In this edition of the ORVI Insider, our last newsletter of 2020, we highlight a new article from Senior Researcher Eric de Place on why plastics market trends indicate a dim economic outlook for the proposed petrochemical buildout in Appalachia.  We also follow-up a report included in our last newsletter with testimony provided by Senior Researcher Sean O’Leary in support of Pennsylvania’s proposed rulemaking to join the Regional Greenhouse Gas Initiative. In addition, we share a guest blog post from featured Advisory Council member, Dr. Nicholas Z. Muller, summarizing his recent paper on near-term carbon tax policy in the United States economy.

Dr. Muller is the Lester and Judith Lave Associate Professor of Economics, Engineering, and Public Policy in the Department of Engineering and Public Policy and the Tepper School of Business at Carnegie Mellon University. Previously, he was on the faculty at Middlebury College. Dr. Muller is also a Research Associate at the National Bureau of Economic Research. He teaches microeconomics, benefit-cost analysis, environmental and natural resource economics, and energy policy.

In a new guest blog post, Dr. Muller shares a summary of his recent paper, Near Term Carbon Tax Policy in the US Economy: Limits to Deep Decarbonization. With colleagues Michal Roth (Tel Aviv University), Paulina Jaramillo, and Peter Adams (Carnegie Mellon University), Muller explored how the energy system in the U.S. would respond to carbon tax policies up until the year 2030. Their findings showed opportunities for considerable reductions of carbon emissions and local air pollutants, as well as generation of significant tax revenue.

ORVI Research Spotlight

Plastic Market Trends Are Bad News for Appalachia Cracker Plans: What Peak Plastic Means for the Petchem Buildout

The Ohio Valley petrochemical buildout is in big trouble. You know it when you hear things like this: “The Zeitgeist has shifted, and this is a permanent shift.”

Those are not the words of an anti-fracking activist or an ocean conservation group. That’s a prominent petrochemical industry analyst talking. More precisely, it is John Richardson of ICIS writing about the end of the era of plastics, which he believes is upon us now. Long considered one of the leading sources of industry data and market analysis, ICIS provides arguably the most credible viewpoint on plastics. So it’s worth paying attention to the four-part series he wrote for ICIS, in which Richardson argues persuasively that public attitudes about plastic have shifted so dramatically that the world may have already reached “peak plastic.”

Shrinking markets, a more advanced petrochemical buildout in the Gulf Coast, growing public skepticism, and bearish industry analysts are all pointing to the same outcome: Appalachia’s cracker plants face stiff financial headwinds and, as such, they are not a safe bet for economic development.

ORVI testifies in support of Pennsylvania joining the Regional Greenhouse Gas Initiative: Reduced Emissions, Lower Utility Bills, and Economic Development for Small-Town Pennsylvania

On December 11, 2020, ORVI senior researcher, Sean O’Leary, testified before the Pennsylvania Environmental Quality Board in support of the Commonwealth’s proposed membership in the Regional Greenhouse Gas Initiative.

After examining the conditions under which Pennsylvania would join RGGI, assessing the effects RGGI has had to date in member states, and reviewing the Department of Environmental Protection study of the likely economic impacts, we have concluded that RGGI membership will result in three very beneficial outcomes in Pennsylvania:

• Greenhouse gas emissions will be significantly reduced as will other forms of pollution that harm Pennsylvanians’ health and drive up healthcare costs and absenteeism.

• Utility bills will be reduced as less expensive renewable energy resources become more prevalent and gains in energy efficiency more than offset the small upward pressure that would be placed on rates.

• Jobs and commerce will increase, particularly in rural counties and non-metropolitan areas whose economies have struggled most in recent years.

The third of these – increases in jobs and commerce in towns and rural counties — is one of the most frequently overlooked and yet one of the most significant benefits associated with policy measures that, like RGGI, effectively take money that would otherwise be used to pay utility bills and, instead, invest it in energy efficiency and distributed generation.

ORVI In The News

Capito, Manchin Among Bipartisan Group of Senators Pushing Legislation to Promote Carbon Capture (Charleston Gazette-Mail)

Ted Boettner, senior researcher at the Ohio River Valley Institute, said the legislation introduced Tuesday could help lay groundwork for “a comprehensive approach to reducing carbon,” predicting it will have a much larger impact if and when there is an economy-wide price on carbon.

What We’re Reading at ORVI

Energy and democracy issues continue to dominate headlines. Here are the stories we are reading this week:

• What Biden’s Plan for “Building Back Better” Could Mean for the Ohio Valley (Forward Kentucky)
  Biden’s plan would not only invest in rural broadband but also fortify clean energy industries and shore up struggling water systems. It’s a plan that Biden says will modernize the country, fight climate change, and create millions of jobs, drawing comparisons to the New Deal. Ohio Valley advocates hope it’s a plan that, if realized, will transform the region for the better. But the likelihood of a divided government, with Kentucky Republican Sen. Mitch McConnell retaining his majority leadership, means the new administration will need to find common ground to make the vision a reality.

• Biden’s Pick to Lead the EPA Has One Job: Fix Absolutely Everything (Vice)
  Experts said the most urgent task for the new EPA leader should be upending the priorities established under Trump. Biden nominee, Michael Regan, needs to protect the health of communities exposed to air and water pollution and not the business model of fossil fuel companies. But that won’t happen overnight.

• Ohio Quietly Passes A Bill That Could Bankrupt Churches Linked To Fossil Fuel Protests (Huffington Post)
  The proposal is part of a wave of anti-protest bills that began surfacing in state legislatures in 2017 but picked up steam as the COVID-19 pandemic reached its initial peak. The bills follow a model. They designate virtually any oil, gas, coal or plastics facilities as “critical infrastructure,” a status normally afforded to dams and nuclear reactors. Then they ramp up criminal penalties for commonplace protest tactics, such as blocking a roadway, tethering oneself to equipment, or even just holding a demonstration near a company’s property.

• Natural Gas Production Declines from Seven Major US Regions to Continue into 2021, EIA Says (Natural Gas Intelligence)
  The downtrend in natural gas production from seven major U.S. producing regions that has persisted for much of 2020 will extend into 2021, according to updated projections from the Energy Information Administration (EIA).         

• Study: PA Heart Failure Patients Near Fracking Were More Likely to be Hospitalized (StateImpact Pennsylvania)
  Heart failure patients who live near fracking operations were more likely to be hospitalized than those who live farther away, according to a new study. Researchers at Drexel and Johns Hopkins studied medical records of 12,000 heart patients in Pennsylvania between 2008 and 2015.

• Report: WV Shift to Renewable Energy Could Lower Bills, Boost Economy (Public News Service)
  With more coal plants idling or shutting down during the pandemic, a new report makes the case for boosting West Virginia’s renewable energy and energy efficiency over the next 15 years. Put out by the Center for Energy and Sustainable Development at West Virginia University, the report shows the state could move away from coal and generate more than 70% of the state’s electricity using wind and solar power by 2035 at little or no incremental cost to customers.

• Judge Denies Former CEO’s Move to Liquidate Blackjewel Coal (WFPL)
  A federal bankruptcy judge has denied a petition from former Blackjewel coal executive Jeff Hoops to liquidate the company. The decision means the reorganization of the company will continue under Chapter 11 bankruptcy as former employees, creditors and state agencies seek to recover millions owed by the company.

• BP Eyes Carbon Offset Market, Taking Majority Stake in Largest US Forest Developer (Natural Gas Intelligence)
  BP plc has taken a majority stake in Finite Carbon, the largest developer of U.S. forest carbon offsets, with plans to accelerate business opportunities overseas.

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