New Economy for a Warming (NEW) Region:Preliminary Report

Fall 2011

Don GoldsteinAllegheny College Department of Economics

dgoldste@allegheny.edu +814.332.3340

The NEW Region project is studying climate change scenarios, and the associated economic opportunities, for the northwest Pennsylvania area in the southern Great Lakes region. During the summer of 2011, a team of Allegheny student researchers – Chris Brennan, Tyler Danzey, Dan Eiben, Cory Rectenwald, and Thuc Vu – assisted in compiling this preliminary look at likely regional impacts at the industry sector level: agriculture, building, energy, manufacturing, and transportation.

Please do not cite or quote without permission. I am grateful to Allegheny College colleagues Rachel O’Brien (Geology) and Eric Pallant (Environmental Science) for comments and suggestions. Financial support from the Christian Allison and Jane France Endowment Fund, and the Andrew Wells Robertson Chair in Economics, is gratefully acknowledged. Full responsibility for the contents is my own.

NEW Region Page Preliminary Report: Fall 2011

Introduction

The climate is changing, and as it does it creates pressures and opportunities to adapt and to mitigate. For businesses in any geographical area, these pressures and opportunities will depend on the region-specific impacts of climate change, and northwestern PA – along with the southern Great Lakes region generally – is no exception. The extent to which the climate does continue to change, and our quality of life for any given amount of change, will depend partly on how proactively key stakeholders seek out the opportunities.

What economic opportunities are likely to be created by the impacts of climate change in our region through the rest of the 21st Century? Such opportunities could result from direct geophysical changes in our region – for example, it will likely be warmer on average, with more frequent extreme weather events and falling Great Lakes water levels. They could also arise from indirect, climate change-induced shifts – for example, changing energy prices,  relative water supplies across regions, or pricing policies on carbon emissions.

Presque Isle, a migratory, sandy peninsula off Erie, PA.

This preliminary report focuses on the agriculture, built environment, energy, manufacturing, and transportation sectors. For each, we have attempted to compile background analysis to facilitate further exploration of the following questions:

Will the direct or indirect regional impacts of climate change create new needs or markets that companies in the sector might address?

Can existing corporate resources – technologies, skills, capabilities – be leveraged or extended in markets that are likely to be important as the climate changes?

What roles might key stakeholders play in the outcomes of companies’ strategies, positive or negative?

How will companies’ prospects for success be affected by the uncertain future directions of public policy, national and global markets, and the strategic choices made by firms in other industry sectors?

The following sections look first at climate projections for this region throughout the 21st Century; then at climate-related systemic factors that may act as parameters of what is possible in this region; and finally at each of the five industry sectors in turn.

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Regional Climate Projections (By the team)

Key Findings

Next few decades (2011-2030)

Temperature: For the next two decades, the average temperature is projected to rise by 2.5 °F across Pennsylvania under both the A1Fi and B1 scenario. Much of Pennsylvania can expect substantially more days over 90°F--doubling in most cases across the state. Warming tends to reduce land and ocean uptake of atmospheric carbon dioxide thus increasing the fraction of anthropogenic emissions that remains in the atmosphere. This could accelerate the rate at which temperatures rise in the future. Differences between the two scenarios appear by mid-century (2040-2069)with temperatures rising by 4 °F under the lower emissions scenario and 5.5 degrees Fahrenheit under the higher emissions scenario. At this time, parts of southwestern and southeastern Pennsylvania could experience more than 50 days a year over 90°F.

Snow Cover: Due to the rise in temperature, the number of days of snow cover in western Pennsylvania is projected to be halved in the next several decades under each emission scenario (UCS 10).

Precipitation: Over the next several decades and into mid-century, spring and fall precipitation is expected to increase state-wide by 5% above the historical average under either emissions scenario (UCS 11).

Water Levels: Projections for the Great Lakes predict an increase in lake temperatures and a drop in the water levels. Lake Superior ‘s water level has dropped 10mm per year since 1978 and dropped 34 cm from 2006-2007 (Marshall 8). A .5m to 2.5m drop is expected to occur by the time CO2 levels double(Marshall 9). Drops of .7-2.4 ft (.21-.73m) are predicted by 2030 (GLRA 31).

Late Century (2070-2099)

Temperature: Winter temperatures are projected to rise by 8 °F and summer temperatures by 11 °F under the higher emissions scenario, and rise by about half as much under the lower emissions scenario. It is projected that much of the southern half of the state will endure more than 70 days a year with temperatures higher than 90 °F (UCS 9-10). Even if all emissions were to cease this year, the temperatures would still continue to rise for several centuries.

