Research Brief: DEP's Confounding Job Numbers For RGGI

May 19 2021 | Pittsburgh Works

The Pennsylvania Department of Environmental Protection is trying once again to convince its advisory committees that it makes sense to join a multi-state coalition that would force power plants that use fossil fuels to pay an extra fee to the state. Not one of those committees endorsed the idea when DEP made its pitch last year.

The DEP’s own figures show that the plan, known as the Regional Greenhouse Gas Initiative, will raise power prices and households will pay more for electricity over the next decade.

But DEP claims that joining RGGI will do more than cut the state’s carbon dioxide emissions and reduce overall air pollution, primarily by prompting the early retirement of Pennsylvania’s coal-fired power plants.

DEP also says that its plan for joining RGGI will add jobs to the state’s economy. Maybe so. Except that’s not what DEP’s analysis initially showed.

Before presenting its case to the state Environmental Quality Board last year, the DEP released the spreadsheets showing the economic impact of three different RGGI scenarios for using the $300 million per year the state would collect:

  • Option 1: Finance energy efficiency, wind and solar production, electric vehicle usage, and other energy-related projects, the option pushed by Gov. Wolf.
  • Option 2: Rebate half of those fees to consumers to help them pay higher energy bills.
  • Option 3: Put most of the money into the state’s general fund.

In its presentation to the EQB, the DEP said Option 1 would create 30,000 new jobs by 2030, more than either of the other RGGI options and more than not joining RGGI.

But that wasn’t what an earlier set of DEP numbers showed. The figures originally released by DEP in August 2020 showed that Option 1 would create fewer jobs than not joining RGGI.

In fact, it predicted that Gov. Wolf’s preferred option – using the RGGI money for energy investments – would create fewer jobs than either of the other two RGGI options.

After Pittsburgh Works asked DEP officials last August why the job numbers on a summary spreadsheet showing the 30,000 new jobs did not reflect the actual detailed data in the economic model run, DEP chalked it up to “transcription error,” removed the original data file from the DEP website, and substituted a new one without explanation.

In the new spreadsheet file (currently available on the DEP RGGI website), the summary data showing the 30,000 increase is the same as before. But the detailed analysis that predicts the annual number of jobs by industry sector for each RGGI option has changed.

The job total for Option 1 has increased by 61,000, while the job totals for Options 2 and 3 have dropped by 17,000 and 27,000 respectively. Option 1 is now the option that is estimated to create the most jobs by 2030.

DEP is using a model produced by Regional Economic Models, Inc., one of the industry standards for estimating how different changes in the economy will affect employment, GDP, and other measures. If you ever see a claim that Industry X is responsible for 10,000 jobs and $1 billion dollars in economic impact, that estimate probably comes from REMI or one of its competitors.

The predictions made by REMI and its competitors are only as good as the assumptions programmed into the model. If you tell the model that inflation will be 2% per year over the next decade, you’ll get a different answer on jobs and GDP than if you assume it will be 3% or 1%.

The DEP did not explain what variables were changed in the REMI model that resulted in the different job numbers between the two versions.

The DEP job number is squishy in another way. The department told the EQB that RGGI Option 1 would create more than 30,000 jobs by 2030. But the DEP’s own data estimates that Pennsylvania will only have 4,272 more jobs in 2030 under RGGI Option 1 than if the state did not join RGGI.

So where did the 30,000 jobs number come from?

Despite what it claims in the EQB presentation, DEP isn’t counting net new jobs. It is counting each year that a job exists as an additional job.

So, the job difference in 2022 is added to the job difference in 2023 is added to the job difference in 2024 and so on until 2030, when the total difference adds up to 30,518. If this seems like a strange way to count jobs, you’re right. It is why politicians make a point to differentiate construction jobs associated with building a new factory (temporary) with the staffing level at the facility (permanent.)

In a Pennsylvania economy with around 8 million jobs, 30,000 new jobs would be a big number. But a 4,200-job difference predicted for nine years in the future is basically a rounding error. To be fair, the detailed RGGI presentation on the DEP website does reference “job years.” But the main DEP RGGI web page makes the same net jobs claim as the EQB presentation.

RGGI may have other benefits for Pennsylvania. But when DEP says raising electricity prices will help create additional jobs for Pennsylvania residents, be sure to ask to see the numbers.

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