Ohio's Renewable Energy and Energy Efficiency Standards Are Working

From the Cleveland Plain Dealer forum:

 

Cleaner, cheaper energy boosts Ohio's economy thanks to renewable energy and efficiency standards: Peter Accorti

By Guest Columnist/cleveland.com
on September 30, 2013 at 9:41 AM, updated September 30, 2013 at 9:42 AM

 

Wind turbines that are part of the Blue Creek Wind Farm in Van Wert County in Northwest Ohio rise above a cornfield. Karen Schiely, Akron Beacon Journal

 

Five years ago, Ohio lawmakers enacted a comprehensive energy plan that included a commitment to expand renewable energy and energy efficiency. The law set a goal to diversify our energy sources to 12.5 percent renewable energy by 2025 and to provide homeowners, small businesses and others with options to meet their energy needs by using less electricity. Two years ago, Gov. John Kasich strengthened the law by providing more clean-energy options for manufacturers. What have been the results? Quite simply, more money in peoples’ pockets, innovation, job creation and local economic development here in Northeast Ohio.

As renewable energy becomes more available, it offsets the higher price of coal and natural gas in the system. That is because renewables are essentially free once the original capital investment is made. There’s no fuel cost at all. Additionally, with increased energy efficiency on the part of consumers, less electricity is consumed and the overall cost of electricity is reduced as well. Recent reports by The Ohio State University, the Ohio Manufacturers Association and the Public Utilities Commission of Ohio prove that Ohio’s renewables and energy efficiency law is saving Ohioans money.

This April, along with 15 other Northeast Ohio manufacturers, Talan Products signed a letter to State Sens. Bill Seitz and Keith Faber, State Rep. William Batchelder and Kasich. The letter urged caution as Seitz and the Ohio Senate Public Utilities Committee began a review of Ohio’s forward-thinking renewable and electric-efficiency standards. These policies are saving energy, cutting costs and supporting both old and new industries and Ohio jobs. The companies signing the letter employ over 1,200 Ohio rate and taxpayers. We signed because our companies need a stable policy so we can plan our companies’ investments in plant and equipment. Ohio’s renewable and energy efficiency law is working to improve our environment and create jobs.

Ohio’s clean energy laws have also helped drive innovation and jobs across Ohio. Ohio Advanced Energy Economy reports that the state is home to over 400 companies that employ over 25,000 people. Additionally the energy efficiency industry employs almost 10,000 Ohioans. Ohio’s clean-energy standard, and those in other states as well, has helped create new market opportunities for the state’s rich manufacturing base. Our company, Talan Products, has invested in new equipment and hired new employees to provide components for the solar industry. We are also partnering with other manufacturers in the region to increase our capability to provide turnkey products and not just components. We are active in WIRE-Net, a manufacturing advocacy group that has helped Ohio identify hundreds of Ohio firms that supply a growing clean energy industry -- serving the wind, solar and natural gas sector. Ohio has been one state that has made the connection between energy policy and jobs.

Renewable-energy and energy-efficiency projects have also promoted local economic development. The state’s largest wind farm in Van Wert County in Northwest Ohio has created 500 local construction jobs, engaged over 30 Ohio companies and generates more tax revenue for the county than the next 11 businesses combined. And it’s the same for energy efficiency. According to the American Council for an Energy-Efficient Economy, for about every $1 million invested in energy efficiency, 20 permanent jobs are created. The money saved from reduced energy costs is reinvested into the company and community.

Unfortunately, the Ohio legislature is planning to consider a proposal that drastically weakens Ohio’s renewable and energy-efficiency laws. These provisions include outsourcing jobs to other states by eliminating the law’s requirement that half of our renewable energy be produced in Ohio, capping the amount of energy-efficiency savings and eliminating energy-efficiency choices for customers in the Cleveland area and across the state. The “in-state” production requirement was designed to create Ohio jobs, and it is working. Eliminating the in-state production requirement will hamper clean-energy development and job creation in Ohio. Capping savings also makes no sense. For every dollar invested in energy efficiency, Ohioans have saved three dollars.

