ORVI Insider #20: A Model for Economic Development in Appalachia

 

The  latest news, research, and analysis from the Ohio River Valley Institute.

 

 

 

 

July 20, 2021

 

 

 

A groundbreaking set of new reports from the Ohio River Valley Institute explain why natural gas development failed to deliver economic prosperity to Appalachia and examine a real-world model for economic development that has turned around the economy of a formerly stressed coal community. 

Destined to Fail identifies the causes of the natural gas industry’s failures in the Marcellus and Utica fields to deliver growth in jobs, income, and population to the 22 Ohio, Pennsylvania, and West Virginia counties that produce more than 90% of the region’s natural gas. 

The companion report, The Centralia Model for Economic Transition in Distressed Communities, dissects the real-life case of Centralia, Washington, a chronically distressed coal town that lost its coal mine and is now losing its coal-fired power plant, but in which the economy, jobs and population are booming.

The Centralia model, combined with the prospect of economic stimulus and infrastructure funding, may put this kind of transition within the reach of distressed communities in Appalachia and beyond. The question is, will state, local, and regional policymakers embrace the opportunity?

Meanwhile, in Washington, a new energy infrastructure package introduced by Sen. Joe Manchin (D-WV) misses the mark on labor provisions and funding distribution for abandoned mine land (AML) reclamation. Research Fellow Eric Dixon outlines the bill’s shortcomings and explains how it should be improved. 

Here’s the latest from the Ohio River Valley Institute:

 

 

Research Spotlight

Destined to Fail: Why the Appalachian Natural Gas Boom Failed to Produce Jobs & Prosperity and What it Teaches Us

 

Why didn’t hundreds of billions of dollars in natural gas investment bring jobs to Appalachia? How can the region can get a better deal than the one it’s getting now? The report examines the economic plight of the 22 largest gas-producing counties in Ohio, Pennsylvania, and West Virginia from the start of the natural gas boom to 2019 to answer these questions:

  • The natural gas boom turned out to be a bad deal for gas-producing counties because a tiny fraction of the money invested in and earned from gas stayed in local economies.

  • The reasons why are structural and won’t be fixed by more fracking. Natural gas doesn’t require many workers; relies heavily on out-of-state investors, suppliers, and workers, who repatriate investment and proceeds; and damages quality of life and the business environment.

  • States and localities can make the bad deal better by enacting policies that keep more of the money in local economies and mitigate the damage to peoples’ health and quality of life.

 

 

View and download the report
The Centralia Model for Economic Transition in Distressed Communities
 

In the last decade, the chronically distressed coal town of Centralia, WA faced the closure of its coal mine and coal-fired power plant, the area’s largest employers. Now, Centralia’s economy is thriving. How? 

  • The natural gas industry’s economic shortcomings provide a template for the qualities necessary to make an economic transition successful.

  • Centralia established a $55 million transition fund for investments in clean energy, energy efficiency, and education that spurred local job growth, drove complementary investment, provided utility bill savings, increased disposable incomes, and improved quality of life.

  • Despite the closing of the mine and impending retirement of the power plant, Centralia’s transition formula, which can be replicated in similarly challenged places, led to economic and job growth that was twice that of the nation’s in the first four years of grant funding.

 

 

View and download the report

Manchin Infrastructure Bill Needs More Focus on Labor, AML Funding Distribution

 

Sen. Joe Manchin’s (D-WV) latest energy infrastructure package drops key AML provisions and lowers the AML fees that finance cleanup by 20%, a reduction will cost about $460 million in lost revenue, Research Fellow Eric Dixon writes.

To hold the coal industry responsible, Congress must raise the historically low AML fee levels to ensure states and tribes can meet the backlog of AML damage costs. Funding should be allocated according to the extent of remaining damage, as determined by an updated federal AML inventory, and shouldn’t be able to be spent on non-AML projects. Congress should also create a new public reclamation jobs program under the Civilian Climate Corps to ensure mine cleanup work is accessible and well-paying.

 

 

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ORVI In the News
 

Other Voices: Repairing the Damage in Appalachia (Pittsburgh Post-Gazette) 

For generations, fossil fuel companies have extracted immense wealth from Appalachian communities, enriching other parts of the country at the region’s expense and leaving behind abandoned coal mines and orphan wells. Robust federal spending to repair this damage will improve quality of life and create thousands of jobs in distressed, rural areas of Appalachia, ORVI researchers Eric Dixon and Ted Boettner write.  

