CLIMATE SUMMIT: 'Jobs, Energy Efficiency and the Climate Crisis’
Sean O'Leary is a senior researcher at the Ohio River Valley Institute. He has been the lead author of two ORVI reports that document the Appalachian natural gas boom's failure to deliver gains in jobs and prosperity. in his most recent report, he proposes a model for economic revival in chronically distressed counties and communities that feel threatened by the nation's transition to clean energy. This is an excerpt of his presentation on jobs, energy efficiency and the climate crisis as part of the Aug. 24, 2021, WV Climate Alliance summit "CLIMATE, JOBS and JUSTICE: A Public Forum on West Virginia's Future." View the full summit here: youtu.be/-m54X7PVsC0
TRANSCRIPT:
Excerpt from the Aug. 24, 2021 "CLIMATE, JOBS and JUSTICE: A Public Forum on West Virginia's Future," sponsored by the West Virginia Climate Alliance. VIEW FULL SUMMIT AT: youtu.be/-m54X7PVsC0
SEAN O’LEARY: I really am optimistic about the opportunities that West Virginia has. Both as a function of where the economy is going right now, and also some of the legislation that's coming out of Washington. But what has been happening recently, some of you may know that over the past year during which the Ohio River Valley Institute has been in existence, we've done a series of reports that have basically analyzed, particularly the natural gas industry, and also the petrochemical industries, which many of our legislators have been holding out as the hopes for economic revival in the region. And sadly, that is a misplaced hope
For those of you who are from the greater Ohio Valley and are familiar with Western Pennsylvania or southeastern Ohio, where the natural gas boom in Appalachia has taken place, you know that while production has skyrocketed, there has been very little in the way of corresponding growth in jobs or prosperity. One of the questions that I have been going around to county commissions and economic development authorities and asking them: 'What would you expect? What have you expected? And do you think you're getting a good deal from the natural gas boom, and the other promises that have been made in the region?' And the answer is almost always: 'No! We're not getting a good deal. It's not working.'
And all you have to do is go through downtown Bellaire, Ohio, or Wheeling, West Virginia or Waynesburg, Pennsylvania to to see that that's the case. But at the same time, I get a question thrown back at me. And that question is: 'What's the alternative?' I am very optimistic because I feel like now for the first time in a very long time, we have a pretty good answer to that question. And I'd like to tell you a little bit about why.
‘Do you think you're getting a good deal from the natural gas boom, and the other promises that have been made in the region?' And the answer is almost always: 'No! We're not getting a good deal. It's not working.'
And so one of the slides that I've been sharing with a lot of county commissioners is the one you should be able to see now, in which the question at the top is: 'Which counties' employment growth would you rather have?' And in 2014, the slide depicts a chart for six counties that had experienced negative employment growth over the previous 16 years, going back to 1998. Four of those counties — the ones in red, plus Belmont County in Ohio, became natural gas producing counties during the fracking boom. Also one of the counties listed is Beaver County, Pennsylvania, where the Shell ethane cracker plant is being built right now. And you can see that all of those counties saw a flat and/or negative job growth for an extended period. In fact, there never was a spike in jobs in those counties.
But there is one county that stands out. It's Lewis County, Washington, in dark blue, which didn't host a major natural gas or petrochemical expansion or any other major chemical expansion, but it alone saw significant employment growth. And that's why, by the way, going back to the map that Jeremy just shared a few minutes ago, if you look in Washington State, you'll see that there's just one county highlighted as a coal county — that is Lewis County, Washington. You'll also see that it is one of the whitest counties — meaning the color on his map — which means it's one of the least economically distressed. What I'm about to describe for you is why.
First, you have to understand that in the natural gas boom, between 2008 and 2019 counties in Ohio, West Virginia and Pennsylvania saw a huge explosion in economic output as measured by GDP. And a lot of times we'll hear the governor and various legislators talk about it. And we've even heard the head of WVU's Business School talk about "an economic miracle" taking place.
Well, it was if you were in the natural gas industry. But when you look at the measures of economic prosperity that we usually expect to accompany economic growth, none of them happened. The region as highlighted in yellow in this chart showed a below-average increase in personal income, almost no increase in jobs, and a loss — a net loss — of population throughout the region.
When we talk about energy efficiency and education, you can start spending tomorrow and the benefits begin almost immediately.
And so one of the questions was: 'How could all that money that was invested — and it is a lot of money, literally over $200 billion in the region — how could that much money be invested in a region and not produce job growth? Well, there are a series of reasons. And they're very disturbing reasons. I won't go through all of them here. But what I can tell you is that the reasons are structural — which means regardless of how much the petrochemical industry or the natural gas industry grows, it will continue the trend that it has exhibited over the past decade, which is economic growth without increased corresponding increases in jobs and prosperity.
And that's partly because these industries are among the least labor intensive in the US economy. Of the jobs that are created, many go to out-of-state workers. And all but a tiny fraction of the revenue that they generate migrates to management and investors who live outside of the region. In other words, it is the very definition of 'the resource curse.'
What's good news is that we have an alternative to that kind of economic growth, as represented by Lewis County, Washington, or the Centralia micropolitan Statistical Area. Centralia is an old coal town of 18,000. And it's the hub of a micropolitan area of 80,000. In 2006, Centralia lost its largest employer, a coal mine that employed 600 workers. Then, it learned that by 2025, it would lose another major major employer — a coal-fired power plant that once employed 370 people. And that's a scenario that a lot of you have heard, those of you who may live in Marshall, Ohio, and Wetzel counties are actually going through exactly the scenario right now with respect to the Mitchell coal fired power plant there.
The difference is that in Centralia, beginning in 2016, distribution of $55 million in economic transition funding began. And it happened through a weatherization fund that supports economic efficiency upgrades for low and moderate income residents; an economic and community development fund that targets workers, families and businesses; and also an energy technology fund that funds the development of clean energy in the region. And something remarkable happened as a result of that.
Between 2015 and 2019. GDP and Centralia grew at twice the rate of the nation's GDP. And after trailing the nation and job creation for more than a decade, Centralia's job growth was nearly twice that of the nation. This community that has about the same population, as Ohio, Marshall and Wetzel counties in West Virginia put together added 2800 jobs. And also wages grew 50% faster than the national average. And Centralia's population grew faster as well.
The strategy that was employed in Centralia and produced these results are eminently replicable in Appalachia.
And there are a variety of reasons that all of these outcomes happened. But most of them circle around the fact that energy efficiency in the education sectors, in which grant funding is highly concentrated, are highly labor intensive. Work in these sectors is performed by local workers and contractors. And so much of the upstream and downstream activity that occurs subsequently is local, as well. The grants leverage existing businesses and programs. They stimulate added investment from homeowners and business owners, which compounds by three to four times their impact. And also and importantly, the grants or annuity producing, because increased energy efficiency reduces utility bills. It puts more disposable income in the pockets of residents. And it continues to do so for years and decades.
And finally, the model is these jobs are shovel-ready. When we talk about energy efficiency and education, you can start spending tomorrow and the benefits begin almost immediately. But what's most most exciting for me is the strategy that was employed in Centralia and produced these results are eminently replicable in Appalachia. And so my hope is that we'll look at the Centralia model, recognize that it can be replicated in economically distressed companies in West Virginia and throughout America. And also recognize that we're now in a phase where sources of funding are coming online from the federal government and other locations.
And I hope to be able to talk with many of you in the future, about how your local counties and communities might be able to take this model and apply it locally to generate true bottom-up growth that is sustainable. And that allows West Virginia to ride the wave of clean energy transition rather than trying to fight it.
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