Ohio can’t afford the GOP’s massive giveaway to the oil & gas industry

fracking well ohio
fracking well ohio

A hydraulic fracturing well looms large over the Ohio countryside (courtesy of Ideastream).

In March 2012, the Ohio House of Representatives introduced HB 487, a bill which included changes to the way that Ohio taxes oil and gas extraction in the state. Ohio’s current system of regulating oil and gas production was implemented in 1972. Almost everything about the energy sector in the United States has changed drastically in the last 40-plus years; I wish I could say these regulations were included.

Ohio’s existing severance tax

Ernst & Young analyzed Ohio’s existing severance tax and Governor Kasich’s proposed changes (PDF) in 2012. E&Y compared Ohio’s tax policy to that of seven other oil and gas producing states. Of the eight states, Ohio has by far the lowest effective tax rate (ETR). The state’s combined ETR of 1.8% is 80% lower than the average in the seven other states. Based on a 2011 analysis from Policy Matters Ohio, this tax rate has cost the state millions in foregone tax revenues. From 2001-2010, the  value of the oil and natural gas extracted within the state was $8.38 billion. But Ohio collected a mere $26,017,858 in taxes – equal to 0.31% of the market value. That’s not at typo. Using these numbers, Policy Matters projected the amount of severance taxes that Ohio would collect from shale gas production from 2012-2015, compared to five surrounding states. Of the $10.77 billion in estimated value, Ohio will capture just $39.8 million in taxes. Compare this number to West Virginia and Michigan, whose 5% tax would bring in $538.4 million.

The Kasich proposal

Clearly, Ohio’s current severance tax sucks. Governor Kasich’s plan was supposedly introduced to rectify this issue. The proposal would have doubled severance taxes on oil from conventional, vertical wells to $0.20 per barrel and altered the tax on natural gas from vertical wells to the lessor of 1% of the market value of the gas or $0.03 per thousand cubic feet (mcf). It would have also priced oil and gas from horizontal wells, which is produced using the controversial hydraulic fracturing method, separately. This oil would have been taxed at 1.5% of the market value for one year, then at 4% for the lifetime of the well. Natural gas from fracking wells would have been taxed at 1% across the board. E&Y’s analysis found that this proposal would have increased the effective severance tax rate from just 1.8% to 2.7% overall; however, Ohio would still have the lowest tax rate in the region. Under Kasich’s proposal, Ohio’s ETR for an average oil/gas well would be just 40% lower. What a relief.

Ohio Republicans strike back, introduce HB 375

And yet, Ohio Republicans balked at Kasich’s plan. During budget deliberations, the plan was completely stripped out of the bill. Recently, Ohio Republicans finally offered up their alternative to Kasich’s proposal. State Rep. Matt Hoffman (R-Lima) introduced HB 375 on December 5. Shockingly, the bill has overwhelming support from the oil & gas industry.

Thomas Stewart, head of the Ohio Oil & Gas Association, issued a statement saying the bill “includes a sensible modification of the severance tax based on actual well economics.”I’m not sure what energy economics textbook Mr. Stewart is reading from, but suffice it to say he’s just a tad off the mark. Headwaters Economics issued a report in 2012 that included a list of 12 recommendations for crafting fiscal policies for the oil and gas sector. HB 375 goes against every single recommendation. So let’s compare the bill to just three of these recommendations.

1. Maintain a high effective tax rate

Headwaters argues that it is essential for states to keep a high ETR on their mineral deposits, because it provides additional resources to mitigate the impacts of drilling and allows them to invest in long-term economic development.

kevin bacon dancing

Even 1980s Kevin Bacon knows that the oil & gas industry isn’t footloose (courtesy of People Magazine).

Contrary to fear-mongering from industry reps and the Ohio GOP, the oil & gas industry is not going to flee the state and give up concessions just because the state increases slightly its pathetically low severance tax. As Headwaters notes, Montana had an ETR of 4.6% for oil and gas in 2011. Neighboring North Dakota, in contrast, keeps its rate at 9.9%. Despite this, North Dakota has seen significantly more drilling activity, and Montana’s poorly-designed tax policy cost the state $60 million in foregone tax receipts in 2010 alone.

The minerals sector is not directly comparable to other economic activities, like the service sector. Oil and gas producers migrate to where the oil and gas deposits are, not where taxes are lowest. The industry is not, in economics parlance, particularly footloose. If it were, then Texas and Alaska, where tax rates are 8.2% and 25%, respectively, would not be leading producers. There is simply no valid evidence to suggest that slightly higher severance tax rates will keep companies from drilling here.

Yet, HB 375 institutes tax rates even lower than Kasich’s proposal. It would lower the tax on conventional gas from $0.025 per mcf to $0.015 per mcf. It also repeals the regulatory cost recovery assessment fee passed in 2010 to offset the costs of land reclamation. And, for horizontal wells, it introduces a severance tax of 1% of the value of net proceeds from oil/gas sales for 20 months; this tax then increases to 2%.

2.Remove “holiday” incentives

Several states have production tax “holidays” during the early days of oil and gas production. The logic behind these tax holidays is based on the fact that, for conventional wells, there is a lengthy gap between the drilling phase and the production phase (when the oil/gas is actually flowing). This gap can be upwards of two years for vertical wells.

But this model does not apply to horizontal wells. The drilling phase for a horizontal well is compressed, and the production phase typically jump starts thereafter. The majority of oil/gas from horizontal wells is extracted during the the first two years, after which production drops precipitously – by more than 60% in just one year in most cases.

shale gas production cycle

This image from the EIA charts the production cycles of shale wells across five different shale plays.

By providing a five-year tax holiday, HB 375 effectively ensures that Ohio will forfeit the overwhelming majority of tax revenues from its oil and gas deposits. By the time that the tax rate increased to 2% in year six, it’s entirely likely that drillers may have simply moved onto the next well.

3. Guarantee adequate local share in revenue collections

A central tenet of good oil/gas policy is to guarantee that the benefits of the fuels are adequately shared with communities on the front lines of extraction. As I’ve written before, the US isn’t somehow immune to the impacts of the natural resource curse. Far from it. One can find evidence of the resource curse from horrifically high mortality rates (PDF) in Appalachia to skyrocketing crime rates in North Dakota to groundwater pollution from fracking in multiple states to increased damage to infrastructure in Texas.

HB 375 does nothing to support front line communities. Ohio’s past two biennial budgets have taken a toll on local governments. Ohio Republicans balanced the state budget by holding onto tax revenues that should have been returned to local governments. The 2014-2015 budget reduces the amount of money local governments will receive by $1.4 billion. HB 375 simply exacerbates the issue further. Under the proposal, the funds raised would go to the Ohio Department of Natural Resources to cover the costs regulating the industry, remediating abandoned wells, and conducting geological surveys for the industry. Any additional funds would go to reduce personal income taxes. This policy would disproportionately benefit the wealthy and leave those directly affected by drilling on the outside looking in.

HB 375: Great for the industry, terrible for Ohio

All told, Policy Matters Ohio found that HB 375 would cost the state $620-800 million over the next decade, compared to the Kasich proposal (which is far from ideal policy). The bill amounts to little more than a giant handout to the oil & gas industry. Ohio’s current oil/gas severance tax is a 40-year old relic of terrible policymaking. It would be a challenge to make a policy that’s worse.

