When developers of a new coal fired power plant came to Washington County, Georgia to propose a new coal fired power plant in 2008, their argument to the local community consisted of two words -- 'more jobs.' In communities across the nation, utilities and developers of new plants tell local officials and residents that any concerns they may have about environmental or health risks related to coal plants should be outweighed by the economic impact that plant construction will have.
And for many communities, where other industries have left and poverty and unemployment rates are high, it is often a compelling argument. But in a first-ever study released last week, the Ochs Center for Metropolitan Studies found that when it comes to jobs, promises of economic panacea coming from new coal fired power plants need to be taken with more than a grain of salt.
We looked at the six largest coal powered plants to come online between 2005 and 2009 and found that job creation in the host counties for five of the six plants analyzed fell woefully short of initial job estimates. Overall, of the six plants studied in five counties around the country, only 56% of jobs promised actually materialized. Only one county experienced the job growth that was promised. In the other four, coal plant construction delivered just 27% of the jobs projected.
The report found total employment and construction jobs grew in five of the six counties with new plants between the start of construction and completion. But only one county experienced an increase in construction employment that was equal to or greater than the predicted employment impact of the coal plant construction project. When taking into account national trends, three of the host counties actually saw a decline in construction employment. Many workers appear to have frequently been imported for the project -- leaving little lasting economic benefit for the plant's host community.
Our findings weren't news to the coal industry. A spokesman for the National Mining Association responded to the Ochs report that "it is standard for companies to round up on direct and indirect jobs, and underestimate plant construction costs." Somehow, that message isn't shared with local governments when plant developers seek tax abatements or help with financing new plants.
Thankfully, there is an alternative. The least costly way to address any new need for energy is by making better use of the energy sources that we have already. And, it turns out, that focused investment on energy efficiency -- everything from more efficient lighting to better insulation -- also creates more local jobs over a sustained period of time.
Last year's decision by a Kentucky electric cooperative to cancel a new coal plant reflect this economic reality. The economic arguments for coal should have resonated in a place like Kentucky -- the nation's third-largest coal mining state that trails only West Virginia in coal production related employment. Proponents of the now-canceled Smith plant promoted it as a source for new jobs in some of the areas hardest hit by the recession, promising 700 new construction jobs in a county where one in ten were out of work and one in five lived in poverty.
Yet, the decision to cancel the Smith plant turned on the very economic and financial arguments most often made in support of coal, with cooperative officials calling it "a business decision." For one the finances did not work -- as has been the case in the nearly one hundred other coal plant cancellations since 2001, increased construction costs and the financial risks associated with additional carbon regulation led to increases in the likely cost.
But the economics did not work either. In the case of the Smith plant, an Ochs Center analysis found that significant investment in energy efficiency to reduce demand would cost less than creating new capacity through a new plant. And it would create jobs -- 5,400 new jobs across Eastern Kentucky -- and a three year total economic impact of $1.2 billion. When coupled with investments in renewable energy, it would also meet the same energy needs as the now-canceled Smith plant.
Given our finding that coal plants only create a fraction of promised jobs, the Smith plant cancellation may be a turning point where more and more local governments and utilities recognize that energy efficiency can both save dollars and create jobs for local economies in need of revival. There is little need for an environmental argument in advocating for energy efficiency over coal plants when it comes down to a matter of dollars and sense.