Thursday, May 24, 2018

Kleinman Energy Center: Reimagining Pennsylvania’s Coal Communities

The Kleinman Center for Energy Policy at the University of Pennsylvania Wednesday published a report-- Reimagining Pennsylvania’s Coal Communities-- making recommendations on economic development strategies to help the people and places involved in the coal industry.
The report captures current information from on-the-ground stakeholders—surveys with small business owners, outreach for interviews with more than 125 stakeholders, and two regional meetings in coal producing areas of the state.
This input is augmented with research into Pennsylvania’s demographics, coal market data and trends, unfunded programs proposed in grant applications, and grant-funded programs.
The report was written and researched by Christina Simeone, Theodora Okiro and DeShaun Bennett.
Executive Summary
Pennsylvania’s coal mining industry began in the mid-1700s and grew to warm countless homes, power the nation, and fuel the steel industry and the industrial age.
In turn, coal’s importance to Pennsylvania’s economy grew, as homes, businesses, and towns developed around coal mines—much like factory towns.
But over time, as is typical in manufacturing, technology improves and enables machines to more efficiently and cost effectively do the work of people. Slowly, the coal mining industry also began using more machines and employing fewer laborers.
This employment reduction trend has been occurring for decades, even as the amount of coal mined increased. The U.S. steel industry began to slow in the late 1970s into the early 1980s, as economic recessions softened steel demand, and competition from foreign steel producers increased.
Scientists learned more about the public health and environmental impacts of coal mining and combustion, which led to increased regulations.
Appalachian coal is buried deep underground, making it more expensive to mine than coal in other parts of the country. As regulations and market factors changed, production of cheaper coal from other areas of the country increased and Appalachian coal production declined.
These trends contributed to the ongoing erosion of coal mining employment, further depressing Pennsylvania’s small, rural coal towns.
While coal mining unemployment and the depression of Pennsylvania’s coal towns has been gradually occurring for decades, the rise of Pennsylvania’s Marcellus Shale natural gas resource resulted in rapid decline.
Cheap and abundant natural gas extracted from the earth by machines—aided by a comparably small number of workers—quickly reduced coal demand, production, and employment, sending economic shockwaves through already struggling coal communities.
And while Pennsylvania’s natural gas development has lowered energy costs for consumers and created new economic development opportunities, it has been devastating for the people, businesses, and towns still dependent on coal mining.
Pennsylvania’s coal industry is unique because it produces two types of coal that are used in two different sectors. Bituminous coal in the west and northeast is used as fuel to produce electric power, whereas anthracite coal in the northeast is used by the iron and steel industry.
The persistent national downturn in coal demand primarily affects bituminous coal, while anthracite coal is exposed to a large, international export market. The future demand for coal is unknown.
As such, the strategies in this report focus on economic diversification to enable the potential for success, regardless of coal industry dynamics.
In 2015, direct coal mining represented less than 0.1 percent of total non-farm employment in Pennsylvania.
But the coal industry supports additional indirect jobs (e.g. supply chain businesses) and induced jobs (e.g. stores or restaurants) that support individuals and communities.
While each community is unique, many of these distressed coal communities share similar characteristics, including high unemployment, aging populations, deteriorating or insufficient infrastructure, and educational attainment levels that are lower than state and national averages.
As people born, raised, and educated in these communities are moving out, new, educated populations are generally not moving in, leading to a “brain drain” of educated workers. These and other factors make it difficult to attract new business into these communities.
What can be done to help these people and places? This report attempts to capture and categorize local and regional strategies being pursued to assist distressed workers, businesses, and communities.
The report captures current information from on-the-ground stakeholders—surveys with small business owners, outreach for interviews with more than 125 stakeholders, and two regional meetings in coal producing areas of the state.
This input is augmented with research into Pennsylvania’s demographics, coal market data and trends, unfunded programs proposed in grant applications, and grant-funded programs.
The report captures many, not all, strategies being employed or proposed in Pennsylvania. Some of these strategies are still in the planning phase; others are in development; a few have been recently implemented. Most projects, however, are too early in their infancy to determine their long-term efficacy.
It goes without saying that financial resources available to assist people and places impacted by the coal downturn are scarce. This reality often hinders the ability to implement revitalization or redevelopment strategies.
Exploring, evaluating, and leveraging multiple strategies may be the best way to test for success, prior to deploying capital. When exploring development strategies, communities should weigh key place-specific variables to determine strategic leverage points—such as county location, resource availability, pre-existing strengths and weaknesses, and others.
Assistance strategies in Pennsylvania tend to fall under five key categories:
-- Planning and Development – using planning and development efforts to convert community liabilities into assets that can be leveraged for broader economic benefit.
-- Training – providing education and workforce development strategies, including promotion of entrepreneurship, to enhance and diversify employment opportunities.
-- Technology – enabling the greater use of technology to enrich business opportunities.
-- Financing Options – employing innovative approaches to increase the availability of financial resources that target coal community revitalization.
-- Exploring Other Industries – encouraging individuals, businesses and communities to diversify into new opportunities in growth industries or industries where there is a potential local competitive advantage.
The report provides a review of the above categories, and outlines related sub-categories. For each sub-category strategy identified, the report highlights foreseeable implementation challenges, though additional challenges should be expected.
Examples of implemented or proposed programs are provided for most identified strategies. Insight boxes are included throughout the report to provide complementary data or perspectives to enable a deeper understanding of issues.
The report concludes by identifying key principles to employ when determining the best portfolio of strategies to implement, including developing a community-specific approach, emphasizing stakeholder collaboration and cooperation, leveraging financial resources, and promoting organizational connections and individuals who are skilled connectors.
Applying these four principles to local governments and economic development organizations, four specific next steps are identified to help these entities lead coal community transition and diversification.
These steps include: complement regional economic development planning with community-specific plans, promote a culture of collaboration (not competition) among leadership organizations, develop partnerships to identify and secure economic development resources, and serve as matchmakers to make connections within, across, and beyond target communities.
The process of reimaging lives, enterprises, and communities must by definition be forward-looking, embracing change as an opportunity. For Pennsylvania’s coal regions, any vision of the future and plan for transition must respect and honor the past.
For many people, the changes underway are not opportunities; they are real-life crises. Coal mining jobs pay large wage premiums, and although these are difficult jobs that present health hazards, they are often some of the best paying jobs around (when available).
More fundamentally, coal and coal mining served as the foundation for the initial development of these coal towns. It is a proud part of the history and culture of these places and the generations of people who’ve lived there.
Between honoring the past and envisioning the future, comes the painful reality of transition.
The most powerful messages heard from stakeholders concerned the agonizing human experience of transition.
Stories of prolonged unemployment, crushing financial debt, plummeting home values, and inability to relocate, understandably went hand-in-hand with stories about unhealthy levels of stress, deteriorating mental health, and even substance abuse.
Revitalization is a long-term goal that may or may not be realized, but transition is underway and the needs are immediate.
The various strategies identified have short, medium, and long term horizons to realization, but do not fully explore the transitional needs of Pennsylvania’s hardest-hit coal dependent populations.
This report brings together important information—connecting on-the-ground stakeholder input, coal market trends, coal country demographics, regional economic development strategies, and supportive research on current and proposed initiatives to improve distressed coal community economics—in order to identify a menu of diverse strategies to potentially revitalize Pennsylvania’s struggling coal communities.
Click Here for a copy of the full report.
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