The energy transition and local government finance: new data and insights from 10 US states

Abstract

Fossil fuels are the primary contributor to global climate change, and efforts to reach net-zero emissions will require a dramatic curtailment of their extraction and use. However, fossil fuels fund public services at all levels of government, and research has not assessed whether clean energy sources can provide similar scales of revenue. In this paper, we analyze a novel dataset that we have assembled on how fossil fuels and renewable energy contribute to local governments in 79 US counties across 10 states. Revenues from fossil fuels far outweigh renewables in aggregate terms, providing more than $1000 per capita annually in dozens of counties. However, wind and solar in some states generate more local public revenue than fossil fuels per unit of primary energy production. In most counties that depend heavily on fossil fuels for local revenues, solar—but not wind—has the technical potential to replace existing fossil fuel revenues, but this would require dedicating implausibly large portions of developable land (in some cases, more than half) to solar. For counties with less reliance on fossil fuels, wind and solar can more plausibly replace fossil fuel revenue streams. This finding suggests that while renewable energy will provide new revenue streams for communities, fossil fuel–dependent regions will need to build new tax bases well beyond wind and solar, develop other sources of revenue, or risk a decline in public service provision.

Keywords

• Energy transition
• local government finance
• energy policy
• climate policy