Somehow, Ohio Republicans have crafted a bill so terrible that it gives existing law a run for its money. If you were looking to develop a policy that took the full advantage of our natural resource endowment and benefited ordinary Ohioans, you could hardly do worse than HB 375. But, on the other hand, if your goal was to benefit the wealthy, well-connected, and your political benefactors, you would be pressed to outdo HB 375.

This bill is egregiously bad policy. Naturally, I expect it will be on Kasich’s desk by the spring.

The resource curse is coming to town

The discovery of oil deposits has, in many ways, been a curse for Nigeria's Ogoniland province, which has been plagued by environmental degradation and civil conflict (courtesy of Reuters).

The discovery of oil deposits has, in many ways, been a curse for Nigeria’s Ogoniland region, which has been plagued by environmental degradation and civil conflict (courtesy of Reuters).

Oil and natural gas from shale will be a “game changer” for Ohio, one that “has given fresh life to energy development,” according to Jack Gerard, the president & CEO of the American Petroleum Institute. The Plain Dealer has matter-of-factly stated that the boom in hydraulic fracturing, or fracking, in states like Ohio is “expected to create thousands of jobs and add billions to the state’s economy.”

That expanded oil and gas production will generate myriad economic benefits is largely taken for granted in most circles. For the most part, opponents of fracking for oil and gas have focused almost exclusively on the potential environmental consequences, such as water and air pollution, radioactivity, and an increased risk of earthquakes.

But a new study from Headwaters Economics has thrown some cold water on this conventional wisdom. What if, instead of bringing socioeconomic development to energy-rich areas, oil and gas production could actually make these communities worse off?

The natural resource curse

This concept, the so-called “natural resource curse,” has long been studied in international relations and environmental circles. Several studies have demonstrated a strong connection between natural resource abundance and stymied economic growth on an international level, particularly in the developing world. In a 1995 paper, Sachs & Warner concluded that reliance on natural resource dependence can decrease economic growth by around 1% per year.

natural resource dependence and growth rates

This figure, from Sachs & Warner (2001), charts the relationship between natural resource dependence and economic growth rates from 1970-1989. As it suggests, those countries whose economies depend heavily on natural resource exports had lower real growth rates during this period, and vice versa.

There are several reasons (PDF) why natural resource wealth and dependence could harm socioeconomic development. I will outline three below.

First, a boom in natural resource extraction can increase price levels throughout the economy (PDF), raising a country’s exchange rate. As a result, resource wealthy states tend to have higher costs for export goods, reducing their competitiveness on global markets.

Secondly, higher real wages can create an incentive for individuals to forgo employment in other areas to pursue opportunities in the extractives industries. This reliance upon extractives can crowd out investment in manufacturing, limiting the ability of the industry to become more efficient over time. These outcomes can harm innovation and entrepreneurship (PDF), which may create long-lasting ramifications for the economy.

Thirdly, resource-dependent countries are highly susceptible to rent-seeking behavior and the pathologies that can come along with it, such as political violence, up to and including civil conflict. As de Soysa and Binningsbø (paywall) put it:

Resource rents apparently create factional political states, where rent capture allows politicians to survive by dispensing rents, rather than making hard choices about reform. Political survival dictates profligacy and waste, rather than providing public goods.

Rather than investing in important public goods, leaders of resource-rich states can simply make direct payments to important elites or buy off potential challengers. Resource revenues also tend to accrue to state, rather than staying in source communities. As a result, while some actors will benefit from extraction, the communities on the ground tend to suffer the effects without reaping the rewards.

The lure or resource rents can also drive groups to try to capture control of the state. As a result, a plethora of studies have shown that states dependent on natural resources experience higher rates of internal political violence (paywall) and a greater risk of experiencing civil war.

six western states oil and gas income levels

The study explores the effects of oil and gas development on socioeconomic development in six states from 1980-2011 (courtesy of Headwaters Economics).

The resource curse comes to the United States

But while the negative consequences of resource dependence are well-known for the developing world, the same cannot be said for the Untied States. In order to investigate the long-term impacts of using oil & gas extraction as an economic development policy, Headwaters analyzed the effects of an early 1980s oil boom in six Western states: Colorado, Montana, New Mexico, North Dakota, Utah, and Wyoming. The study explored the long-term impacts of the boom on social and economic development from 1980-2011, analyzing data from 207 counties in the states.

While many observers consider the oil and gas boom to be a positive development in the West – the curren oil boom in the Bakken shale has helped lower North Dakota’s unemployment rate to just over 3% – Headwaters’ findings challenge this perception. Rather than contributed to sustained, positive outcomes, these counties actually experienced many of the same consequences of the resource curse that I outlined earlier.

First, the authors found that the counties most dependent on oil and gas extraction actually had lower levels of per capita income during this period. These counties saw per capita income levels decrease by $7,000, on average. One reason for this outcome may be that boom towns typically see the cost of living skyrocket in the short-term, which can raise prices and offset income gains. In Fort McMurray, the heart of Alberta’s tar sands industry, for instance, the population has tripled in recent decades. The formerly rural area, which is now bursting at the seams, has the highest housing prices in Alberta, and is deficient in 70 of 72 quality-of-life indicators.

Secondly, the study suggests that the resource sector can have a crowding out effect. The lure of the extractives industries, which have lower education requirements, tends to lower the percentage of adults with a college education. Those counties that were most heavily invested in oil and gas had, on average, 2.5% fewer college-educated adults than the rest of the sample counties. And the environmental consequences of resource extraction are well known.

Thirdly, the authors note that “the longer a county has been specialized on oil and gas, the higher the county’s crime rate.” This outcome would seem to reflect the fact that natural resource dependence leads to rent-seeking behavior and increased levels of violence. Most oil and gas boom towns are chock full of young men. The flood of young men into the Bakken shale (where they outnumber women by nearly 2-1 in some areas) has driven up crime rates by as much as one-third in Montana and North Dakota. Many women have reported being sexual harassed and feeling increasingly threatened due to the changing demographics.

The study fails to examine the environmental and public health impacts of resource dependence. However, other studies have shown that coal-mining communities in Appalachia have significantly higher adult and child mortality rates (PDF) than other communities in the region.

While the authors of the Headwaters study are careful to point out its limitations – causality cannot be proven and the results are unique to the sample areas – it does provide a cautionary tale to officials who are hoping to cash in on their region’s natural resource endowments.

Oil and gas extraction can be a way to jump start a stagnant economy in the short-term, as the study suggests. But states need to ensure that they are taxing resource extraction appropriately and investing these tax revenues in public goods for the communities on the front lines. Though bending over backwards for the oil and gas industries – as Ohio’s Republican lawmakers appear all too eager to do – may benefit some well-connected individuals, many more in these communities will suffer in both the short- and long-term.

Oil and gas deposits can be important endowments, but they don’t constitute a real development strategy. States need to think twice before putting all their eggs in one basket.

Cleveland’s parking policies are stuck in the 1960s

cleveland parking meters
cleveland parking meters

Parking meters in downtown Cleveland (courtesy of Cleveland.com).

