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Bureau of BIG Business and Economic Research

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A retired professor of economics at the University of Montana challenges a report from UM’s Bureau of Business and Economic Research on the impacts of the Clean Power Plan.

The report predicts dire consequences if the U.S. Environmental Protection Agency implements the plan in Montana:

• The state would lose more than 7,000 jobs, including positions at the four units of the Colstrip plant in addition to the coal mine and local government jobs created by property taxes from those entities.
• The state would lose more than $500 million in yearly income, factoring in the higher-paying jobs that would disappear.
• Lose more than $1.5 billion in gross annual sales as the state moves from its status as an energy exporter to an importer.
• See a population loss of approximately 10,000 people as families seek jobs out of state.

Former chairman of UM’s Department of Economics, Dr. Tom Power, has a great rebuttal.  It should be noted that Northwestern Energy, Montana’s largest utility company, commissioned the BBER report.  Power says the report:

“ … earns a big red F and shouldn’t serve as the basis of any policy decision. It is based exclusively on extreme assumptions about the Montana impacts of the Clean Power Plan regulations that NorthWestern told the authors of the report to use.”

In addition, he said the EPA will allow states to meet requirements by boosting renewables, increased energy efficiency and purchasing carbon allowances.

So, the report didn’t look into the potential jobs created by alternative energy: wind, solar, perhaps additional hydro, and an upgraded grid.  And, of course, it didn’t take a look at the cost of continuing to spew CO2 into the atmosphere.

Then there’s the lost tax revenue, which I addressed in an earlier post.  It’s really minuscule. Here’s a pie chart produced by another UM economist, Dr. Dick Barrett, showing that about one percent of total state revenue comes from coal.

Here’s the Missoulian story on the report, the report itself and the Montana Public Radio interview with Power.

 

 

 

 

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About the author

Pete Talbot

'Papa’ Pete Talbot is first and foremost a grandfather to five wonderful grandchildren. Like many Montanans, he has held numerous jobs over the years: film and video producer, a partner in a marketing and advertising firm, a builder and a property manager. He’s served on local and statewide Democratic Party boards. Pete has also been blogging at various sites for over a decade. Ping-pong and skiing are his favorite diversions. He enjoys bourbon.

20 Comments

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  • Good post Pete. I especially like the addition of “Bureau of BIG Business…” since that’s most certainly the function of UM’s BBER, and has been for a long time.

    Of course, BBER doesn’t just produce ‘unrealistic’ and ‘mischaracterized’ reports about coal and the Clean Power Plan. BBER is a very active outfit in the effort to dramatically increase industrial logging of National Forests in Montana.

    What’s ironic is that BBER serves the function of National Forest logging cheerleader by largely ignoring global economic realities, including still lagging U.S. housing starts, general soft demand for lumber, low lumber commodity prices, expiration of the U.S.-Canada Softwood Lumber Agreement, currency exchange rates, economic crisis in China and other Asian countries, to name but a few.

    Seems like BBER is a go-to source for soundbites on National Forest logging issues for many Montana media outlets, despite the fact that BBER has a terrible track record when it comes to actually forecasting and/or predicting for the general public, or the logging industry, the approach of any of these aforementioned global economic realities.

    Also, when you have groups like the Montana Wilderness Association and Democratic Party politicians like Senator Tester and Governor Bullock also calling for more National Forest logging in Montana (BTW, you wouldn’t know it from the rhetoric, but the U.S. Forest Service’s Northern Region, which includes Montana and northern Idaho met it’s timber harvest goals the past two years), it essentially gives an outfit like the Bureau of BIG Business and Economic Research free reign to deliver the more National Forest logging message without much opposition or questioning, even if it doesn’t make much economic sense.

    It would be great if Montana Public Radio could also have Dr. Tom Power take a look at some of the many UM Bureau of Business and Economic Research reports calling for more National Forest logging, despite global economic realities, etc.

    I have a feeling that if an economist like Dr. Power dug deeper into BBER’s “More Logging” reports he’d also find that UM’s BBER is guilty of “unrealistic” reports that are “mischaracterized”…just like that Clean Power Plan report. Thanks.

  • After reading the report, I red-flagged it for presenting preposterous precision; in some cases, seven significant figures. That level of precision just isn’t possible for the modeling that was performed.

    It would be better if the BBER were not associated with the University of Montana. Reports such as this do not imporove the university’s reputation for respectable scholarship.

  • The experience of looking at the first page of the report is woth 10,000 words!
    The Missoulian did another accurate and good short news story.
    MPR has the where and the what is most interesting part
    of the short news story.
    Tom Powers’ reality statement not yet breaking news in print press cycle!
    While Talbot timely reports on critical, Montana breaking news stories!
    My bias is that this is #2 time a mega-corp power company attempts to re-educate the Montana Partisan + media system.
    My basis is that the Public press bears the responsibility to resist the forces of power and wealth.

  • Does the report actually figure in the how many people would be hired to keep the last coal plants cleaner and safety rated? Of course not, because that would mean more jobs big business doesn’t want to create! It’s their greed…. to keep board members sailing on their yachts. The profits they feel are necessary are just as overblown as their taste for screwing people with misinformation.

