INDIANAPOLIS – On November 12, 2020, Indiana lawmakers will discuss the state’s shift from coal-generated electricity to new and emerging technologies ahead of the 2021 legislative session. This discussion will include a report from a team of Indiana University researchers led by the IU Public Policy Institute.
The report analyzes the impact the impending change will likely have four communities in Indiana. The study focused on the upcoming closures and partial closures of four coal-fired generating plants—Schahfer (Jasper County), Michigan City, Petersburg, and Rockport—set to begin in 2021.
Researchers at PPI, the Indiana Business Research Center, and the O’Neill School of Public and Environmental Affairs found that the anticipated benefits of the change could include improved health from cleaner air, new jobs in the clean energy field, and reduced greenhouse gas emissions. However, the closures also could reduce local tax revenues, bring potential unwanted uses of local land, and result in job losses in traditional fossil fuel-based industries. Those job losses could accelerate potential population changes in affected communities.
The report estimates that the four closures will directly result in the loss of up to 652 jobs, $77.5 million in employee compensation, and about $354 million in economic output. Additional ripple effects may cost 1,732 jobs, $98.4 million in employee compensation, and $184.7 million in economic output. By comparison, Indiana’s 2019 total economic output was $379.7 billion.
These closures will have a considerable local impact. The Schahfer plant alone is expected to lose 300 jobs, while the other plants may lose approximately 120 jobs each. The partial closure of the Petersburg plant is expected to have the greatest regional ripple effects on employment, costing 470 additional jobs due to its use of Indiana coal.
The analysis found that tight labor markets, openings in nearby communities, and new opportunities in wind and solar energy production could mitigate some job losses. However, current workers may have to relocate to find similar compensation for their skills. That potential population loss could exacerbate existing challenges in rural communities.
The tax losses from the closures at the Schahfer, Petersburg, and Rockport plants may have a profound impact on local governments given state restrictions on raising new or additional sources of local revenue. New wind and solar opportunities could help offset some of this tax revenue loss.
This analysis was prepared for the Indiana Utility Regulatory Commission following a legislative directive by the Indiana General Assembly. It is important to note this work was completed prior to the current recession brought on by the COVID-19 pandemic, which may affect findings in the report. If interested in accessing the full report, contact our team at iuppi@iu.edu.