I never realized that the best way to treat a junkie was to pay for his next score.

Northeast Ohio’s addiction to free parking and the toll it has taken upon the region have been well documented. But apparently Cleveland City Council didn’t get the memo. Back in 2008, Cleveland City Councilman Zack Reed introduced legislation that provides free meter parking for drivers in downtown Cleveland on Black Friday and the day after Christmas. Councilman Reed prominently displays the fact that he helped usher this legislation through Council on his website.

It’s worth noting that Garrett Hardin condemned this exact practice back in 1968 in “The Tragedy of the Commons”:

A simple incident that occurred a few years ago in Leominster, Massachusetts, shows how perishable the knowledge is. During the Christmas shopping season the parking meters downtown were covered with plastic bags that bore tags reading: “Do not open until after Christmas. Free parking courtesy of the mayor and city council.” In other words, facing the prospect of an increased demand for already scarce space, the city fathers reinstituted the system of the commons.

As if we needed further evidence that Cleveland’s transportation policies are stuck in reverse, our best parking strategies still haven’t caught up to the 1960s. So let’s explore why providing free street parking on Black Friday and December 26th is a terrible idea.

First, the economics of this idea make no sense. Depending on the location, parking meters charge roughly $1-1.50 per hour in downtown Cleveland. They generally carry a 2-hour maximum, meaning that shoppers will pay, at most, $2-3 to park. But people visiting Tower City Center, which houses nearly all of downtown’s retail businesses, can already park in the attached parking garage for $6.

tower city at christmas

Tower City Center, all lit up for Christmas (courtesy of All Things Cleveland Ohio).

But, smartly, Tower City ties the cost of parking to the amount that shoppers spend at its retailers. If a person spends $30, Tower City offers parking validation, which reduces the cost of parking to $2. And on Black Friday, if a person spends $100, Tower City will provide free parking and a $20 gift card. Effectively, rather than providing an incentive to people who have already spent money on retail, Councilman Reed and his colleagues are providing a parking incentive to people in the hope that they will spend money on retail. This is a terrible strategy.

I have no doubt that having to pay for parking keeps some people from coming downtown. But are people who base their shopping choices around whether or not they have to spend $2-3 to park their cars really likely to spend a lot of money on retail purchases? As Donald Shoup argued (PDF) when discussing parking fees for restaurants:

And who is likely to leave a bigger tip for the waiters in a restaurant? Drivers who are willing to pay for convenient curb parking if they can always find an open curb space? Or drivers who will come only if they can park free after circling the block a few times to find free parking?

Secondly, providing free on-street parking for retail businesses does not appear to increase actual retail purchases. When free parking is available, people who are not shopping may access it and those who are shopping will tend to remain parked for longer periods of time. Retail businesses depend upon customer turnover to increase their sales. Research from the Netherlands has demonstrated that higher prices for retail parking increases shopper turnover, which can lead to higher retail sales. Accordingly, Councilman Reed’s plan to increase retail sales may have the opposite effect.

Lastly, providing free parking creates an inequity issue for people who do not own a car. As I’ve noted before, more than one-quarter of Cleveland households lack access to a vehicle. Yet, because the cost of parking is already factored into the price of retail goods, these individuals will have to pay for the hidden cost of parking, despite the fact that they will not take advantage of it. Ohio’s transportation policies are already skewed heavily enough towards driving. The round-trip cost of taking public transportation to Tower City ($4.50 per person) is higher than the price for two hours of on-street parking. Requiring the City to pick up this tab only serves to widen the gap between drivers and non-drivers.

We’ve been told time and time again that downtown Cleveland is experiencing something of renaissance with more than $12 billion being invested in capital improvements. Residential occupancy rates have been above 95% for at least two years. The city and other organizations have spent vast sums of public and private money to attract businesses and tourists to downtown.

But let’s face it. We can either be experiencing a renaissance and revival of downtown, or we can be so desperate for one that we’re willing to pay people to park. We can’t have it both ways.

It’s often more rational for people in disaster-prone areas not to move

Workers rebuild the boardwalk in Bayhead, New Jersey. The boardwalk was badly damaged by Superstorm Sandy (courtesy of The Atlantic Cities).

Workers rebuild the boardwalk in Bay Head, New Jersey. The boardwalk was badly damaged by Superstorm Sandy (courtesy of The Atlantic Cities).

Over at The Atlantic Cities, Prof. Harvey Moltoch has a good piece titled “Why Residents of Disaster-Prone Areas Don’t Move.” In it, he discusses some of the economic and emotional reasons why people choose to stay in vulnerable areas, even after suffering the devastating effects of disasters like Superstorm Sandy.

Consider, for example, that people are consumers of space in ways that go beyond having houses, apartments, back-yard gardens, and a place for the RV. They have friends, family and obligations nearby. Location, especially residential location, is the node around which people manage life with routines, like having specific shopping habits close to home. Even when they can be financially “made whole” in an offer to retreat, residents may not want the deal. Hence there are “hold-outs” who resist even robust financial inducements. Private developers trying to assemble large parcels know this all too well: people often want to remain for reasons that money can’t overcome.

Given the recent string of disasters that have occurred in the last few weeks – including earthquakes in Pakistan and the Philippines and massive tropical storms in China, India, and Japan – it is logical that people would want to understand the motives of those who choose to remain in harm’s way, despite the inherent risks; this is particularly true, given that each of these areas has been hit by similar destructive disasters in the past.

While Prof. Moltoch’s post provides valuable insight into this issue, it ignores a lot of other key factors that play into the decision. Moreover, it is largely applicable only to the developed world. What may seem economically rational to a person living in the Korail slum of Dhaka does not necessarily comport to Western standards, and vice versa.

In many areas, government regulations and economic structures may create incentives for individuals and businesses to build in these high risk areas. Both the presence of certain initiatives – like the heavily indebted federal flood insurance program – and the absence of others – such as a requirement to incorporate climate change projections into infrastructure planning – can incentivize people to build in areas where, if externalities were properly accounted for, it would not make economic sense for development.

One can understand the reticence of taxpayers to effectively subsidize such unsustainable development projects. Accordingly, it’s not surprising to see people make comments like “we ALL pay for their stupidity to remain in place,” which one person said in response to Prof. Moltoch’s piece. Yet, this mindset ignores the fact that, for many people (particularly in the developing world), staying in disaster-prone areas is actually the rational decision.

Given the threats posed by climate change, particularly that of sea level rise for low-lying areas, it’s common to hear about the need to resettle large populations of people from, say, Kiribati or Bangladesh. Yet, as we frequently see with resettlement programs related to large-scale development projects, people often find themselves worse off than before. The Hirakud dam, India’s first mega-dam, was completed more than 60 years ago; despite this fact, at least 10,000 people affected by the project still have not been rehabilitated fully.

While moving people from disaster-prone areas may minimize their physical vulnerability, it frequently maximizes their social vulnerability and sense of dislocation (PDF). Following major droughts in the 1980s, for instance, the Ethiopian government launched a large-scale, forced resettlement program of famine-affected households. The effort proved to be a catastrophe, and it soon turned into a state-sponsored disaster of its own.

