New Reports Sketch a Blueprint for Job Growth and Economic Development in Distressed Appalachian Communities

There are many parallels between economically struggling communities in Appalachia and Centralia, Washington, a chronically depressed coal town that lost its coal mine and is now losing its coal-fired power plant. But in Centralia, the economy, jobs and population are booming. 

A new report by the Ohio River Valley Institute (ORVI) titled “The Centralia Model for Economic Transition in Distressed Communities” dissects the real-life case study of the community, its company-funded transition plan, and the Centralia Coal Transition Fund, which is distributing grants to promote economic development, energy efficiency and clean energy technologies for residents, employees, businesses, non-profit organizations and local governments.

“When economic stimulus is heavily oriented towards energy efficiency and education, the payoff is immediate,” said Sean O’Leary, the report’s lead author. That type of spending keeps money in local economies because it goes towards local labor and services.

Contrast that with Appalachia, where only a small portion of the billions of dollars invested by the natural gas industry has remained in local communities, a disconnect quantified in ORVI’s companion report titled, “Destined to Fail: Why the Appalachian Natural Gas Boom Failed to Deliver Jobs & Prosperity and What It Teaches Us.” 

“The natural gas industry didn’t just fail to bring prosperity to the region, but it is structurally incapable of doing so for reasons that are discussed in the report” said O’Leary. The problem is that too little of the money invested and earned from natural gas production ever enters local economies. That’s because the industry isn’t very jobs-intensive, it relies heavily on out-of-state workers and suppliers, and the value of royalties is greatly diluted by the chronically low price of gas and the propensity of recipients to either save the money or spend it elsewhere rather than in the local economy.

“For jurisdictions that have premised their economic development on continued expansion of the natural gas and petrochemical industries, they are destined to fail and must consider economic transition. The good news is that the Centralia model offers a viable alternative.” 

A recent press conference and panel discussion gathered economic experts and local elected officials to discuss the reports’ key findings, including Green County, Pennsylvania Commission chair Mike Belding and former Belmont County, Ohio commissioner Mike Bianconi. 

 

 

Belding said his county cannot maintain economic viability with a single-source driver. “You have to get away from politics and have a transparent dialogue. You cannot deny the fact that we need to diversify the economy when you look at the numbers.” 

Bianconi said he’s seen the decline in drilling and its impact on his community, and he’s encouraging local residents who are accustomed to a heavy mining and drilling presence to look at things differently. “We just have to have open eyes and open minds. We’re all fighting for the same thing, which is to make things better for everyone,” he said. 

Between the original economic impact report on the Appalachia’s 22 largest natural gas counties and the new, companion report explaining fracking’s structural inability to generate economic prosperity, it’s clear that the region’s natural gas boom has been a bad deal for local residents. Now, communities whose economies have been distressed for decades and that feel threatened by the transition to clean energy, which describes many places in the greater Ohio Valley and Pennsylvania, have a model of economic growth and prosperity to emulate. That model is driving economic, job, and population growth at twice the rate of the US economy in a community that looks for all the world like many of ours. 

“It is a myth that we must make a decision between jobs and a healthy environment. It’s simply not true, “said ORVI senior researcher Sean O’Leary. “It’s becoming clearer that communities in Appalachia are already getting a bad deal from the failed natural gas boom. It is imperative that local and state leaders shift the directions of their economic direction strategies now.” 

 

New developments make a transition plan even more urgent

A series of announcements in the past week show how suddenly the failed vision of fossil fuel and petrochemical prosperity is crashing down, underscoring the importance of alternative economic development strategy.

PTTGC, the Thai company that is reportedly considering the construction of a cracker in Belmont County, Ohio, found a cheaper way to expand its presence in the petrochemical industry. It purchased another company for $5 billion. The purchase reduces PTTGC’s available capital and makes it even less likely than it was before that the cracker project will ever go forward.

The Kentucky Public Service Commission rejected a plan to keep the Mitchell Power Plant in Marshall County West Virginia open until 2040, which greatly increases the likelihood that the plant will close in 2028. And many other communities with coal-fired power plants in Ohio, Pennsylvania, and West Virginia know or should know that closures aren’t far away. 

Vistra announced yesterday it would close its 1.3-GW Zimmer coal-fired power plant in Clermont County, Ohio on May 31, 2022, five years earlier than previously announced, as the plant continues to struggle economically due to its configuration, costs, and performance.

Finally, efforts to subsidize the coal, natural gas, and petrochemical industries by investing in carbon capture, utilization, and sequestration policies won’t help much even if they’re enacted and funded, because they’ll just perpetuate what the region has now – lots of toxic industrial activity that harms quality of life and peoples’ health without significantly increasing jobs and income.

These challenges are just the most recent symptoms of a chronic condition that has been eating away at Appalachia for fifty years. But it doesn’t have to be this way. 

There is legislation moving through congress, there are state efforts, such as Pennsylvania’s possible membership in RGGI, and there are private foundations and companies, such as AEP, that are poised to inject money into this region. And, if that happens, the onus will be on us to use it wisely – to use it in the way the community of Centralia, Washington used $55 million in transition funds to induce a real boom in jobs.