How Fossil Fuel Allies Are Tearing Apart Ohio’s Embrace of Clean Energy

This ICN story was also published in the Cleveland Plain Dealer.

COLUMBUS, Ohio—On March 30, Bill Seitz, a charismatic Republican, took to the floor of the Ohio House to make a case for gutting a 2008 law designed to speed the adoption of solar and wind as significant sources of electricity in the state. The law, he warned, “is like something out of the 5-Year Plan playbook of Joseph Stalin.” Adopting a corny Russian accent, he said, “Vee vill have 25,000 trucks on the Volga by 1944!’”

Nine years before, Seitz and his colleagues, Republicans and Democrats alike, had voted overwhelmingly for the measure he now compared to the work of a Communist dictator. It made Ohio the 25th state to embrace requirements and inducements to lure utilities away from coal, a major contributor of the gases fueling global climate change. Studies suggested the law would help create green energy jobs and boost the Ohio economy—and it has.

Now, Seitz said, it was obsolete. Natural gas, rapidly displacing coal, was the resource Ohio ought to foster, he said. He also argued the law gives an unfair advantage to wind and solar when the state’s last nuclear plant is fighting for its life. Most important, Seitz insisted, the government had no business telling anyone what kind of energy to buy. By the time he was done, he had secured a veto-proof majority to undo key parts of the law.

What happened to turn lawmakers so decisively against a statute they’d adopted 93-to-1 less than a decade ago?

The answers begin with the 2008 financial crisis, which hit Ohio hard and greatly depressed energy demand, and they include the shale gas boom, which benefited Ohio producers and made coal uncompetitive.

But there’s more to the story, too.

As fossil fuel interests mobilized at the national level to fight proposals to mitigate climate change that would undercut their profits, they made Ohio a priority for fighting clean energy policy at the state level. Beginning in earnest in 2011, a network of coal companies, utilities, think tanks, nonprofit foundations and political action committees coalesced to roll back Ohio’s alternative energy initiatives.

Industry-supported think tanks provided highly questionable research purporting to show big job losses. An industry group claiming to represent consumers—and accused of using fraudulent tactics before regulatory agencies—advised Seitz’s staff on how to water down the definition of alternative energy. And industry sources donated to the campaigns of state politicians, like Seitz, who’ve kept the repeal-and-replace bills coming, even after Republican Gov. John Kasich vetoed a similar effort.

This network includes Americans for Prosperity, a foundation funded by the energy magnates Charles and David H. Koch; the Heritage Foundation, a Washington-based advocacy group known for its criticism of climate change science; and the American Legislative Exchange Council (ALEC), another conservative nonprofit in Washington with Koch ties that frequently spoon-feeds draft legislation to state politicians.

Seitz is on ALEC’s national board of directors, but he bristles at the suggestion that he relies on the council for guidance. “ALEC doesn’t drive me,” he told InsideClimate News. “If anything I drive ALEC.” Either way, in 2012, ALEC adopted an “Electricity Freedom Act” that reads like a declaration of war against the kind of energy rules on the books in Ohio and calls for the effort to reject them that Seitz leads.

The Rise of Clean Energy Scare Studies

Once a major coal producer, Ohio has a lesser-known history with fuel-free electricity. In the winter of 1887-88, Charles F. Brush constructed the world’s first electricity-generating wind turbine on a 60-foot iron mast behind his Cleveland mansion. Brush held more than 50 patents, and his company joined with several others to form General Electric. In 1984, physicist Harold McMaster first demonstrated in his Toledo basement the potential for thin, non-silicon-based films to capture the sun’s energy. Glasstech, now called First Solar, has led the conversion of Toledo into a solar manufacturing hub. The University of Toledo trains engineers for the many photovoltaic companies in the region, and, in 2007, it added the Wright Center for Photovoltaics Innovation and Commercialization to transfer what’s in its labs to nearby factories.

“Ohio has a legitimate claim to being a leader in renewable energy, which is what makes the effort to stymie renewables here all the more ironic,” said Bill Spratley, former executive director of Green Energy Ohio, an advocacy organization in Columbus. He said if the Seitz bill became law, “we might end up supplying everyone else with these wonderful technologies while we don’t get to benefit from them ourselves.”

Spratley testified against Seitz’s bill. He noted that there are roughly 80 companies making parts for wind power systems in Ohio and scores of engineers and sales representatives installing solar, “and those jobs aren’t going anywhere,” he said. “Those are local jobs.”