Two vital forms of capital upon which people can draw to enhance their resilience to disasters are a familiarity with the climate/environment and social networks. Forced relocation can upset each of these in significant ways. Following massive flooding on the Zambeze and Limpopo Rivers in 2001 and 2007, the Mozambican government resettled a large number of people (PDF) from the affected flood plains. Unfortunately, these flood-safe regions suffer from recurrent drought; accordingly, many of the people who were resettled actually returned to the flood-prone areas after the disaster ended.

Moreover, forced relocation frequently breaks social bonds and interferes with various forms of social capital, leaving individuals highly vulnerable and prone to exploitation. After Hurricane Katrina, the rate of rape among women living in FEMA trailer camps was 53.6 times higher (PDF) than the rate before the storm. There is also ample evidence that Cambodian and Vietnamese families forced to migrate from their homes have sold their daughters into the sex trade (PDF) in order to generate income.

Lastly, particularly in urban areas, it is essential for poor households to have ready access to economic opportunities. Yet, the majority of formal land that the urban poor can afford is located within the peri-urban fringe, far from the urban core. Accordingly, most poor households will opt to live in marginal areas closer to the city center in order to have easier access to the economic resources upon which their livelihoods depend. This create situations in which slums develop in highly vulnerable, disaster-prone areas, such as the Annawadi slum of Mumbai that Katerine Boo chronicles in Beyond the Beautiful Forevers.

Two young Indian boys play with items they found in a garbage pile, while their mother sorts through the waste. In India, people who sort and sell trash for a living - an incredibly important job in a country with poor solid waste management - are overwhelmingly from low castes and are commonly known as "ragpickers" (courtesy of Don't Waste People).

Two young Indian boys play with items they found in a garbage pile, while their mother sorts through the waste. In India, people who sort and sell trash for a living – an incredibly important job in a country with poor solid waste management – are overwhelmingly from low castes and are commonly known as “ragpickers” (courtesy of Don’t Waste People).

So the next time that you want to criticize someone for living in the low-lying areas of New Orleans or in Orissa state in India, remember two things:

 

Welcome to tropical Cleveland, part 2: The social & political roots of heat-related mortality

children at water park
children at water park

Children attempt to escape from the heat during July 2012 in Louisville (courtesy of the AP).

In my last post, I explored some recent research that outlined projections of climate change in Cleveland and its potential to drive an increase in heat waves. But climate/weather is just one factor behind heat-related mortality; socioeconomic and political issues are, perhaps, just as, if not more important, determinants.

Just as Cleveland’s historic climate and the associated lack of acclimatization to heat waves will likely leave the region more vulnerable to extreme heat, so too do the region’s various socioeconomic and political pathologies leave it ripe for a public health crisis. (As I write this, it is 97° outside, and I just got an extreme heat advisory from the National Weather Service. On September 10.)

Last month, the Graham Sustainability Institute at the University of Michigan released a new mapping tool that explores the social and economic factors underlying climate change vulnerability in the Great Lakes region. This great new tool allows you to zero in on any county around the Great Lakes to the extent to which its economy, infrastructure, and vulnerable citizens are likely to suffer in a greenhouse world. Unsurprisingly, Cuyahoga County (of which Cleveland is the seat) does not fare particularly well.

The Greater Cleveland area possesses a number of characteristics which, if they do not change, may create a perfect storm for heat-related mortality in a warmer world. I will explore four of these – the built environment, poverty, changing demographics, and racial segregation.

The Built Environment

Northeast Ohio has suffered from decades of sprawl and uncoordinated development patterns, leading to waves of suburbanization followed by exurbanization. In 1948, Cuyahoga County’s population stood at 1,389,532; just 26% of land in the county was developed at the time. Yet, by 2002, although the county’s population had grown by a mere .32% to 1,393,978, sprawl ensured that roughly 95% of the county’s land area had been developed.

cuyahoga county land use in 1948 & 2002

Changes in land use within Cuyahoga County from 1948 (left) to 2002 (right). Red shading indicates developed land, while the beige indicates land that is still undeveloped. The maps clearly demonstrate the waves of suburbanization in the county over the last six decades (courtesy of the Cuyahoga County Planning Commission).

According to data from the Cuyahoga County Planning Commission, 33.6% of the county (and 56.2% of Cleveland) is covered by impervious surfaces. These surfaces (e.g. asphalt) conduct heat, contributing to the urban heat island effect. The EPA notes that urban areas can experience annual mean temperatures of 1.8–5.4°F higher than their surroundings, while this difference can reach an astonishing 22° during the evening.

Cuyahoga County’s sprawl-based development structure presents a number of other challenges, as well. As people have spread out throughout the region, we have become increasingly car-dependent. Car use has come to dominate our policy discussions – transportation commentators like to note Ohio stands for Only Highways In Ohio” – despite its myriad of side effects.

According to the Northeast Ohio Sustainable Communities Consortium (NEOSCC), 86% of commuters in Northeast Ohio report driving alone to work. This car culture contributes to the development of chronic disease, which I discuss below. Additionally, combined with Cleveland’s industrial base and Ohio’s coal dependence, it significantly reduces air quality in the region. In its 2012 “State of the Air” report, the American Lung Association gave Cuyahoga County an F for ozone pollution and a failing grade for annual particle pollution.

Climate change will likely exacerbate this issue further. Last year, largely due to the abnormally warm summer, Northeast Ohio experienced 28 ozone action days – double the number from 2011. We know that high air temperatures increase concentrations of ground-level ozone, which can cause respiratory distress for vulnerable groups. Accordingly, Bell and colleagues have projected that ozone-related deaths will increase 0.11-0.27% in the eastern US by 2050. This issue adds to the risk of heat-related mortality in Greater Cleveland.

Changing Demographics

Like much of the Rust Belt, Cleveland has been shrinking and aging. From its peak in the 1950s, Cleveland’s population has plummeted. The city had 914,808 in 1950; by the 2010 census, the number had fallen to 396,815 – a 56.6% decrease in six decades.

This precipitous decrease in population has left large swaths of Cleveland abandoned and, increasingly hollowed out. Even before the Great Recession and the housing crisis that precipitated it began in 2007-2008, Cleveland had foreclosure rates on par with those in the Great Depression. From 2005-2009, Cuyahoga County average roughly 85,000 foreclosure filings per year, and parts of Cleveland saw nearly half of their homes enter foreclosure. The destruction of neighborhoods undermines social capital, a key coping mechanism for surviving extreme events.

foreclosures in Cuyahoga County 1995-2012

The number of annual foreclosure filings in Cuyahoga County from 1995-2012. As the chart indicates, the number of filings spiked in 2005, two years before the housing crisis began (courtesy of Policy Matters Ohio).

As people have fled the region, particularly young people and people of means, those who remain are increasingly poor and disconnected. Accordingly, the region’s population has aged significantly. Nationally, approximately 13% of the total population is age 65 or older. In Ohio, the number is 14.3%, while it sits at 15.8% in Cuyahoga County.

Older persons are far more vulnerable to the deleterious effects of extreme heat, particularly those suffering from chronic illnesses, like diabetes, and those living alone. Unfortunately, 20.6% of people 65 years and over (PDF) in the county suffer from diabetes; this number climbs to over 35% in Cleveland. Additionally, more than one-third of older persons in the county live alone, adding further to their vulnerability.

