Comments on EPA Clean Power Plan

Docket No. EPA-HQ-OAR-2013-0602 Pittsburgh, PA July 31, 2014

Don Goldstein, Ph.D. Department of Economics, Allegheny College

First, let me thank the EPA for proposing this Clean Power Plan, organizing these sessions, and giving me the opportunity to comment. I teach corporate finance and environmental management at Allegheny College, about ninety miles north of here. During my 24 years at Allegheny, I have also worked with many local companies around environmental management in a variety of capacities. My research examines lower-carbon energy and transportation technologies, including their potential roles in the economic future of this region. Everything that I have seen tells me that the proposed Plan will move us in the right direction, especially to the extent that its boost toward renewables in our energy mix is maintained and even strengthened. That is where I will focus my comments, while I welcome the many benefits the Plan will create for human health and the environment.

Innovation and investment in new technologies require clear signposts signalling firms that such investments will be consistent with where others and the economy at large are heading. Sometimes market signals alone provide adequate signals, and - especially for major, systemic changes - sometimes this requires an assist from government action. The move toward lower-carbon energy is that kind of technology transition.

My research suggests that Northwestern PA has regional assets that could be leveraged as part of this shift. For example, there is sufficient hardwood forest acreage within 75 miles of Erie to support at least 1 million tons of pelletized wood annually for biomass energy, sustainably managed from waste cuttings and pulpwood. But pellet mill investors need to know they will be able to get their output shipped economically, and transportation facilities investors need to know there will be ongoing demand for the product. In addition, the southern shores of Lake Erie have a commercially viable wind resource, estimated offshore at 18 mph at 90 meters and onshore at 15 mph at 80 meters high. But developers await signals that State policy support will be there for wind power demand and for a workable regulatory framework.

These are only the direct potential opportunities in low-carbon energy. Actualizing them would also create indirect and mutually supporting ones. The Erie-Meadville region has a world-class cluster of several hundred precision machining companies, with the capacity to become major suppliers for renewable energy equipment and infrastructure. Upgrading port and intermodal facilities to support biomass and Lakeshore wind would encourage reinvigoration of the region's historical strengths as a freight transportation nexus. And expansion in both energy technology supply-chain and intermodal shipping capabilities would make the region more competitive in the ongoing shift toward natural gas as a
lower-carbon fossil fuel source.

Such projections are, to some extent, speculative. But we can confidently predict that pragmatic, flexible Federal regulatory choices can start a process in which a combination of State policy and market forces would allow the region's companies to pursue the opportunities in low-carbon technologies as they perceive them, in the process generating not only power, but also jobs, income, and economic development.The Clean Power Plan is well-designed to stimulate such a process. The States get clear

carbon-intensity targets embodying a few simple action areas, to be utilized at State discretion for the greatest leverage. Companies get a consistent Federal and State policy framework within which to make decisions as opportunity suggests. With the signposts in place, private sector innovation and investment can move us faster and farther along in this critical technology transition than would occur without the Plan.

For the companies and workers in NWPA, fundamentally this is about adaptation to the national and global economies as they evolve in a world of climate change. Like politics, at the end of the day all climate adaptation is local. The local politics in NWPA have not, in general, been friendly to the Administration's climate and energy agenda. But this proposed EPA Plan can, over time, contribute to re-framing climate adaptation in terms of economic opportunity. This could ultimately be one of its most important co-benefits.

Thank you.