Attorneys who specialize in contracts know that a single phrase or just a word can completely alter the meaning and effect of a contract. The same is true . . . maybe even more true . . . of economic impact reports, which by their nature are speculative and rely heavily on assumptions, caveats, and conditionals, most of which lie buried in appendices.
That’s the case with a new economic impact report from the Rhodium Group, titled “Carbon Capture and Storage Workforce Development: State-by-State”. The report was commissioned by the Great Plains Institute (GPI), which is an enthusiastic advocate for building massive networks of pipelines to transport and bury underground carbon from coal and natural gas-fired power plants and other facilities. As the folks at GPI hoped, the Rhodium report finds that CCS development would have many benefits for Appalachian Kentucky, Ohio, Pennsylvania, and West Virginia, including the creation of nearly 29,000 jobs and the abatement of over 239 million metric tons of CO2 emissions annually.
But, if you read beyond the report’s main text and rummage around the addenda, you come across three troubling passages in a section titled “Methodology”.
- All facilities analyzed in this study were identified by GPI. This includes industrial and electric power point-source locations for carbon capture, the carbon dioxide pipeline network and CO2 storage sites.
- These facilities represent GPI’s views on near term carbon capture retrofit opportunities in the Regional Carbon Capture Department Initiative states.
- For purposes of the analysis, it is assumed that any identified facilities remain operational through the study period regardless of their current or future economic viability.
What the Rhodium Group is telling us is that they didn’t choose the facilities, nor was any consideration given to the question of whether retrofitting the facilities for carbon capture makes any economic or financial sense. GPI didn’t ask the question and Rhodium didn’t answer it . . . except that, in a way, Rhodium did, just not in this report.
A year ago, Rhodium produced a widely cited analysis of the Inflation Reduction Act, its likely effects on carbon emissions, and how reductions would be achieved in various sectors of the energy economy. In that analysis, Rhodium found that carbon capture and storage was uneconomic in coal and gas power plants. Consequently, Rhodium concluded that there should be zero investment . . . none . . . in CCS for those plants because there are more efficient and less expensive ways to reduce greenhouse gas emissions in the power sector.
Introducing CCS would nearly double the cost of electricity from gas plants and triple the cost from coal plants. Instead of paying $250 million to a gas plant for a year’s worth of electricity, we would have to pay over $450 million and, instead of paying a coal plant $250 million, we would have to pay it over $730 million. And even that may not be enough because the Energy Futures Initiative recently found that taxpayer-funded subsidies for CCS will likely have to increase by another 25% in order to goad power plant owners into adopting the absurdly expensive technology. We would literally pay power plants more to capture and bury the carbon emissions they create than we would pay them to generate electricity. That’s nuts.
It’s also a death blow to the Great Plains Institute carbon capture scenario for Appalachia. Of the 239 million metric tons of carbon they say CCS would remove, 214 tons, almost 90%, comes from coal and gas plants in which the technology is unaffordable.
And what of the 30,000 jobs they say would be created or preserved? They are illusions in the same way that similarly exuberant economic impact studies told us a decade ago that the natural gas boom would bring 450,000 jobs to Appalachia only to fall 460,000 short of that goal.
That’s right, job growth was a negative 10,000. Not only did the natural gas boom not induce job growth in Appalachia’s major natural gas-producing counties, it ushered in nearly worst-in-the-nation levels of job and population loss. Why is there a discrepancy between the rosy job numbers claimed in economic impact reports and the disappointing reality? Reports like the one Rhodium did for GPI don’t take into account the costs imposed by industrial development that is polluting and not very labor-intensive. They don’t account for the diversion of workers and resources from other more productive endeavors, the pollution, the taking of property, and the overall damage to quality of life as people find their formerly rural counties being turned into increasingly toxic industrial zones.
The fact is that the power generating industry, which would be the biggest CCS user in the GPI scenario, is also one of the least labor-intensive sectors of the US economy. Less than a quarter of the revenue that power plants earn goes to paying workers. The rest goes to corporate headquarters, shareholders, and suppliers most of whom are outside the region. With CCS, the share that would go to workers would be even less. So, while it’s true that people will lose their jobs if coal and gas power plants close, it’s also true that far more people will lose their jobs and become poorer, if we have to fork over billions more in taxes and utility bills to pay for CCS.
Meanwhile, the economically sensible things we would do to replace power from plants that close – clean ways of generating power and energy efficiency upgrades to homes and buildings – would create far more, good-paying jobs, than the number that would be lost.
The fatal flaw in the Rhodium report for the Great Plains Institute isn’t in what it tells us. It’s in what it doesn’t tell us. It doesn’t tell us that there are better and far less expensive ways to reduce carbon emissions. It doesn’t tell us the cost that we would have to pay through higher taxes and utility bills. It doesn’t tell us about the job losses and population losses that might be even greater than the gains. And it doesn’t tell us about the potential growth in jobs and prosperity if we pursue smarter methods of energy transition and avoid squandering billions of dollars on absurdly costly technologies like CCS.