean-industry investment: the recission of several billion dollars in competitive grants for novel low-carbon projects, major corporate mergers in heavy industry were approved without emissions enforcement or guarantees for community reinvestment and carbon-pollution limits for power plants have been weakened.
Against this backdrop, efforts to reindustrialize and modernize American manufacturing to energy-efficient systems must still align innovation and climate action with economic revitalization, workforce development, environmental protection and public health improvements.
Importantly, the U.S. must not repeat past mistakes while creating and modernizing industrial facilities. Historically, fenceline communities — people who live near industrial facilities, which are often made up of residents from low-income backgrounds or communities of color — have long faced disproportionate pollution exposure and shouldered the public health burden of these industries.
Many fenceline communities exist today because of intentional government policies and practices, such as redlining and racially discriminatory zoning and disinvestment, which forced economically marginalized and politically excluded groups to live in what’s become known as “sacrifice zones.” This reflects patterns of historic underinvestment and environmental harm imposed on economically and socially marginalized populations.
For example, people in fenceline communities throughout Louisiana’s Cancer Alley, which accounts for 25% of the petrochemical production within the U.S. from more than 200 factories, have an abnormally high cancer risk, with the risk being even higher for low-income people and people of color.
Prioritizing clean air and water, economic revitalization and community-driven decision-making is critical to addressing historical harms and making industrial decarbonization efforts durable. When communities are engaged meaningfully early on, policies and projects are more likely to earn public trust, avoid local opposition and secure the long-term support needed to sustain industrial transitions. Furthermore, such a shift can create economic benefits, such as reducing health care costs from improved air quality and fostering public and worker support for decarbonization initiatives, which are essential for durably scaling these efforts.
The shift away from fossil fuels has often failed to fully consider the needs of affected workers and fenceline communities. For instance, thousands of refinery workers could be left stranded as California phases down its petroleum refining. Beyond a handful of refinery-specific initiatives, just transition planning across the broader industrial landscape — particularly in steel, cement and chemicals — remains scarce.
If today’s industrial modernization and decarbonization efforts ignore workers, communities and environmental impacts, they could repeat past mistakes of accelerating plant closures without offering alternative economic opportunities, concentrating environmental risks in fenceline communities, eroding community trust and potentially delaying or canceling projects.
The Economic Case for a People-Centered Transition
Recent analysis from McKinsey & Company estimates that an economy-wide net-zero transition by 2050 could lead to 200 million new direct and indirect jobs while also causing a loss of 185 million jobs — resulting in a net gain of 15 million jobs worldwide by 2050. Without a well-managed transition, industrial decarbonization could result in local job losses and economic disruption.
Beyond avoiding the substantial economic risks and losses from climate change, modernizing U.S. industry in a way that prioritizes workers and communities can help revive historic manufacturing regions, attract investment and boost their economic prosperity. And at the same time, it would allow the U.S. to capitalize on deploying innovative new industrial technologies.
As the global economy shifts toward cleaner and more efficient manufacturing, innovative industrial production methods that utilize cleaner energy sources will become better positioned to compete globally. And as global markets and private sector buyers start prioritizing lower-carbon industrial products, U.S. government policies such as subsidies and technology demonstration grants are needed to proactively drive industrial innovation and ensure domestic industries don’t fall behind in a rapidly changing market.
At the same time, successful decarbonization projects will depend not only on market shifts and technological advancements, but also on how people are included. When the needs of workers, fenceline communities and local stakeholders are not addressed as part of transitions, companies risk encountering public opposition, costly legal challenges, project delays or cancellations, and increased costs associated with those risks, slowing progress.
For example, some experts have warned that if the financial and social burdens of the clean-industry shift — such as higher energy rates or job losses — fall disproportionately on lower-income households, workers or fenceline communities while benefits accrue elsewhere, public support for net-zero initiatives could erode, making it harder to pass and implement effective policies. And, while they recognize industry’s negative impact on air and water pollution, many members of fenceline communities rank economic considerations like job security as a far higher priority than local environmental well-being in surveys.
Fortunately for both industrial communities and the broader economy, environmental well-being and economic well-being are not mutually exclusive. For example, in the U.S., past policies that directed clean energy investments toward historically marginalized communities sought to support workforce transitions and strengthen declining local economies.
