Supporters say energy efficiency – not gas – offers the best economic prospects in Appalachia



Investing in energy efficiency is expected to be part of a transition plan to improve the quality of life in the counties of Ohio, West Virginia and Pennsylvania which have seen a lot of natural gas activity. , according to new reports from the Ohio River Valley Institute.

The reports also explain why overall quality of life lags in seven counties that produced the lion’s share of Ohio’s fracking gas, even as their gross domestic product has increased.

“When you do energy efficiency – not just in homes, but in businesses, workplaces, schools and other public buildings – you also contribute to a better quality of life,” said Sean O’Leary , lead author of the two reports published on Wednesday. .

First, energy efficiency work on heating, ventilation, air conditioning, and doors and windows tends to be labor intensive, O’Leary said. “For every dollar invested in them, they generate about three to four times more jobs than a dollar spent or earned on natural gas.”

“These are businesses that are done by local contractors,” O’Leary continued. “When you spend the money with them, the money stays in the local economy. They hire local workers, and that has a multiplier effect.

“The third thing is that these types of investments have annuity value,” O’Leary said. “That is to say, they save on utility bills. This translates into a smaller drain on residents’ personal income. And “savings last for decades.”

In support, O’Leary and colleagues cite Centralia, Washington, as a model to use for Appalachian counties to shift from dependence on fossil fuel industries. They describe the model in one of the reports.

Located roughly halfway between Seattle and Portland, Oregon, the area has long relied on coal mining and a coal-fired power plant. At times from 1994 to 2005, the unemployment rate exceeded some counties in the Appalachians.

The Centralia coal mine closed in 2006. Only one unit remains in operation at the power plant, and it is scheduled to retire in 2025. Yet, from 2015 to 2019, the region’s gross domestic product increased to twice the national rate, and it added more than 2,800 new jobs, according to the report.

In particular, TransAlta, which owned the coal mine and still owns the power plant, agreed to invest $ 55 million in a transition plan that supports energy efficiency, economic and community development, as well as energy programs. education and retraining.

“You just walk around town and you see it’s a better place to live and have a business than it used to be,” O’Leary said.

“Energy efficiency is definitely the foundation for growing clean energy jobs,” said Jane Harf, executive director of Green Energy Ohio, who did not work on the reports. “In 2019, nearly three-quarters of Ohio’s clean energy jobs were in energy efficiency, and the same is true in the Midwest.”

“Energy efficiency is also the fruit at hand in the fight against climate change,” continued Harf. “Reducing the amount of energy we use is of critical importance, regardless of the source. “

If energy efficiency improvements like those at Centralia were made in three panhandle counties in West Virginia, residents would save about $ 8 million a year on their utility bills, O’Leary said. “And that’s money that would be recycled in the local community.”

Contrast with gas

In contrast, the other new report from the Ohio River Valley Institute suggests that the natural gas industry is “doomed” when it comes to delivering lasting quality of life benefits to people. residents of 22 counties in Ohio, West Virginia and Pennsylvania.

Since 2008, the industry has invested billions of dollars to develop fractured horizontal gas wells, as well as midway processing plants, pipelines and related activities. Despite the setbacks in the country’s coal industry, the mining, quarrying, oil and gas economic sector has grown from 4% of the economies in those counties in 2008 to 35% in 2019, according to the report.

Still, while overall employment grew 9.9% nationwide from 2008 to 2019, the 22 counties covered in the reports saw only 1.6% growth, reported the Ohio River Valley Institute earlier this year. The seven counties in Ohio included – Belmont, Guernsey, Carroll, Jefferson, Harrison, Monroe and Noble – actually saw a drop in net employment of around 8%.

“How in the name of God can you invest $ 80 billion without seeing any job growth or big change in economic activity? O’Leary said.

Unlike the energy efficiency industry, natural gas operations are “capital intensive rather than labor intensive,” O’Leary said. Compared to other industries, relatively few jobs are created for the dollars invested.

In addition, much of the work of drilling and fracturing the horizontal wells was carried out by skilled workers from outside the region.

An influx of temporary workers gave Belmont County in Ohio “problems with moving fleets entering, and they had to build hotels for all workers entering,” former county commissioner Mike Bianconi said . This has given a short-term boost to the hospitality and service sectors, while causing disruption in other ways.

“But you know, they are all gone,” Bianconi said.

Royalty payments also haven’t translated into improved personal incomes for most people, O’Leary said. On the one hand, natural gas spot prices have fallen from their 2008 high of over $ 12 per million Btu to less than half that of February 2021. And several months from 2012 have seen prices cash less than $ 2 and $ 3 per million Btu, Energy Information Administration data shows.

As a result, royalty payments to local owners are lower, O’Leary and colleagues report. Less money is available for personal income and spending by people in local economies. And this money is not distributed evenly throughout the community.

In a separate analysis, economist Amanda Weinstein of Akron University and colleagues at Ball State University in Indiana attempted to assess the quality of life of people living in counties in the United States. In general, counties rich in natural features, such as beaches or mountains, tend to rank well.

The Appalachian counties covered by the report do indeed offer beautiful landscapes and other natural amenities. Still, they lag behind in other areas when it comes to their overall quality of life, Weinstein said. These counties have a history of extensive coal mining, as well as natural gas drilling.

“Instead of relying on these natural amenities, these extractive industries are actually reducing them,” Weinstein said.

The Quality of Life ranking uses data from the 2010 census, before the largest expansion in hydraulic fracturing and horizontal drilling in the Marcellus and Utica areas. However, declining demographics for Appalachian counties suggest people could “vote with their feet” to leave. Also, the quality of a region’s business environment doesn’t necessarily translate into a better quality of life, Weinstein said.

To look forward

Now is the time to talk about a transition for Appalachian counties, O’Leary said, especially in light of infrastructure plans currently being discussed at the federal level. And at least some local leaders are looking to broaden the economic base of their communities.

“You can’t deny the fact that we have to diversify the economy when you look at the numbers,” County Commissioner Mike Belding of Greene County, Pennsylvania said. He noted that a few natural gas companies have made substantial investments in the community, including one that has donated money for a recreation center and another that is working to expand broadband coverage. Yet overall, he said, “I would agree with the failures of the industry at large.”

The report on the Centralia model for the transition was “very revealing,” Bianconi said. He encourages residents to look beyond coal and natural gas with “open eyes and open minds.”

Ohio Oil and Gas Association spokesperson Mike Chadsey was more critical. “Much like their latest effort, the only thing that is doomed to fail is this report funded by anti-natural gas which is gaining traction,” he said, raising questions about the backers of the ‘organization. “The fact remains, according to state data, more than 208,000 are proudly employed in the natural gas industry here in Ohio.”

That number is consistent with an April 2020 report from the Ohio Department of Employment and Family, using data through the third quarter of 2019. The same report still shows March 2020 unemployment rates higher than state averages for the seven counties included in the Ohio River. Reports from the Institut de la Vallée.

“We are looking at whether the counties are getting a bad deal economically,” O’Leary said. “Even if you are pro-industry, even if you are pro-fracking, that doesn’t mean you should be in for a bad deal.”

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