Last month, the Political Economy Research Institute (PERI) of UMass Amherst released a report on a proposed clean-energy transition program for West Virginia. It’s one of several PERI reports that provide a template for how to redevelop West Virginia—or Ohio or Pennsylvania—by combining an energy transition program with an economic-development program and a land reclamation program.
All of this produces good jobs and a new strategy of development for a state that has traditionally been built around fossil fuels, as well as a just transition for former fossil fuel workers.
Robert Pollin is the lead author of these reports.
Robert Kuttner: Bob, could you tell us more about the thinking behind this work and the logic of how the various pieces of the strategy fit together?
Robert Pollin: Sure, and thank you very much. The first big component of the report—for West Virginia and the rest of the U.S. and the rest of the world—is to achieve the emission reduction targets set out by the Intergovernmental Panel on Climate Change. The IPCC’s intermediate target is a 50 percent reduction in CO2 emissions by 2030, which is now only nine years from now.
The proposed investment program would build up clean energy in West Virginia and wind down fossil fuel consumption by approximately 50 percent. So one key question is how much investment will it take to get there.
And then, with those investments how many jobs do we create? The Reimagine Appalachia program that people have been developing now for several years is broadly focused around infrastructure reviving manufacturing and regenerating agriculture. Land reclamation improving agricultural conditions is another important component of the investment program.
We modeled all of that, and we estimate the job creation and the costs. You’re looking at about $5 billion a year, and the creation of about 41,000 new jobs.
The fossil fuel industry is the major employer in the state, but it’s been in decline for a long time. As it happens, there are just about 41,000 people employed in the region, not only in coal and oil, but in transportation, pipelines, and anything having to do with oil and coal.
So, if we are looking at a 50 percent cut by 2030, that means we cut half the jobs over ten years, or about 2,000 jobs a year. We think about 600 people a year will retire voluntarily because they’re going to turn 65. So that’s 1,400 net jobs per year we need to replace. We match that against the roughly 40,000 jobs per year we’re creating with clean energy and strong infrastructure and agricultural revival.
You calculate that if you create new jobs and pension off some of the older workers, you’re talking about a net cost of about $143 million per year. In the context of a Biden infrastructure bill of something like $2 trillion, that’s not a huge chunk of money.
The way we get to that number is to give those 1,400 workers per year a job guarantee. It doesn’t have to be in the clean-energy sector. That’s an obvious place to move people, but we propose that their wages stay at their current pay level wherever they work. Then we guarantee their pensions, and we support them with retraining and relocation as needed. Our client was pretty insistent that we don’t want people to have to relocate. We want new investments, right in the communities.
If you just let West Virginia get its share of the Build Back Better program based strictly on population, they would get $2.5 billion a year, which is more than our projection for the public part of the entire program we’ve put forward. We’ve estimated that would require about $2 billion in public funds and about $3 billion in private investments. If anything, West Virginia should get more than its per capita share because they’re going to be disproportionately hurt by this transition away from carbon.
In fact, there is a similar proposal that 100 members of Congress have endorsed called THRIVE [Transform, Heal, and Renew by Investing in a Vibrant Economy resolution]. Under that proposal, West Virginia would get about four and a half billion per year. So somewhere between Biden and THRIVE, West Virginia is going to get in the range of $2 to $3 billion; that’s more than enough to cover the whole program.
Before this bill passes, there is probably also going to be a Joe Manchin bonus. One practical question is who actually carries this out? You’ve got a state with a Republican governor and a Republican legislature—a state that’s not famous for economic planning, so what mix of federal and state actions might actually carry this out?
I’ve had meetings with some state officials and with members of Joe Manchin’s staff, and I was surprised by how enthusiastic they seem. One thing that’s been clear in talking with the local NGO people who commissioned this report and the state delegates (legislators) is that they want to take ownership of this.
And, of course, they will shape it in exactly the way they want. They’re tired of Washington and other people telling them how to do things, so that was a clear message.
I see this as a fantastic opportunity for Joe Manchin especially, in his moment of extreme leverage in Washington. He can say we need this and, yes, West Virginia should get a disproportionate share.
To what extent does this need to be carried out by the state government, and to what extent can it be done by this consortium of local governments, NGOs, economic-development specialists, and so on, with or without the active participation of the state government?