Poverty

Given the region’s challenges, it’s perhaps unsurprising that Greater Cleveland struggles with high levels of poverty. Cleveland was named the poorest city in the country in 2004; it has remained at or near the top since that point. Roughly one-third (32.7%) of Cleveland’s residents live below the poverty level. Even worse, more than half of Cleveland’s children are growing up in poverty.

map of poverty rates in Northeast Ohio

Poverty rates and changes in poverty rates within Northeast Ohio from 2005-2009 (courtesy of Rust Wire)

Much of this poverty is concentrated in highly depressed portions of the inner city and, increasingly, in the inner-ring suburbs. It creates regions where public health suffers dramatically; the Plain Dealer recently reported that portions of Cleveland had infant mortality rates higher than most of the developing world, including Bangladesh, Haiti, Pakistan, and Rwanda.

As one would expect, poor people suffer disproportionately in disasters. Roughly 95% of disaster deaths occur in the developing world, and the same principle applies within the developed world (see: Hurricane Katrina).

Racial Segregation

Lastly, Cleveland suffers from high levels of racial segregation. It was the 8th most segregated city in the US in 2011, which likely does not surprise Cleveland natives. For decades, the Cuyahoga River has been seen as something akin to the Berlin Wall – African-Americans stay to the East of the river, while whites and Hispanics live on the West Side.

Recently, the Atlantic Cities posted a map that showed the location of every person in the country (color-coded by race), based on Census data. The close-up shot of Cleveland is below. It quite clearly illustrates the racial divide within the city: African-Americans (green dots) to the east, whites (blue dots) and Hispanics (red dots) to the West. If you look closely, you can even see the small cluster of red dots that makes up Cleveland’s Asia Town.

map of Cleveland showing racial divide

The map, a closeup from the Racial Dot Map, shows the racial divide in the city of Cleveland.

Now, such spatial segregation creates a host of problems, but it also has a connection to heat-related mortality. A study published in Environmental Health Perspectives suggests that persons of color are far more likely to live in areas at risk of suffering extreme heat waves than whites. The study found that a high risk of suffering from the urban heat island effect is more closely correlated with race than class. Accordingly, severe spatial segregation, as we find in Cleveland, will ensure that poor minority neighborhoods have yet another risk factor to account for in a greenhouse world.

Taken together, Cleveland’s combination of heavy, sprawl-based development; an aging, sickly population; high rates of concentrated poverty; and racial segregation may create a perfect storm for heat-related mortality in the coming decades. The fact that sea level rise isn’t going to drown us, and it snows 6 months a year doesn’t mean we can get complacent as the climate changes. Like I said in my last post, just because it won’t suck as much as Bangladesh doesn’t mean it won’t still suck here.

Now that I’ve thoroughly depressed everyone, I will use my next post to look at some of the things Cleveland can do to mitigate the threat of heat-related mortality, including some of the initiatives the region is already undertaking.

PD editorial on Obama’s climate plan is lazy, wrong & shortsighted

President Obama wipes his brow while delivering his climate speech at Georgetown University on June 25 (courtesy of The Atlantic Wire).

President Obama wipes his brow while delivering his climate speech at Georgetown University on June 25 (courtesy of The Atlantic Wire).

Last Sunday (June 30), the editorial board of The Plain Dealer published an editorial titled “Don’t bypass Congress on climate-change policy,” which criticized President Obama’s climate policy speech at Georgetown on June 25. In the piece, the board argued that the President is acting inappropriately by taking executive action to tackle the US’s greenhouse gas emissions through the Environmental Protection Agency. They note that the proposed regulations on GHG emissions from existing coal-fired power plants would “drive many of them out of business.” They continued:

Such plant closures would disproportionately hurt coal-dependent states such as Ohio. It is unfair to expect one region or small group of states to shoulder the chief economic impacts of a radical policy shift without subsidies or offsets.

An extreme U.S. policy aimed at divesting the nation from coal-fired energy should not be decided by the White House alone.

Unfortunately for the PD editorial board (and the public in Northeast Ohio it’s supposed to inform), this argument is a house of cards that one can easily dissect. So allow me to do so.

First, the board refers to the proposal as one of the “mandates that need no congressional approval” of which Americans must be “wary.” Nowhere in the piece does the board mention the fact that in Massachusetts et al. v. EPA (2007, PDF) the US Supreme Court ordered the EPA to determine if carbon dioxide constitutes a danger to public health in the country, the so-called “endangerment finding”. Justice Stevens, writing for the majority, noted that:

Because greenhouse gases fit well within the [Clean Air] Act’s capacious definition of “air pollutant,” EPA has statutory authority to regulate emission of such gases…

On December 7, 2009, the EPA issued the results of its endangerment finding, noting that

the current and projected concentrations of the six key well-mixed greenhouse gases…in the atmosphere threaten the public health and welfare of current and future generations.

Yet, despite this judicial ruling that EPA regulate GHGs, the editorial board makes no reference to the jurisprudence or the endangerment finding. It treats the President’s actions as if they were capricious and unexpected, rather than mandated by the highest court of the land.

Bipartisanship & consensus are to the PD editorial board as the ring was to Gollum (courtesy of Wikicommons).

Bipartisanship & consensus are to the PD editorial board as the ring was to Gollum (courtesy of Wikimedia Commons).

Secondly, the editorial board criticized the President for not working towards the consensus it reveres so highly. “Consensus” and “bipartisanship” are the buzzwords of the day for the Very Serious Persons who sit on editorial boards around the country. Yes, if only President Obama could reach out to Congressional Republicans and bring them to the table on climate action.

Of course, this belief completely belies reality. The modern Republican Party is the only opposition party in the world that steadfastly denies climate science. Moreover, the party remains completely obsequious to the fossil fuel industry. According to a recent study from the Investigative Reporting Workshop at American University, 411 elected officials around the country have signed a pledge to the Koch brothers-funded Americans for Prosperity promising to avoid taking action on climate change.

Furthermore, while VSPs at the PD and The Washington Post continue to write ballads about their fantasy carbon tax, recent evidence suggests that the EPA route may be the better alternative. A report from Resources for the Future suggests that, depending on the details, EPA regulation would likely be more effective at reducing GHG emissions than a carbon tax. This is particularly true, given the carbon tax that would likely come out of the current Congress – none.

Thirdly, the PD editorial board asserts, without providing any evidence, that the President’s climate plan will necessitate “sweeping economic sacrifice” and will change the “lifestyles and energy sources” of Ohioans.  Once again, the board refused to let fact get in the way of a [not so] good argument.

For decades, industry shills and their supporters have cried out against EPA regulations, claiming they would destroy the American economy. Yet, in case after case, the benefits of these regulations have far exceeded estimates, while the costs have been vastly lower than projected. The Edison Electric Institute claimed (PDF) that the 1990 Clean Air Act (CAA) amendments would carry $4-5 billion in annual compliance costs. The actual annual cost? $836 million. They were only off by 81.4%. According to a 2010 study, the benefits of the CAA and the 1990 amendments outweighed the costs by a ratio of 32.1 to 1 ($23.42 trillion in benefits to $730 billion in costs).

