Ohio’s economy: A test case for Trump’s climate decision

By Peter Behr | 06/02/2017 07:48 AM EDT

Shale gas investments and renewable power have redrawn Ohio's energy map, according to the U.S. Energy Information Administration. The number of power plants of all types increased from 109 to 146 between 2010 and 2017, EIA reports.

Shale gas investments and renewable power have redrawn Ohio's energy map, according to the U.S. Energy Information Administration. The number of power plants of all types increased from 109 to 146 between 2010 and 2017, EIA reports. Animation: E&E News; Maps: EIA

Correction appended.

President Trump cast clean energy goals as a U.S. job killer and economic dead weight, as he promised to put Youngstown, Ohio; Detroit; and Pittsburgh ahead of a global effort to address climate change by pulling the United States out of the 2015 Paris accord.

"It is time to put Youngstown, Ohio; Detroit, Mich.; and Pittsburgh, Pa. — along with many, many other locations within our great country — before Paris, France. It is time to make America great again," Trump declared in a Rose Garden press conference announcing his decision.


But the nexus between energy and the economy in Ohio, to take one of the president’s examples, tells a different and more complex story. In his mention of Youngstown, Trump sang the tune of the 40-year-old collapse of steel manufacturing in the Midwest’s Rust Belt. The Paris accord, to Trump, meant another blow to blue-collar, middle-class jobs that had been sustained by cheap coal.

Trump painted a picture of a U.S. economy straining under the weight of an unreasonable and unfair agreement that would limit carbon dioxide emissions by forcing U.S. companies to use costlier forms of energy. Moreover, Trump says, renewable energy is a losing proposition for a growing economy.

Ohio is a political bellwether each election cycle and a symbol of industrial decline stretching to the late 1970s. As steel mill closures mounted, Youngstown became the embodiment of deindustrialization. Still, in using Ohio as an emotional lever for voters concerned about job losses and the decline of coal, steel and heavy manufacturing, Trump has yet to get the story quite right. He ignores the economic trend lines pressing natural gas and renewable energy into action. Further, he continues pressing the case that coal — unencumbered by environmental regulation — is positioned to make a comeback.

Here’s how Ohio’s energy economy actually looks: Ohio had eight coal-fired power stations in March. It had just nine in March 2010, according to the U.S. Energy Information Administration. Gas-fired power generation in the state sprang from 32 gas plants in 2010 to 46 gas plants today, buoyed by the abundant Utica Shale gas reserves lying beneath eastern Ohio.

The economic development around renewable energy is also gaining ground. Ohio had zero solar power generating units in early 2010, and today it has 16. Ohio now has a dozen wind farms, when just one existed in 2010.

Those economic gains came despite a decision by Ohio’s Republican legislative leaders in 2014 to freeze the state’s renewable energy standard. The freeze expired at the beginning of this year after Gov. John Kasich (R) vetoed a bill that would have made the renewable target voluntary, saying it would hurt the state’s economy.

Coal-fired power generation in Ohio, promised a lifeline by Trump, has suffered more at the hands of cheap natural gas than from competition with wind and solar generation, according to most analyses. "There is a lot of good research showing that the decline of coal has very little to do with environmental regulation and a lot to do with natural gas," said Susan Helper, former chief economist of the Commerce Department in the Obama administration and an economics professor at Case Western Reserve University in Cleveland.

"Gas will compete against coal, and that’s very challenging for coal," said Thomas Humphries, president of the Regional Chamber of Commerce for Youngstown and Warren in Ohio’s Mahoning Valley.

Humphries said he wanted more time to consider the impacts for Ohio of Trump’s action on withdrawing from the Paris climate agreement before commenting on it. He said the region’s business sector generally supports Trump’s goal of reducing regulations and believes that the administration is moving more forcefully to challenge unfair trading practices that have hurt steel and other manufacturing in the area.