It’s hard to be against energy efficiency and clean energy. And it’s hard to see why our state elected officials want to gut these standards. Let’s hope over the next couple of months, they choose to side with facts and not special interests. Common sense must prevail.        

Peter Accorti is president of Talan Products in Cleveland and is a board member and former chairman of WIRE-Net's board of directors.

 

 

 

Heavy Metal in Cleveland

Arcelor-Mittal is the world’s largest steel maker.  Its operation in Cleveland is often touted as the company’s most productive, producing 1500 tons per employee – well above the standard of 1000 tons per employee for advanced steel making enterprises.

 

I recently heard Lou Schorsch speak about ArcelorMittal’s plans for Cleveland.  Schorsch is Executive Vice President of ArcelorMittal and President/Chief Executive Officer of the company’s Flat Carbon Americas business unit. This role includes responsibility for slab, hot rolled, cold rolled and coated sheet and plate produced at operations in Canada, the United States, Mexico and Brazil.  In 2012, Schorsch keynoted WIRE-Net’s “Making It Here: Energy & Manufacturing Conference”, discussing ArcelorMittal’s work in the energy sector, and its gains to reduce the corporation’s carbon footprint. Schorsch discussed ArcelorMittal’s investment plans in Cleveland, what it will take for a true resurgence of American manufacturing, and some of the key issues facing both ArcelorMittal and all US based manufacturing. 

 

Arcelor will invest $70 million in their Cleveland facilities in 2013, all aimed at securing the Cleveland works’ reputation as a top producer of flat rolled steel.  The Cleveland plant serves diverse markets including automotive, steel service centers and converters, plate slabs and tubular applications.  The company is moving ahead to restart its mill on the west side of the Cuyahoga River, a mill that is well suited to batch production.  ArcelorMittal plans a $25 million investment in new technology to help grab more of the emerging market for light weight, high strength steel.

 

Schorsch also said that ArcelorMittal’s success could be a template for other manufacturing companies: 

·         create distinctive products,

·         invest in research & development, and

·         build a culture of shared interests among all employees. 

 

He also pointed to four serious policy challenges that will create roadblocks to manufacturing’s comeback:

 

1)      Trade:  this is a serious issue for all companies working in global markets, particularly in steel, where Asian producers benefit from currency manipulation, non-tariff barriers, minimal environmental and safety regulation and other subsidies that are not present either in the US nor in Europe.

2)      Education:  companies can’t wait for smarter government policy to help create the technical talent they need.  ArcelorMittal isn’t waiting either, and has created the Steelworker for the Future program, working with area community colleges and career-tech high schools like Cleveland’s Max Hayes, to fill the pipeline of talent they need.

3)      Infrastructure:  ArcelorMittal handles a lot of tonnage each year, shipping 3 million tons out of Clevealnd, while receiving 5 million tons of raw material per year.  They depend on modern infrastructure:  roads, rail and shipping. You know they are concerned when US infrastructure is rated D+ overall and D- for waterways.  Investing in better infrastructure is a shared good of our industrial commons, and also creates a lot of good jobs in the process.

4)      Tax:  most of the chatter in Washington DC seems basically aimed at advantaging Wall Street, and companies who sell here, to the disadvantage of companies who make things in the US.  There is a push on to close key “loop holes” that benefit American producers, like accelerated depreciation. 

 

Asked to dig in to the most important of these 4 challenges, Schorsch targeted tax policy as the lynchpin.  Tax reform should ensure that our producing sector is strengthened, not undermined.  Wall Street is doing its best to protect its interests to the detriment of US based manufacturing.