The monetized costs and benefits of the Clean Air Act and its 1990 amendments. As the table shows, the benefits of the CAA have vastly outweighed its costs (courtesy of Small Business Majority).

The monetized costs and benefits of the Clean Air Act and its 1990 amendments. As the table shows, the benefits of the CAA have vastly outweighed its costs (courtesy of Small Business Majority).

A recent study from the Natural Resources Defense Council suggest that EPA regulations on GHG emissions will once again provide a significant net benefit. In December, NRDC put together a proposed set of regulations for EPA to implement. This plan would set state-by-state emissions reductions standards, allowing coal-dependent states like Ohio to make a more gradual shift to more renewable energy sources. According to their assessment, the plan would reduce GHG emissions by 26% by 2020; its benefits would be roughly 6 to 15 times greater (PDF) than its associated costs.

NRDC recently had a respected firm run an economic assessment of this plan (PDF). The firm, Synapse Energy Economics, found that, contrary to the warnings of the naysayers at the PD, this plan would create 210,000 jobs and reduce electric bills by $0.90 per month through 2020.

Graph from Synapse Energy Economic's report on the NRDC policy proposal. As the graph shows, Ohio is projected to gain the second most jobs from EPA action (courtesy of Synapse Energy Economics).

Graph from Synapse Energy Economic’s report on the NRDC policy proposal. As the graph shows, Ohio is projected to gain the second most jobs from EPA action (courtesy of Synapse Energy Economics).

Ohio, one of the 14 states included in the analysis, would particularly benefit. The state would gain an additional 12,000 jobs – second only to Florida – and households would pay $1.03 less per month for electricity. Moreover, these regulations would simply speed up the transition away from coal that the state is already making. Under SB 221, Ohio is already obligated (PDF) to improve its energy efficiency by 22.2% and get 12.5% of its energy from renewable energy sources. Rather than increasing prices or killing jobs, a study from Ohio State has concluded that the policy saved ratepayers $170 million on their electric bills from 2008-2012 and created 3,200 jobs in the state.

Lastly – and unsurprisingly, given Ohio’s fealty to the coal industry – the editorial fails to mention any of the serious consequences of the state’s dependence on coal. A myriad of studies shows that coal carries significant costs for public health and well-being. According to a 2011 research article (PDF),

the life cycle effects of coal and the waste stream generated are
costing the U.S. public a third to over one-half of a trillion dollars annually.

If we were to internalize these externalities, the authors estimate that the price of coal-fired electricity would double or triple, making it noncompetitive with renewables. The Clean Air Task Force has concluded (PDF) that coal plants are responsible for 13,200 premature deaths, 20,400 heart attacks, and 217,600 asthma attacks annually in the US. Given Ohio’s dependence on this filthy fuel, the state ranked 2nd in 2010 for in coal-related mortality risk, hospital admissions, and heart attacks. The Cleveland metro area ranked 8th for mortality. All in all, evidence suggests that, for every $1 in economic benefits from coal, it carries $2 in costs to the public.

Mortality per 100,000 people from coal-fired power plants. As the map illustrates, coal-dependent states and their neighbors, including Ohio, suffer substantially from its effects (courtesy of the Clean Air Task Force).

Mortality per 100,000 people from coal-fired power plants. As the map illustrates, coal-dependent states and their neighbors, including Ohio, suffer substantially from its effects (courtesy of the Clean Air Task Force).

The Plain Dealer‘s editorial is just the latest in a series of inaccurate claims that EPA regulations will doom the American economy. They have proven wrong, time and again, and the PD will almost certainly be wrong here. The editorial is inaccurate, shortsighted, and – to be frank – an extremely lazy argument. As President Obama said in his climate speech,

[T]he problem with all these tired excuses for inaction is that it suggests a fundamental lack of faith in American business and American ingenuity. These critics seem to think that when we ask our businesses to innovate and reduce pollution and lead, they can’t or they won’t do it. They’ll just kind of give up and quit. But in America, we know that’s not true.

The next time the PD wants to write about climate policy, I suggest the editorial board actually does its homework, rather than relying on a tired set of easily disproved talking points.

Cleveland’s Climate Action Plan marks a good first step, but it can get better

Downtown Cleveland, as seen from the Ohio City Farm (courtesy of the Sustainable City Network).

Downtown Cleveland, as seen from the Ohio City Farm (courtesy of the Sustainable City Network).

On Wednesday and just in time for the Independence Day long weekend, the City of Cleveland Office of Sustainability released its long-awaited (by me, anyways) draft Climate Action Plan. As one would expect with a draft report, the city is welcoming public comments, so I went through the document with a fine-toothed comb yesterday. Here are my major takeaways/comments:

  • Methodology: The report really calls out for a detailed methodology section. Part of sustainability is transparency, and failing to provide a clear picture of how you have reached your conclusions undercuts this goal. This methodology could take many forms, such as a complete section at the start of the report or a shorter section at the beginning with a detailed technical appendix at the end. However it is done, this piece is an essential component. It’s important for people reading and tracking the Climate Action Plan to know what emissions scenario was used, where the temperature and precipitation projections are coming from, and whether a sensitivity analysis was completed. I understand the desire to make this easily approachable to the general public, and I laud that. Perhaps the technical annex would be the better alternative.
  • Methodology Part 2: On page 12 of the draft, the report discusses the costs and benefits of the proposed action plan. However, once again, it demands a methodology for how this cost-benefit analysis was completed (provided one actually was). What were the assumptions and parameters that went into this calculation? What was the discount rate (for a good primer on discount rates, read David Roberts’ piece) used? Did it include a sensitivity analysis?
  • Business As Usual Projections: On page 20, the report describes future projections and how its authors put together the Business As Usual (BAU) baseline that was used. Clearly, as with all medium- to long-term climate plans, these projections carry a high level of uncertainty. The report discusses this issue by saying:

Due to the high level of uncertainty associated with this type of forecasting exercise, a flat line BAU forecast was assumed for now. However, this assumption of no growth or decline in emissions can be adjusted in the future to account for changing conditions.

I have to question the decision to approach uncertainty in this manner, however. It seems to me that the best practice for approaching uncertainty is to internalize that uncertainty and attempt to manage the associated risk. Accordingly, I would prefer to see the flat line forecast used as just one of a few different BAU models. It could constitute a mid-range analysis to be supplemented by low-range (conditions improve significantly in the region) and high-range (conditions significantly deteriorate in the region) analyses.

  • Parking Minimums: In Focus Area 3, Sustainable Mobility, the report notes the City’s desire to “reduce single occupancy vehicle mode share from 69% to 62% by 2020, 55% by 2030.” Logically, one action step noted to address this goal is to “review parking space requirements and prioritize advanced parking strategies.” Unfortunately, the report never directly mentions the issue of minimum parking standards. As Matt Yglesias from Slate has discussed on many occasions, minimum parking standards are a major urban planning boondoggle that waste valuable public space, lower economic production, and reduce tax revenues. Cleveland is considerably overbuilt currently, and our abundance of parking is not something we should be proud of. The city was recently included as one of 16 cities in Streetsblog’s “Parking Madness” competition. We should be lamenting the fact that the Warehouse District has undergone this transformation since the 1970s:
Animated GIF showing the transformation of Cleveland's Warehouse District from a vibrant downtown are in the 1970s to a black hole of surface parking lots currently (courtesy of Streetsblog and Rust Wire).