In his announcement yesterday, Trump said, "The Paris accord would undermine our economy, hamstring our workers, weaken our sovereignty, impose unacceptable legal risks and put us at a permanent disadvantage to the other countries of the world."

If the question is whether the development of lower-carbon or carbon-free power would sink Ohio, the dots in the president’s statement don’t connect well, Helper said. "I was surprised by the president’s reasoning. It comes from an old idea that you have to choose between climate and the environment — and jobs — and that’s not true," Helper added.

"Ohio has been hurt by a slowdown in policies toward renewable energy," she said. "There are a lot of jobs potentially, and good jobs, in manufacturing the equipment needed to capture that energy.

"There is a huge amount of steel in wind turbines," Helper added. For example, a single turbine has $40,000 worth of metal fasteners and many other machined parts, she said, "all things that have a history in Ohio."

Ray Fakhoury, state policy associate for the organization Advanced Energy Economy, said the trend among businesses and consumers in Ohio for new energy technologies has too much momentum to be sidetracked. "Ohio goes back and forth on energy policy," Fakhoury said. "But the market is showing us where businesses and consumers are heading."

Utica Shale

Whether natural gas is truly a "bridge" to cleaner power generation, as the Obama administration cast it, or a bad long-term solution to the climate challenge turns on the future control of releases of methane — a potent greenhouse gas — from gas development. U.S. EPA last month halted an Obama administration rule that would cut down on methane leaks at drilling sites, citing this as another "job-killing regulation."

But there is no doubt that the gas boom has elevated Ohio’s economy.

Since 2011, more than $38 billion has been invested to drill and produce gas from the Utica Shale fracking operations, according to a new report, "Shale Investment Dashboard in Ohio," by researchers from Cleveland State University. Investment in pipelines, processing and other gas delivery resources exceeded $8 billion in Ohio in that period, of which $3 billion went into new gas plants and other "downstream" investments in the sector.

A glut of shale gas in the United States and the depressed prices and earnings of gas producers have taken a toll in Ohio, where the drilling rig count fell from 47 in the summer of 2014 to 15 by October of 2016.

But the Cleveland State researchers see another surge of investments coming as natural gas liquids become raw material for petrochemical production on Ohio’s borders. Shell Chemicals committed last year to build a multibillion-dollar ethane shale cracker in Monaca, Pa., near Pittsburgh, employing 6,000 temporary construction workers and 600 full-time workers when completed.

Cleveland Plus, an economic development organization in northeastern Ohio, reported that 11 new gas-fired generating plants are proposed or under construction, creating thousands of jobs, to replace aging coal units. Ohio retired 15 percent of its coal-generating capacity in 2015, the organization reported. While the transition hurts some workers and helps others, the new plants mean new orders for steel, cement, electronics and a long list of other component products.

Helper said that part of the Trump administration’s moves to dismantle Obama administration climate-related policy may backfire for Ohio. ArcelorMittal SA’s Cleveland steel firm produces advanced high-strength steels "uniquely designed to help automotive manufacturers meet aggressive new fuel-efficiency standards," the company states. "The eco-friendly cars of the future will be made with some of the lightest strongest coated steel grades ever made."

That product will lose some of its advantage if the Trump administration rolls back an increase in motor vehicle fuel economy standards, now under review, Helper said.

The overall economic impact of Trump’s decision to push an "America first" policy on climate and trade is clouded by the uncertainty it creates, ClearView Energy Partners said in an analysis yesterday.

"We have long anticipated trade conflict not just because of the Paris Agreement, but also as an aftershock of the Great Recession. The significant stimulus outlays undertaken by industrial nations to support employment within their borders seemed all but certain to engender skepticism regarding low-cost imports," said the analysis.

"Today’s nationalist comments could presage a further escalation of energy-related trade conflict," the firm said. "Current signs point towards stricter enforcement, higher surcharges on imports and further fuel for retaliation by U.S. counterparties."

Correction: An earlier version of this story misstated the number of natural gas plants in operation in Ohio today compared with in 2010. The number is 46.