Strategies for Inclusive and Resilient Industrial Decarbonization
To support responsible and equitable industrial decarbonization that aligns with economic opportunity and long-term community resilience, policymakers and developers should consider several strategies:
| Create Industry Transition Roadmaps | Industry roadmaps that combine modernization pathways with steps for workforce transition can help policymakers proactively create long-term reskilling and job placement strategies when retrofitting, replacing and retiring heavy-polluting industrial facilities. |
| Invest in Workforce Training and Reskilling |
* Decarbonization should be paired with reskilling initiatives, wage protections, and local hiring mandates to minimize job displacement. * Targeted investments in vocational training, apprenticeship programs and STEM education can equip workers with the skills needed for new, clean industry jobs. |
| Prioritize Community Benefits |
* Community benefit plans or agreements, participatory planning processes and local advisory boards ensure fenceline communities have a key role in shaping industrial projects. * Developers and policymakers should engage communities early and consistently to increase transparency and trust in new decarbonization efforts. |
| Balance Environmental and Economic Priorities |
* Industrial decarbonization strategies should simultaneously advance local pollution reduction and environmental remediation, energy affordability and job creation. * Policies should avoid short-term economic disruptions by pairing emissions reductions measures with incentives for the use and reuse of recently closed or declining industrial sites for clean manufacturing, energy efficiency, and infrastructure investment. |
| Ensure Environmental and Worker Safety in Industrial Shifts | * Conduct cumulative impact assessments to ensure that decarbonization technologies (e.g., hydrogen, carbon capture and storage) do not introduce health or safety risks for workers and nearby communities.
* Strengthening worker safety regulations and health protections ensures that industrial shifts do not lead to new forms of harm. |
| Embed Community Trust and Protective Safeguards | * Require every project to offer two-way engagement forums (listening sessions, advisory boards, co-design workshops) that communities can join if they choose.
* Establish anti-displacement safeguards (e.g., property-tax relief, affordable-housing set-asides) to prevent gentrification as new projects raise land values. |
Carrying Momentum Forward Amid Federal Rollbacks
In recent years, the U.S. federal government made considerable progress toward a more equitable transition to a low-carbon economy. For example, the Justice40 Initiative sought to ensure that some of the economic gains and environmental benefits of climate investments flowed to economically marginalized and environmentally overburdened communities. Incentives like the Energy Community Tax Credit Bonus were designed to help preserve jobs in regions historically dependent on fossil fuel industries.
However, many of these efforts at the federal level have been scaled back, weakened or eliminated in the first half of 2025. These rollbacks not only disadvantage communities and workers but could also create uncertainty for companies that may rely on stable incentives and local support.
Recent News: Nippon Steel Acquires U.S. Steel
Federal regulators approved Nippon Steel’s $14.9 billion acquisition of U.S. Steel on June 18, 2025, contingent on a national security “golden share” that lets federal officials block plant closures and other moves. Community and labor advocates warn that, without binding, enforceable guarantees for worker protections, meaningful community participation, and a shift to low-carbon steelmaking, the deal could jeopardize union jobs and lock in coal-based production — along with the $7 billion to $13 billion in annual health costs it already imposes on frontline neighborhoods.
In the absence of strong federal direction, state and local governments and forward-looking companies will need to take the lead on responsible and fair decarbonization. Several states, including Colorado and Illinois, have implemented workforce transition funds, targeting clean industrial investments that prioritize job retention and local economic benefits. Industry leaders can also adopt voluntary commitments that strengthen public trust and reduce project risks, such as prioritizing U.S.-based supply chains to avoid carbon leakage, investing in worker training, and engaging with host communities early and consistently to develop community benefits frameworks. These strategies go beyond good public relations — they also avoid delays, legal challenges and reputational damage.
Industrial modernization and decarbonization are not merely about cutting emissions — they are about building a more resilient, competitive and inclusive economy that benefits both industry and the communities that sustain it. By implementing fair and responsible policies and practices that recognize the value of workers and communities, the U.S. manufacturing can position itself toward long-term success in a rapidly changing global economy.