Animated GIF showing the transformation of Cleveland’s Warehouse District from a vibrant downtown area in the 1970s to a black hole of surface parking lots currently (courtesy of Streetsblog and Rust Wire).

  • Plastic Bags: Page 55 of the Climate Action Plan (part of Focus Area 4: Waste Reduction & Resource Conservation) alludes to the challenge of properly managing plastic bag waste:

An organized and coordinated approach to waste reduction and diversion across the Cleveland community, starting with policies that restrict certain materials, such as plastic bags, or divert others, such as organic waste, are important tools in encouraging waste reduction both at the residential and commercial level.

Interestingly, despite noting the issue, the plan never goes so far as to propose implementing a plastic bag tax. It stops short of this approach, calling instead for implementing an “approach that significantly reduces the use of disposable plastic bags, including a public education campaign.”

While I understand that you don’t want to promote a specific approach without studying alternatives, the Climate Action Plan could have at least suggested conducting a study of the extent of plastic bag waste in our watercourses and landfills. This was the first step Washington, DC took prior to implementing its bag tax. The District’s study found that plastic bags accounted for 21% and more than 40% of total waste in the Anacostia River and its tributaries, respectively. Within just the first five months of its program, which applies a $0.05 tax on bags, DC saw plastic bag waste fall by 60% and raised $2.5 million in revenues. Surely a similar program could help reduce Cleveland’s waste stream and improve its paltry 9.25% recycling rate.

Plastic bag pollution has formed an artificial dam in the Anacostia River.

Plastic bag pollution had formed an artificial dam in the Anacostia River in this 2001 photograph.

Overall, I’m pleased with the draft Climate Action Plan, and I think it represents a good first step in the right direction. The City assembled an impressive working group of diverse stakeholders and fielded input throughout the process. That said, I definitely think it can be better, and I hope they will consider my comments. I have also submitted a copy of marked-up version of the plan directly to the Office of Sustainability for their review.

To read the report yourself and submit your comments, visit the Climate Action Plan page at SustainableCleveland.org.

 

What if we approached climate change like nicotine addiction?

Dr. Steve Suranovic of the GW Institute for International Economic Policy (courtesy of George Washington University).

Dr. Steve Suranovic of the George Washington Institute for International Economic Policy.

Steven Suranovic, an economist from George Washington University, published an interesting article in this month’s edition of Global Environmental Change. The piece examines our current addiction to fossil fuels from a behavioral economics perspective, analyzing it through a cigarette addiction model.

According to this addiction model, which Suranovic initially developed in 1999 (PDF) treats an individual’s decision to smoke as a function of three factors: the immediate satisfaction from smoking, the potential health effects of smoking, and the perceived costs of nicotine withdrawal. He argues that, while a number of scholars have argued that addicts are irrational actors, they are, in fact, rational based on this model.

He then applies this model to our current dependence upon fossil fuels, which we know are currently damaging public health and the environment, effects on which will only exacerbate as a result of climate change. He describes individuals living within our current economic system as “unhappy addicts.”

The unhappy addict is completely aware that the negative future impacts outweigh the current benefits but continues to smoke at a high rate because the immediate adjustment cost is too high.

The article goes on to examine fossil fuel use, climate change, and the potential to transition away from fossil fuels through this perspective. Suranovic makes an important point about the difficulty of this transition – because individual efforts to reduce carbon emissions will not be felt immediately and, even if they were, these efforts would largely be imperceptible on the global level – “it does not make economic sense for any one person to reduce usage of fossil fuels.”

David Roberts at Grist has explored this issue in depth in several posts on uncertainty and the behavioral economics of climate change, so I won’t go into too much depth here. Suffice it to say that the uncertainty over climate change projects and impacts, the seemingly random distribution of extreme events, and our human tendency to value the present more than the future makes climate change the quintessential “wicked problem.”

Suranovic distinguishes climate change and fossil fuel use from cigarette addiction, however, by pointing out that, while cigarette use is an individual choice, our extant energy system presents a monumental collective action problem. Not only does one’s inability to make a perceptible impact on greenhouse gas emissions make it an irrational economic decision to switch to clean energy, other individuals (or countries, from a global perspective) can take advantage of this decision and benefit from it. If the United States suddenly banned the domestic use of coal tomorrow, there would be a massive glut of coal on global markets, drastically lowering its price. This would provide an incentive for other countries to take advantage of this decision and buy up coal at this reduced price. As such, climate change represents the classic “prisoner’s dilemma.”

While this component of Suranovic’s article is far from new, he does make one extremely interesting contribution to the debate. The Kyoto Protocol, which currently dictates international climate policy, calls for graduated reductions in carbon emissions for member parties. While the US is not a party to the agreement, President Obama made a commitment at Copenhagen to reduce emissions 17%, relative to 2005 levels, by 2020.

While the US has made progress on this front, global emissions levels have continued to increase in recent years, reaching a record high of 35.6 billion tons in 2012. Every year that the global community delays and fails to meet its marks, the annual reduction number inevitably increases. Kevin Anderson has traced this process in great detail, showing how waiting until 2020 to begin cutting global emissions would require a near immediate reduction of all carbon emissions in order to meet the Kyoto goal of an 80% reduction by 2050.

Anderson's emission reduction pathways, with peak emission years of 2015, 2020, and 2025. As the graphs illustrate, waiting until 2020 to implement carbon reduction programs, as the Durban Accord calls for, would require eliminating nearly all global carbon emissions overnight (courtesy of Grist).

Anderson’s emission reduction pathways, with peak emission years of 2015, 2020, and 2025. As the graphs illustrate, waiting until 2020 to implement carbon reduction programs, as the Durban Accord calls for, would require eliminating nearly all global carbon emissions overnight (courtesy of Grist).

Interestingly, Suranovic argues that, based on the addiction model, this approach is the likely way that we would act to avoid catastrophic climate change. He argues that the current economic and political systems would necessarily produce a “cold turkey” approach, rather than the gradual reduction approach laid out in UNFCCC documents.

Government leaders might recognize that the negative future impacts of climate change greatly outweigh the current benefits but may fail to act because the political cost of fossil fuel reduction is too great. In a similar vein, politicians may promise that something will be done tomorrow, and yet that tomorrow may take a very long time to arrive. However, once the negative future impacts loom large enough, cold-turkey adjustment would suggest a period of very rapid reductions in fossil fuel usage after a long period of almost no adjustment.

While he doesn’t acknowledge it in the piece, which isn’t surprising given that he’s an economist, Suranovic’s article seems to suggest that tackling climate change will require much, much more than making some adjustments on the margins. It will require an enormous mobilization of collective action to completely reform our existing economic, political, and social systems. Unfortunately, I’m still pretty skeptical that we can overcome the major barriers to collective action and actually precipitate this change.

It took 40 years to reduce smoking rates in the US by half. We don’t have 40 years to halve carbon emissions.