I think you need the state government because the way we’ve designed it, 60 percent of the total funding is coming from the private sector. And so, in order to induce the private sector you’ve got to have incentives and disincentives. We need some basic policy levers here that can only happen at the state level, for example, renewable portfolio standards, so the utilities have to cut their fossil fuel consumption by, say, 5 percent a year. Or you could have a carbon tax, or some combination of the two.
We also need energy-efficiency standards for buildings. Government should buy electric vehicles. So all of these things need to come together, and I don’t think those can come together just at the level of municipalities.
Is it thinkable that the current government of West Virginia will fully support this kind of transition plan, even with a $2.5 or $3 billion a year federal carrot?
We’ll have to find out. I was on a call just a few hours ago, and the person from one of the NGOs told me that there’s never been any enthusiasm like this. It makes such economic sense.
Take the case of carbon capture technology, which would enable them to keep burning coal and then the emissions get captured and stored. Well, the latest report from the Department of Energy just came out a couple weeks ago—and this had to be written while Trump was still in office. The Energy Department is estimating that carbon capture is twice as expensive as solar and twice as expensive as wind. And it’s not proven at commercial scale, so why would the state want to gamble on that, instead of embracing this opportunity?
During the campaign, Biden spoke of an infrastructure program of about $500 billion a year for four years, but he has yet to spell out the details in legislation. And there will obviously be several different federal agencies involved.
The last time the United States engaged in serious active economic planning was during World War II. Since World War II, instead of comprehensive planning, we’ve had a kind of a medley—a little bit of economic development over here, some worker training over there, a little bit of Pentagon spin-off over here, some tax breaks. But economic planning has been so anathema in this country that government involvement in the planning of the economy moves in fits and starts.
We need this green transition to be coordinated, but we don’t want a planning czar. It also seems to me to be a rare opportunity for bottom-up economic planning, partly because the federal government can’t do all of this—it’ll trip over itself; and partly because projects like yours grew out of lots of discussions with local people who’ve been engaged in this effort for a long time.
So it’s a blessing that Washington is still kind of feeling its way for which department is in charge of what. If you look at the New Deal as an analogy, Roosevelt never stopped experimenting. He would try another and it really wasn’t until the war and the wartime emergency that you had a more coordinated kind of economic planning, on behalf of the war effort. So it really is an opportunity for a conversation between local bottom-up planning and state government involvement, and the role of the Feds providing the money, with criteria.
These local civic groups have done a lot of great work and they’ve defined the projects on the ground. Ohio, Pennsylvania, West Virginia, Kentucky are adamant that they’re definitely going to define this.
Basically, all I did was take their broad framework and put it together and put numbers on it. So yes, the local planning infrastructure exists. And if it exists in West Virginia, it exists in most states. I’ve been doing this parallel work with the Green New Deal network. I’m doing similar studies for 21 states. They all have a sense of what they want.
Having read the report-—and I hope our readers read the report for themselves—it also seems to me that your value added is to explain how all the pieces fit together. How the shift to the renewable-energy piece fits to the economic-development piece, fits to the job creation piece, because it really does have to all work in sync as a coordinated plan.
And of course I’m not the only one doing it. I was part of the Zero Carbon Action Plan led by Jeff Sachs. That has about 15 different papers on different areas of specific policy. There is another working group at Princeton.
I was talking yesterday to a group in San Diego. They were extremely hostile to the idea of utility-scale solar. They wanted a rooftop solar or at least artificial surfaces. That’s more expensive than utility-scale, but they were saying, yeah, but we don’t care because we don’t want to destroy property values with all these ugly solar farms. Those kinds of issues will come up every single place, as they should. The fact that communities are discussing in detail is really valuable.
The more that those decisions are made locally, the more legitimacy the entire project has.
Let me ask you one last question. Given all of the obvious benefits, for business, as well as for the environment and for workers, as we come out of a horrific recession, do you think the Republicans are going to be able to continue to just reject this categorically? Or are some possibly going to appreciate the value of it?
Well, some of them that are just totally crazy, right, what can you say about these people? They don’t have any program. On the other hand, the governor of West Virginia, who I don’t know personally, is a very successful businessman. And from a business standpoint, this program makes complete sense. He has to see this as an opportunity for the state, and why not get on board? Why not try to shape it? There are investment opportunities in land reclamation, though they need to be subsidized. Any purely self-seeking capitalist should like that.
Bob, I appreciate the work and the conversation. Keep in touch as this moves forward.