Small Manufacturing Credit Crunch

The Cleveland Federal Reserve Bank recently posted an analysis of the reasons why small business lending has fallen off since the Great Recession, and cites four factors:

 

1.       Banks have been shifting away from small business credit markets to more profitable sectors since the mid/late 1990s.

2.       Small business demand for lending has eroded, as overall demand for their goods and services has eroded.

3.       Credit has been harder to get, driven by reduced creditworthiness (as real estate values have fallen).

4.       Banks have tightened lending standards, reducing the number of small companies able to qualify.

 

Policy corrections will need to address all these factors to be effective, but one solution that cities, counties and regions could explore is establishing/augmenting loan guarantee funds to help open the credit spigots again, and making sure that small businesses are fully tapping the SBA 7(a) programs (the major Federal loan guarantee program for small businesses).

See the report here:  http://www.clevelandfed.org/research/commentary/2013/2013-10.cfm

 

 

Building Regional Prosperity, #2 and #3

The Regional Prosperity Project brings together economic development initiatives from 8 regions to share notes, compare strategies and find ways to overcome barriers to broadly shared regional economic prosperity.  Supported by the Surdna Foundation, the Project is in its 2^nd year.

 

I was invited to talk with the group when they held their Cleveland meeting this August.

 

One of WIRE-Net’s main “prosperity” strategies has been our role as a champion for reinvestment in urban industrial infrastructure – specifically roadway projects.  WIRE-Net has been an advocate and partner in $47 million in successful projects over the last 6 years, projects which have positively affected hundreds of manufacturing and other companies, and tens of thousands of jobs. 

 

WIRE-Net’s third major impact on manufacturing jobs has been through its continuum of work in youth and adult job training.  WIRE-Net’s adult programs have evolved over 25 years – starting with the Hire Locally Program, the Machine Trades Sectoral Initiative (MTSI), and now continues as WorkAdvance-NE Ohio in partnership with Towards Employment. All of these projects show that an employer led, grassroots approach can attract trainable entry level workers from urban neighborhoods into targeted manufacturing occupations like precision machining and welding, get them to work, and boost earnings in significant ways.  The MTSI experience also shows that by working in coalition with other industry groups (like the PMA, PMPA, and OAMF), training providers can be persuaded to strengthen their programs, making them more relevant and valuable to industry.

 

WIRE-Net is also addressing the severe shortages in young talent that are projected to affect the skilled, technical manufacturing occupations (machining, welding, robotics, mechatronics) by working with middle and high school youth.  WIRE-Net is the partner behind the New Max Hayes High School program, which is redesigning career-tech education so that it addresses the challenges of educating urban youth, connecting them to relevant, authentic learning and work, and gets them on a path to well paying, family-supporting wages.

Manufacturing Regional Prosperity

By:  John Colm, President & Executive Director, WIRE-Net

The Regional Prosperity Project brings together economic development initiatives from 8 regions across the USA to share notes, compare strategies and find ways to overcome barriers to broadly shared regional economic prosperity.  Supported by the Surdna Foundation, the Project is now in its 2^nd year.

I was invited to talk with the group when they held their Cleveland meeting this August, hosted by the Fund for Our Economic Future.

I discussed the 2-3 major ways that WIRE-Net has worked to grow manufacturing jobs, and to connect those new opportunities to low and moderate income communities and individuals.

First on my list was WIRE-Net’s company by company efforts to understand what the main challenges are to growth and “hassle-free” operations in older cities like Cleveland, and to connect manufacturing leaders to resources to get over those barriers to growth. 

WIRE-Net manages the Cleveland Industrial Retention Initiative (CIRI) which aims to bolster Cleveland’s economy as NE Ohio’s largest city.  Over the past 6 years of CIRI under WIRE-Net’s management and partnership with the Cleveland Department of Economic Development, CIRI has helped attract or retain 4800 jobs and $200 million in payroll within Cleveland.  Clearly CIRI is an important tool and asset in Cleveland’s redevelopment efforts.

I’ll share the other two strategies in later posts.