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The Economic Impact of Renewable Energy

When the Fraser Paper Mill shut down in the northern New Hampshire city of Berlin in 2006, many people wondered how the city would recover.

The mill, which had been in operation for over 100 years, was vital to the economic stability of the community. The mill's closure evaporated hundreds of jobs, tens of thousands of dollars in tax revenue and closed the book on a century of history built around the paper industry. Now, as New Hampshire is poised to pass a renewable portfolio standard (RPS) later this spring, a new chapter of economic progress based on renewable energy is unfolding for the city of Berlin. LaidLaw Energy Group, a New York-based developer of independent renewable power plants, has proposed turning the Fraser Paper Mill into a 50 megawatt (MW) capacity biomass electrical generation facility that will utilize woodchips. Because the mill's infrastructure is well suited for developing a power plant, it will be easier and cheaper for the company to construct the facility. If completed in 2008 as planned, the biomass facility will create approximately 500 indirect and 40 direct jobs in timber-rich Coos County where Berlin is located. While a power plant will require much less labor than the old paper mill, 540 jobs are a welcome addition to the area. "Clearly this project would help the local economy and many of the folks who have relied on the paper industry over the years," said Berlin City Manager Patrick MacQueen. "This project will be great for job creation and actually maintaining the jobs that get built." A University of New Hampshire study released this February titled, "Economic Impact of a New Hampshire Renewable Portfolio Standard," concluded that an adoption of 20 percent renewable energy will create thousands of jobs with wages much higher than the current state average, generate over $1 million in state revenue, and provide a "newfound opportunity for NH residents to start businesses." Former New Hampshire Congressman Charlie Bass, who recently joined Laidlaw Energy Group as Special Advisor to company President and CEO Michael Bartoszek, said that renewable energy projects like the Berlin biomass plant are important for economic growth and stability in the state. "I've always been active in supporting alternative energy sources, so I'm excited to be involved with [the Berlin] project. Developments like this will truly benefit the state of New Hampshire and the rest of our country," Bass said. Additional studies released over the last decade have indicated that a large-scale transition by the U.S. into a clean energy economy would significantly benefit the country by creating hundreds of thousands of domestic jobs, generate tens of billions of dollars in federal and state tax revenues, and help revitalize struggling communities. According to a 2004 meta-analysis from of the Renewable and Appropriate Energy Laboratory (RAEL) at the University of California, Berkeley, which examined 13 studies on the economic benefits of renewable energy, approximately 240,000 jobs could be created and maintained if the country passed a 20 percent by 2020 RPS. If the U.S. relied solely on fossil fuels, the country would only maintain around 75,000 jobs. "We found that you get three to five times the amount of jobs in the renewables area than you do in fossil fuels," said Dan Kammen, director of RAEL and co-author of the meta-analysis. "The finding was not that there's some incredibly intrinsic, wonderful feature about renewables, even though I might think there is. It was that these benefits go to the first victors." That means local communities and states must act now in order to be part of the expected job growth. The employment opportunities created by the renewable energy sector will be diverse -- ranging from indirect manufacturing and construction jobs to direct facility design, operation and maintenance jobs. States like California, Texas, and others in the Midwest that have been most aggressive in supporting the solar, wind and biofuel industries are going to see the largest growth in those employment areas noted Kammen. For example, communities in the Midwestern Corn Belt are seeing a considerable economic boom because of the rapid growth of the biofuel industries. A report released this February found that the ethanol industry created over 163,000 direct and indirect jobs, generated $4.9 billion in federal, state and local taxes and reduced the federal trade deficit by $11.2 billion in 2006. "The renewable fuels industry is creating economic activity, it's creating jobs, it's generating income, it's generating tax revenue and it's paying for itself," said John Urbanchuk, Director of LECG LLC and author of the ethanol report. "And since most of these plants are located in rural areas, they are a significant impetus to rural economic development and economic growth." When the U.S. finally adopts high amounts of renewable energy, there will undoubtedly be jobs lost in the fossil fuel industries. But the country won't restructure itself overnight, so companies and workers will have time to adapt to the evolving energy landscape. "Most of the big energy companies are rich -- they are big and diversified. There are efforts going on among all the big oil companies to invest heavily in renewables. So I think you're not going to see job losses, you're going to see a shift, with the one exception of coal if the industry doesn't get on board with finding a way to make coal as close to carbon neutral as possible," said Kammen. When Laidlaw finishes the 50 MW biomass plant in Berlin, the renovated paper mill will be a symbol for the new wave of economic development based on clean energy that is gradually emerging in the U.S. Now it's up to states and local communities to decide whether they want to be part of the growth. "There is simply too much talk and not enough action right now," said former Congressman Bass. "Developing projects like the one in Berlin is how you change the paradigm."
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