  • With your post highlighting Montana Dems “war on coal” do you also have a pie chart showing the percent of Crow tribe revenue coming from coal? http://www.pri.org/stories/2015-10-29/native-american-tribe-montana-hopes-its-coal-reserves-will-provide-economic Why aren’t their challenges to survive and prosper even more urgent for Montana blogs like this one than political tar brushing of others with ad hominem epithets over refugees from other countries and climate change? Is it only about politics or is there a real point to your selecting of topics and ad hominem attacks?

    • Not sure which of my posts you’re referring to as “ad hominem attacks,” Craig. I also wish I had a pie chart showing the percentage of Crow Tribe revenue coming from coal. It would be interesting but I couldn’t find one.

      We’ve screwed the Crow for over a century, which is why they’re in the dire straights they live in today and forces them to rely on the dirtiest of fossil fuels for income. If we supported the tribe in other, more sustainable enterprises, it might not be in this fix. This is a thoughtful quote from tribal member Carolyn Pease-Lopez, a woman I greatly admire:

      “I just hope that there’s some other resource that we have that we can count on,” she says. “I mean, if the markets start declining for our commodity that we do have, I just hope that we’re finding something else that we can support our people with so that our families can be fed and our communities can be rebuilt.”

      Amen.

      By the way, you call a post of mine the “Montana Dems ‘war on coal.'” The post was basically about market conditions and old technologies dictating the demand for coal. There are a number of “Montana Dems” who don’t agree with my position.

      Finally, you haven’t answered my question as to whether you are a human-caused, climate change denier. As I mentioned, that is certainly your right. But even though we’re diametrically opposed on most issues, I thought you were smarter than that.

      • Pete, my opinion of you pretty much mirrors yours of me. When you slurred me with the Bars and Stars George Wallace picture which you posted back in July, I just shrugged and took note of your cheap rhetorical methods and decided I no longer placed any value on what you think about me. I previously thought highly of you and cared. Now with bandying about the “denier” label to prove to you otherwise is just more of the same. I did answer your question, apparently you fail to understand. On climate matters I am in Dr. Curry’s camp. Which is to say a person without a tribe. http://new.spectator.co.uk/2015/11/i-was-tossed-out-of-the-tribe-climate-scientist-judith-curry-interviewed/ Measures to “save the planet” must withstand cost benefit analysis and demonstrate with reasonable certainty that painful measures are effective.

  • Pete: your reference to Dick Barret’s estimate of coal-derived tax revenue completely misses the boat. It does not consider the potential lost income and property taxes paid by the Colstrip generation plants, the transmission lines, and all of the associated workers. It also ignores the tax revenue generated by the funds brought into the state through Montana’s electricity exports to other states.

    Tom Power waves his hands vaguely mentioning something about “boosting renewables, increased energy efficiency and purchasing carbon allowances.” Where’s the beef? Let’s hear a real, plausible scenario. Right now all Power has offered is hot air.

    If any coal-fired electricity plants are closed, some jobs will be lost. Where is the mitigation plan? What does IBEW Local 1638 or Boilermakers Local 11 think? Pete, have you asked? Hillary Clinton has proposed a $30 billion plan for mitigation of economic dislocation caused by implementation of the CPP. Why aren’t you advocating for that plan?

    Pete, do you really think Montana can finance, permit, purchase the land, build, and build the transmission capability required to produce the volume of wind or solar generation needed to comply with the rule in 6+ years (when compliance is required)? Really?

    And Pete, purchasing carbon allowances? From whom? At what price? There is no such market today. Purchasing carbon allowances is currently a hope (and a nice one) but it is not yet a plan.

    BBER and Northwestern Energy jumpstarted a tough, serious public policy discussion: how will Montana reduce it’s coal-fired, electricity generation contributions to human-caused global warming AND mitigate the economic dislocations caused by the required (and tough) reductions. I look forward to your future, more meaningful contributions to this conversation.

    • I appreciate your response, John, and apologize for not getting back sooner. Your comment slipped through the cracks and you may not even see this, but:

      “What does IBEW Local 1638 or Boilermakers Local 11 think? Pete, have you asked?” you write. I know what they think and I wish they’d be more proactive in retraining their workforce for cleaner energy jobs.

      “Hillary Clinton has proposed a $30 billion plan for mitigation of economic dislocation caused by implementation of the CPP. Why aren’t you advocating for that plan?” you continue. I’ll look into this. I may even advocate for the plan. Thanks for mentioning it.

      “Pete, do you really think Montana can finance, permit, purchase the land, build, and build the transmission capability required to produce the volume of wind or solar generation needed to comply with the rule in 6+ years (when compliance is required)? Really?” you say. It would be a good place to start, and the sooner the better. Maybe add some conservation measures into the mix. You’re suggesting we can’t? What happened to that entrepreneurial “can do” meme?

      Finally, I agree that the report raises some serious public policy issues, but I don’t believe it’s all doom-and-gloom, as the conclusion suggests. Plus, we have a planet to save.

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