Ten years ago, more Ohio politicians embraced Spratley’s message. In 2007-08, as the “Energy, Jobs and Progress” plan made its way toward law, energy demand was strong, prices were expected to remain high, and awareness of coal’s contribution to climate change had peaked. The law committed Ohio to cutting energy consumption by 22 percent by 2025 and diversifying sources so that 12.5 percent of its electricity would come from alternative energy sources—geothermal, biomass, wind, solar.

Demand and prices fell with the recession and the shale gas boom, but the promise of more jobs and less global warming continued to resonate. Or it did until studies started showing up that warned that the law would do more harm than good.

In 2011, the former American Tradition Institute, now the Energy and Environment Legal Institute, commissioned an analysis of the economic impacts of Ohio’s energy standards. Based in Washington, the EELI receives funding from Peabody Energy and Arch Coal, the two largest suppliers of coal in the United States. The Beacon Hill Institute, then an affiliate of Boston’s Suffolk University and a frequent publisher of papers critical of climate-related policies, undertook the study.

In its report, Beacon Hill forecast that the Ohio energy standards would result in the loss of 9,750 jobs, wipe out $1.1 billion in disposable income every year, and force Ohioans to pay $8.6 billion more for electricity in 2025. The authors, among them BHI’s executive director, David G. Tuerck, reached this conclusion based on an economic model that ignored the rapidly declining cost of electricity generated by wind and solar. Beacon Hill later lost its Suffolk University affiliation because, a university spokesman told The Boston Globe, its research lacked rigor and tended to reach conclusions sought by its underwriters.

On April 13, 2011, ALEC sent the Beacon report to all its members in the Ohio legislature, warning that the energy rules were “a blueprint for economic misery.”

Citing the study, state Sen. Kris Jordan introduced a bill five months later to repeal the alternative energy standards. The measure didn’t make it out of committee, but Jordan, Seitz and others kept at it, until, in 2014, they managed to secure a two-year freeze on meeting the annual benchmarks established under the 2008 law.

More scare studies followed. In 2015, the Institute of Political Economy at Utah State University published a paper suggesting Ohio’s energy rules would kill off 29,000 jobs. Last spring, the Buckeye Institute, a free-market think tank across the street from the Ohio Statehouse in Columbus, modeled four economic scenarios; the rosiest estimated that the renewable and energy efficiency standards would cost Ohio 6,800 jobs and $806 million in GDP by 2026.

“Those studies are completely bogus,” said Terrence O’Donnell, a lawyer representing renewable energy developers at Dickinson Wright, a Columbus law practice. “The Utah one is the most ridiculous, because it blames everything that happened to the economy during the recession on the renewable portfolio standards. It’s laughable. There’s not one policy maker I know of who still refers to it.” The Buckeye Institute, he added, assesses “a fictitious Ohio law, not the one on the books.” For example, the Buckeye economists assume “that the cost containment provisions in the law simply won’t kick in if prices for renewable energy rise. But they don’t say why.” And the price of solar electricity hasn’t just fallen a little bit; it’s less than half of what it was three years ago.

Several other studies have concluded that Ohio’s energy rules have, on the contrary, created jobs and improved the economy. One, published by Ohio State University’s Center for Resilience, found that in 2012 alone, the law stimulated a modest .04 percent, or $160 million, in GDP growth statewide. According to the Ohio Environmental Council (OEC), the state added more than 2,300 renewable energy projects and 25,000 clean energy jobs since 2009. Not minus 29,000 jobs, but plus 25,000 jobs, and not based on a model, but on payroll and labor statistics.

Trish Demeter, the OEC’s managing director of energy, said the 2008 law benefits the state in another way. Its energy efficiency provisions are saving money. For every dollar invested in efficiency, she said, “Ohio ratepayers are saving between $1.10 and $4.20 on their utility bills, depending on what kind of consumer they are.” She said this data came from actual receipts, not models, and had been reviewed by the Ohio Consumers Council and the American Council for an Energy-Efficient Economy (ACEEE).

So whose numbers are right? On behalf of Gov. Kasich’s office, Matt Cox, a Ph.D. from MIT and founder of Greenlink, a consulting practice in Atlanta, modeled three scenarios to try to determine if Ohio’s energy rules were too aggressive. Overall, Cox found that the rules generated more jobs, more GDP and, in time, lowered electrical bills.

Seitz told InsideClimate News that Cox ought not to have factored public health impacts of air pollution into his study. Cox responded, “How can you do a cost-benefit analysis and not factor in a cost that is borne, not by the utility, but by everyone else?”

Dave Anderson is policy and communications manager for the Energy & Policy Institute, a watchdog group headquartered in San Francisco. He and his team note that all three of the organizations behind the Ohio scare studies—Beacon Hill, Utah State and Buckeye—have received donations from the Koch brothers or their affiliates. For example, the Buckeye Institute receives funding from the Koch-backed Donors Capital Fund and Claude R. Lambe Charitable Foundations, as well as directly from the Charles G. Koch Charitable Foundation.

