Understanding the Latest Bogus Jobs Assessment of the Clean Power Plan

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This post authored by Kevin Steinberger, MAP Energy Policy Fellow.

The American Action Forum, a self-described "center-right think tank," has taken the cherry-picking of evidence to new heights - or rather new lows - with recent claims that the Environmental Protection Agency's Clean Power Plan could eliminate 296,000 jobs by 2030.

AAF's "analysis" has at least four compounding flaws:

  • First, AAF did not examine the job impacts of the actual Clean Power Plan, built from four "building blocks." Rather, AAF examined a constrained assessment of the Plan composed of just two of the building blocks: heat rate improvements at coal plants (Block 1) and shifting generation from higher-emitting coal plants to lower-emitting natural gas units (Block 2);
  • Second, by relying on this assessment rather than the actual Clean Power Plan, AAF's study completely ignores the potential for job gains associated with compliance through low-cost renewable energy (Block 3) and energy efficiency (Block 4);
  • Third, and most egregiously, even regarding the "Blocks 1-2 only" scenario, AAF one-sidedly looked only at job losses, and ignored job gains;
  • Fourth, AAF multiplied its doubly cherry-picked estimate of job losses (not gains) from Blocks 1-2 (not Blocks 1-4) by nearly four times, to build up a phony total of 296,000 direct and indirect jobs lost.
1) AAF looks at only two "Building Blocks," not the actual proposed Clean Power Plan;

AAF writes that its job loss estimates are based on EPA's analysis of compliance with the Clean Power Plan. This is not true. AAF draws selectively from EPA tables assessing only a narrow subset of the options considered in the Clean Power Plan: just heat rate improvements at coal plants (Block 1) and shifting generation from higher-emitting coal plants to lower-emitting natural gas units (Block 2). This was a very limited sensitivity case, and does not represent the actual proposed Clean Power Plan, which also gives power plants the flexibility to comply through low-cost renewable energy (Block 3) and energy efficiency (Block 4).

2) AAF ignored energy efficiency and renewable energy;

The AAF study relies on a limited EPA sensitivity scenario that does not consider the cleanest and most economic resources, energy efficiency and renewable energy. The actual proposal gives states tremendous flexibility to comply with any or all of the resources that make up the composition of the standards. And, as we've documented here, EPA significantly underestimated the role of efficiency and renewables in its initial analysis, by relying on outdated and overly conservative cost and performance estimates for clean energy technologies. Increased investments in energy efficiency would also save customers money on their electric bills, leading to increased spending and spurring job growth across the economy.

In practice, states will have the opportunity and flexibility to craft plans that work best for its own unique energy mix, and can rely on low-cost energy efficiency and renewable energy to lead the way towards compliance. But don't take our word for it - a recent study from the nation's largest grid operator, PJM, has shown that increased investments in energy efficiency and renewable energy can allow for an even smoother transition to Clean Power Plan compliance.

Energy efficiency and renewable energy are significant drivers of job creation and economic growth. NRDC has found that investing in energy efficiency would add a total of 274,000 jobs to the U.S. economy in 2020, as a result of growth in manufacturing and construction for energy efficient installations and retrofits for our homes and businesses. In a quarterly historical survey of clean energy jobs, Environmental Entrepreneurs (E2) concludes that in 2014, nearly 28,000 jobs were added in the wind and solar sectors alone. The Clean Power Plan can drive accelerated deployment of renewable energy and energy efficiency, which would spur continued job growth. AAF's calculations are based on a limited sensitivity analysis and exclude this potential growth in clean energy jobs.

But that's not even the most serious problem with AAF's analysis. Let's look at EPA's jobs estimates table for the "Blocks 1-2 only" scenario and AAF's version of the same table.

3) Even regarding the "Blocks 1-2 only" scenario, AAF one-sidedly looked at job losses and ignored job gains from the same EPA analysis;

When comparing the two tables, you'll notice that AAF selectively focuses on projected job losses in the fossil fuel sector, and neglects to mention projected job gains in the same sector! It's not like the job gains were hard to find -- they are given in the adjacent row in EPA's table.

In fact, the job growth projected by EPA in the "Blocks 1-2 only" scenario exceeds job losses, leading to an overall gain of 51,800 direct job-years between 2017 and 2030. (Job-years are a standard metric used to compare changes in jobs across multiple years. For example, a construction project that creates 20,000 new jobs in a single year, and a power plant job that creates 1,000 new jobs that last for the 20-year lifetime of the power plant, both result in the creation of 20,000 job-years.) Note also that AAF incorrectly labeled its table with "jobs," when the EPA table describes "job-years."

Here is AAF's table:

And here is EPA's table, with AAF's cherry-picking highlighted in yellow, and the projected net job impacts that AAF neglects circled in red:

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4) AAF multiplied its doubly cherry-picked estimate of job losses (not gains) from Blocks 1-2 (not Blocks 1-4) by nearly four times, to build up a phony total of 296,000 direct and indirect jobs lost.

In case the blatant cherry-picking of data wasn't enough, AAF's estimate of 80,000 lost energy jobs translating into 300,000 jobs lost across the economy also doesn't stand up to scrutiny. In another example of deficient methodology, AAF relies on a multiplier of 3.7 jobs for every energy job, which it found in a study performed on the oil and gas extraction industry. The irony is that AAF decided to completely ignore the part of EPA's analysis that projects the number of jobs created in that industry. In general, multipliers are estimates of the "ripple effect," and are meant to translate the consequences of change in one variable to others, accounting for sometimes complex and roundabout linkages. Employment multipliers are specific to sectors, regions, time, and a variety of other factors. The multiplier for one industry sector cannot simply be applied to a separate sector. Again, the job growth that outweighs jobs lost would also come with associated multipliers, so the net impact on employment across the economy from the Clean Power Plan should still be expected to be positive.

Policies for Job Growth and Worker Transition

Even though jobs are going to grow in clean energy sectors and overall, NRDC agrees that attention must be paid to the job losses in particular sectors or communities. The coal industry is in fact losing jobs largely because of advances in machinery and market forces such as cheap natural gas and declining costs of renewable energy. Coal-dependent communities have been struggling with this reality since long before the Clean Power Plan was proposed.

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Source: Bloomberg

But there are solutions: the Clean Power Plan will create jobs, and federal, state and local policies can help assist workers in the clean energy transition. As Peter Lehner, Executive Director of NRDC, explains in more detail here, NRDC is working as a member of the BlueGreen Alliance to help workers and communities affected by the shift to cleaner energy sources.

President Obama has included $55 million in his FY16 budget proposal to help coal-dependent communities diversify their economies and provide worker transition aid. Whether that proposal becomes reality depends on Congress.