 

 

 

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Federal Infrastructure Packages Projected to Save Lives, Offer New Economic Life in West Virginia (Charleston Gazette-Mail) 

In May, Senior Researcher Sean O’Leary delivered a 33-page testimony outlining the Centralia, WA model for economic revival to the West Virginia Public Service Commission, which was considering the 2028 retirement of the Mitchell coal-fired power plant in Marshall County. His testimony didn’t receive much fanfare then, Mike Tony writes, but “momentum toward federal infrastructure spending,” namely, the $100 billion energy infrastructure bill advanced by the Senate Energy and Natural Resources Committee, “could change that.”

 

 

 

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Proposed Ohio Cracker Plant Awaits Final Air Permit Decision; Still No Partner for Project (Columbus Dispatch) 

The PTT Global Chemical ethane cracker, proposed for construction along the Ohio River, may have to apply for new air permits if the U.S. Environmental Protection Agency denies a revision to Ohio law that would allow for an extension of the company’s permit, Beth Harvilla writes. Senior Researcher Sean O’Leary added that the company’s recent acquisition of German coating resins company Allnex casts shadows over the Belmont County cracker’s financial situation. “The company’s pool of existing capital has been reduced, which means that if PTTGC proceeds with the cracker, it will have to rely even more heavily on a partner or on markets to provide the capital, the very thing the CEO has said he was glad to avoid,” he said. 

 

 

 

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New Report Finds Significant Cleanup Needed at Coal Mines in the East (Appalachian Voices) 

A new report from Appalachian Voices, the Ohio River Valley Institute, and Reimagine Appalachia estimates that 633,000 acres on mines still held by coal companies in the East require some degree of reclamation, at an estimated cost of $9.8 billion. Cleaning up these mine lands could provide 2,300 to 4,500 jobs annually. “At this point, it’s imperative that state mining agencies and the Office of Surface Mining Reclamation and Enforcement (OSMRE) work together to determine the outstanding cost and amount of reclamation mines still held by coal companies [to begin a comprehensive cleanup effort],” said lead author Erin Savage, Senior Program Manager at Appalachian Voices. 

 

 

 

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The Fracking Boom Is Over. Where Did All the Jobs Go? (MIT Technology Review) 

In Pennsylvania, the “Saudi Arabia of natural gas,” and across Appalachia, “the numbers show that gas drilling has not lifted the financial outlook of shale communities. In fact, it may have made things even worse,” Colin Jerolmack writes. A “bombshell report” from the Ohio River Valley Institute details how the 22 counties in Ohio, Pennsylvania, and West Virginia that produce most of the country’s natural gas saw falling populations and stagnant job growth from 2008 to 2019, even as economic output grew by 60%.

 

 

 

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Report Offers Case Studies for How Pennsylvania Could Help Areas Affected by RGGI (State Impact Pennsylvania) 

A recent ORVI report explains how revenue from the Regional Greenhouse Gas Initiative (RGGI), a cooperative, eleven-state effort to cap and reduce carbon dioxide emissions from the power sector, could play a critical role in helping Pennsylvanian coal communities “replace lost tax revenue for local governments and school districts, prepare coal plant sites for reuse, and fund economic planning efforts.” The report offers case studies of coal communities in NY, MA, CO, and WA to demonstrate how RGGI funds could help ease the economic reverberations of coal plant closures. 

 

 

 

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The Failures of Fracking (H Magazine) 

A recent ORVI report exposes the false promises of the fracking boom, which failed to deliver growth in jobs and local prosperity despite the claims of industry proponents. “While people can support the industry, they shouldn’t want to support a bad deal, and that’s what they’re getting right now,” said Senior Researcher Sean O’Leary.  

 

 

 

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What We’re Reading
 

Whistleblowers Say ‘Bad Seeds’ Undermine Pipeline Safety (E&E News)

 

 

 

DOE Quietly Backs Plan for Carbon Capture Network Larger Than Entire Oil Pipeline System (DeSmog Blog)

 

 

 

Study: Black Lung Patients Face Higher Risk of Depression, PTSD (West Virginia Public Broadcasting)

 

 

 

Poll Finds Rural Voters Support Tax Hike on the Wealthy (Mountaintop Media)

 

 

 

Mine Reclamation Funds Would Breathe Life into Struggling Economies (The Journal)

 

 

 

 



 

 

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