Passionate Opposition to Wind Power

The bill that froze Ohio’s energy rules in 2014 also created an Energy Mandates Study Committee to determine whose numbers were best and what to do next.

To staff the committee, Seitz turned to Sam Randazzo, general counsel for a consortium of electricity purchasers large and small called the Industrial Energy Users of Ohio. Randazzo has been deeply involved in shaping Ohio’s energy policy for five decades and, like Seitz, opposes the 2008 standards.

On Aug. 8, 2016, as the freeze neared expiration and the EMSC was due with its findings, Seitz wrote to 10 utility, gas and coal lobbyists, as well as Randazzo, that “we should be meeting as a small group to figure out what that report is going to say.” (The watchdog group EPI obtained this email through a public records request.)

The EMSC counted 12 elected officials, among them Seitz, as members. These 12 collectively received $830,000 in campaign contributions from utilities, oil and gas interests, and coal mining companies, according to an investigation by the National Institute on Money in State Politics. Contributions from electric utilities to Seitz more than tripled after he began trying to dismantle the state’s renewable energy standards.

Randazzo disputed any notion that the committee was stacked by the fossil fuel industry. “This was a legislatively appointed body with representation by both Republicans and Democrats,” he said. And, it was “absolutely open to all stakeholder positions.”

In an interview, Seitz was blunt about whose interests he was looking out for. “Coal is moribund and crowded out by natural gas. If there’s anyone I should have an affinity for it’s the natural gas guys. … The old saying is, you dance with who brung you to the dance. In Ohio, natural gas is who brung us to the dance.”

Seitz despises wind turbines, and his dedication to rolling back Ohio’s energy standards stems in part from his passionate opposition to wind power. In fact, the only reason he voted for the standards back in 2008, he said, was a promise by the Senate president that he could write the language on turbines. Over time, Seitz has been behind restrictions that have wiped out any large new projects. “There will be no wind farms!” he said, with satisfaction.

Turbines, Seitz said, take up too much room, don’t work when the wind doesn’t blow, and are not a good fit for his district, in the far corner of the state where it borders Indiana and Kentucky. His neighbors love spending time in their yards and don’t want any turbines wrecking their “view sheds,” or chopping up bats and birds, he said. And it doesn’t help matters that “it seems to be a cabal of urban millennials who love wind [power] and want to inflict the damage on rural landscapes—stick it out there in the country where all the bumpkins can’t do anything about it. That’s not very nice. So I’m not a big fan of wind.”

The final Energy Mandates Study Committee report was a gift to incumbent utilities and gas and coal interests. It recommended an indefinite extension of the freeze on renewable standards and more or less mirrored a bill Kasich vetoed on Dec. 22, 2016, saying the measure could undermine the state’s improved business climate and prevent businesses and homeowners from saving money by saving energy.

Undeterred by Kasich’s veto, HB 114, the bill that passed on March 30, contains much of the EMSC wishlist.

Seitz’s staff also received advice from the Consumer Energy Alliance on expanding the definition of what counts as an alternative form of energy. The CEA is comprised of few consumers, operates out of HBW Resources, a Washington-based lobbying firm, and is backed by major oil and gas companies, such as Chevron, ExxonMobil, Marathon, Shell and Norway’s Statoil. It’s a lobbying group that has been challenged before the Federal Energy Regulatory Commission for submitting public comment letters from individuals who later said in sworn statements that they never signed them. The CEA withdrew a petition in Wisconsin after a local reporter found that some people who signed it actually opposed the utility rate changes CEA was pushing.

Seitz laughed at the notion that he is the face of a well-funded industry campaign. “As I’ve made clear 20 times, I find mandates philosophically obnoxious,” he said. “Look, I’m an antitrust lawyer by background and training. Antitrust lawyers tend to favor competition and not be a big fan of monopolies, and tend to believe that government interference ought to be kept to a minimum.”

His bill is now in the state Senate, where it may face an uphill fight. John Fortney, spokesman for the Republican majority caucus and Senate President Larry Obhof, said any legislation will have to be a compromise acceptable to both houses and Kasich. Kasich’s office did not respond to repeated requests for an interview.

Andrew Kear, an assistant professor of political science and environment and sustainability at Bowling Green State University, said HB 114 can’t survive without substantial changes. He said any measure will have to recognize that renewable energy is an economic driver in parts of the state. “They have to get beyond the false dichotomy that it’s environment versus economy,” he said.