I sure hope I’m wrong.

Bill Seitz has sure changed his tune on Ohio’s Advanced Energy Portfolio Standard

sb 221 energy efficiency benchmarks

On May 1, 2008, then-Governor Ted Strickland signed Substitute Senate Bill 221 (SB 221), making Ohio one of 29 states (plus DC) in the country to establish energy efficiency resource standards (EERS).

The bill mandates that the state’s investor-owned utilities (IOUs) reduce their energy consumption by 22.2% by 2025. This mandate is broken down into yearly increments – each utility is supposed to meet each annual goal on the path to the overall reduction. For 2013, IOUs must reduce the annual electricity consumption of their customers by 0.9%.

Annual energy efficiency benchmarks for Ohio's investor-owned utilities, as specified by SB221 (courtesy of Mark Rabkin).

Annual energy efficiency benchmarks for Ohio’s investor-owned utilities, as specified by SB221 (courtesy of Mark Rabkin).

The bill also required IOUs to generate at least 25% of their electricity from advanced energy sources by 2026. Of these “advanced energy sources,” at least half must come from true renewable energy sources, like wind and geothermal (the bill includes a 0.5% carve out for solar energy). The other half can come from alternative sources, including “clean coal” (carbon capture and sequestration) and, as of Fall 2011, combined heat and power.

To date, the bill has largely delivered on its promises. According to Environment Ohio, the standards have saved enough energy (negawatts) to power 267,000 houses for a year. Additionally, the renewable portfolio standard (RPS) has sparked the installation of enough solar and wind generation capacity to power 95,000 houses for a year. Furthermore, the bill has contributed to the growth the renewable energy industry in Ohio, making good on the promises of job creation from its proponents. In 2011, Ohio ranked 5th in the country for green jobs, with 137,143. This industry – which had the highest growth rate of any sector in the US economy from 2010-2011 – has contributed significantly to Ohio’s economic recovery. Green jobs account for 2.8% of Ohio’s total workforce, higher the national average (2.6%).

Despite the success of this legislation, the bill has come under attack recently by a group of conservative lawmakers and industry interests. As a part of its broader effort to fight renewable energy at the state level, ALEC has placed SB 221 squarely in its sights. Two conservative state senators – Sen. Kris Jordan and Bill Seitz – are leading this charge. This effort is also the latest assault on energy efficiency and renewable energy in Ohio from FirstEnergy, the electric utility whose incompetence brought you the 2003 East Coast blackout.*

FirstEnergy's failure to properly maintain its Davis-Besse nuclear power plant in Northwest Ohio led to the development of a football-sized hole in the reactor lid. According to a review, the reactor could have been 60 days away from a meltdown (courtesy of The Plain Dealer).

FirstEnergy’s failure to properly maintain its Davis-Besse nuclear power plant in Northwest Ohio led to the development of a football-sized hole in the reactor lid. According to a review, the reactor could have been 60 days away from a meltdown (courtesy of The Plain Dealer).

Last week, Sen. Seitz told the Wall Street Journal that that mandates in SB 221 reminded him of “Joseph Stalin’s five-year plan.” Setting aside the absurdity of this statement, it represents a remarkable shift for Seitz on the bill in just 4 years (he initially proposed to scrap the EERS & RPS entirely in 2011; that bill never made it out of committee). Seitz has conveniently failed to mention that he voted for SB 221 in 2008. In fact, the bill sailed through the Ohio State Senate unanimously. And it passed through the Ohio House by a 93-1 vote. During the debate on the bill, Seitz never offered any opposition to it on the record, nor did he try to amend it in any substantial way.

This is an awfully big change from a legislator who tried to paint himself as a reasonable moderate during the contentious debate over SB 5. Yet, I guess it’s not surprising from a man who has served on the Board of Directors for ALEC and has received nearly $63,000  in campaign contributions since 2000 from industries ALEC represents, including oil and gas.

 

*FirstEnergy has been pushing to kill SB 221, even as it promotes its own rebate programs for energy efficiency made possible by the legislation. Hillariously, as I was writing this post, I received an email from the company promoting their new round of rebates for energy efficient appliances.

Climate change will reduce labor productivity, increase inequality

Last week, an article came out in the journal Nature Climate Change (Climate Central also has a good summary of it) that discussed the likely effects of climate change on labor productivity. The authors examined the effects of heat stress during peak heat stress months in tropical and mid-latitude regions.

They concluded:

We estimate that environmental heat stress has reduced labour capacity to 90% in peak months over the past few decades. ESM2M projects labour capacity reduction to 80% in peak months by 2050. Under the highest scenario considered (Representative Concentration Pathway 8.5), ESM2M projects labour capacity reduction to less than 40% by 2200 in peak months, with most tropical and mid-latitudes experiencing extreme climatological heat stress.

Individual labor capacity during minimum & maximum heat stress months. (Courtesy of Dunne, Stouffer, and John 2013)

Individual labor capacity during minimum & maximum heat stress months. (Courtesy of Dunne, Stouffer, and John 2013)

 

While these findings are new, they mirror earlier work on the effects of climate-related extreme temperatures on income and production. In their 2008 paper (PDF) “Climate Shocks and Economic Growth:Evidence from the Last Half Century,” Dell, Jones, and Olken studied temperature and precipitation data from 1950-2003 in order to determine the effects of extreme temperature and precipitation on a country’s economic performance.

Their results suggested that each 1◦C increase in average temperatures in any given year tends to reduce economic output by 1.1%; however, this effect only appeared in low-income countries. Using this historical relationship, they projected the long-term effects of global warming on economic output in poor countries, based on mid-range climate projections through the end of the century. In the key paragraph of paper (page 23), they note:

“With a 10-year adaptation horizon, the median growth rate among poor countries appears 0.6 percentage points lower through 2099 compared to the case of no warming. Extrapolated over 100 years, this implies that the median poor country’s income will be about 50% lower than it would be had there been no climate change.”

 

The authors found no similar effect for high-income countries, suggesting that climate change will further exacerbate global economic inequality significantly. The central cause for this result is the differing natures of the economies in high- and low-income states. According to the World Bank, agriculture accounted for 26.2% of GDP for low-income countries from 2008-2010. For high-income countries, this number was just 1.3%.

Economies in low-income countries are heavily dependent on natural resources, particularly agriculture, implying that workers in these areas are directly susceptible to direct effects of higher temperatures and changes in precipitation. The negative effects will stretch beyond just agriculture, however. Climate change will likely negatively effect forestry and fisheries, among other sectors. In the least developed countries (LDCs), revenues derived from natural resources account for 20.3% of GDP. The most developed countries – the 27 members of the OECD – derive just 1.5% of their GDP from resource rents.

Climate change will emerge as an environmental justice issue and will continue to threaten the fragile human and economic development of the world’s poor. Low-income states will suffer the most from climate change, despite the fact that they have done the least to contribute to it. LCDs emitted just 0.25 metric tons of CO2 annually from 2007-2009; high-income states, in contrast, accounted for 11.97 tons of CO2 emissions during this period – nearly 48 times higher.

Clearly, climate change will have major economic and development impacts. But its most serious, perverse impact will be moral.