Snow Cover: Pennsylvania’s characteristic snow season is expected to have virtually disappeared under each scenario (UCS 10-11). Lake Effect snow is predicted to decrease due to a fall in the number of days with conditions that cause such storms. The change was almost entirely due to the decline in days below 0 degrees Celsius, so it is likely that lake effect snow could be replaced by lake effect rain (Kunkel)

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Precipitation: Precipitation is expected to increase by as much as 12% with little changes in summer precipitation. This could lead to increased flooding, but also enhance the water supply (UCS 11). However, other models suggest different precipitation outcomes. By 2090 the CGCM1 scenario shows near-drought conditions across the northwestern portion of the Great Lakes region (i.e. Minnesota) and increases of 20-40% everywhere else including northwestern Pennsylvania whereas the HadCM2 scenario shows general precipitation increases of 25% in the Great Lakes region with near flood conditions (increase of 70%) over lower northern Michigan (GLRA 19).

Droughts: Although droughts are not projected to plague Pennsylvania in the early part of the century, the rising temperatures coupled with little change in summer rainfall are projected to increase the frequency of short term droughts by late century. This could offset the positive effects of increased precipitation in the fall and spring (UCS 11). For the Great Lakes region, summer precipitation is projected to increase by 15-20% despite near-drought conditions in the northwestern portion of the Great lakes region(GLRA). This suggests that Northwestern Pennsylvania could experience an increase in summer precipitation while other parts of Pennsylvania might experience a decrease in summer precipitation causing the UCS models to predict little changes in Pennsylvania’s summer precipitation.

Water Levels: Climate models project drops of .25 meters in low emission scenarios, and drops of .28 meters and .41 meters in medium and high emission scenarios, respectively [add foot conversions]. The high degree of uncertainty makes the possible ranges for these drops rather wide(Angel). These changes could result in 25%-33% reduction of base flows in the connecting channels (GLRA 31).

Forests: Projections show that Pennsylvania’s habitat suitability for signature species such as black cherry, sugar maple, and American beech will decrease dramatically by the end of the century. Under the higher emissions scenario, the species are projected to move as much as 500 miles north, and under the lower emissions scenario, the species are projected to move as much as 350 miles north. This will affect several other species in northwestern Pennsylvania; for example, as many as half of Pennsylvania’s 120 bird species could see a 25% reduction in their suitable habitat (UCS 29-31).

Resources and Methods:

Many of these results come from the 2008 Union of Concerned Scientists report, which builds on the analyses conducted under the Northeast Climate Impacts Assessment. The UCS report is a collaborative research effort involving more than fifty independent experts that investigates two possible emissions scenarios developed by the Intergovernmental Panel on Climate Change (UCS 1). The higher emissions scenario, the A1fi, represents a world with fossil fuel- intensive economic growth in which atmospheric CO2 concentrations reach 940 ppm by 2100—more than triple pre-industrial levels. The lower emissions scenario, the B1, assumes a relatively rapid shift to less fossil fuel intensive industries and more resource-efficient technologies. This causes CO2 emissions to peak around mid century, then decline to less than our present-day emissions rates by the end of century where atmospheric CO2 reach 550 ppm—about double pre-industrial levels. The UCS researchers used the IPCC’s higher and lower emissions scenarios as input into

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three global climate models, each representing different climate sensitivities. The three climate models used to generate the projections in the UCS report were the U.S National Oceanic and Atmospheric Administration’s Geophysical Fluid Dynamics Laboratory (GFDL) CM2.1 model, the United Kingdom Meteorological Offices’s Hadley Centre Climate model version 3 (HadCM3), and the National Center for Atmospheric Research’s Parallel Climate model (PCM) (UCS 7).

The Great Lake Regional Assessment (GLRA) is part of the National US Global Change Research Program. The GLRA reports finding from a team of more than thirty scientists from the region, assessing regional impacts of climate change. The findings are based on the use of two general circulation models; they used the Canadian Climate Center Model and the United Kingdom Hadley Center Model. The GLRA also describes recent trends in weather and the current climate conditions of the area.

“Assessments of Potential Effects of Climate Change on heavy Lake-Effect Snowstorms near Lake Erie” by Kenneth E Kunkel, Nancy E Westcott and David A.R. Kristovich also provided some insight on snow cover and precipitation in the area. The article applied the HadCM2 and CGCM1 model projections to daily predictors of lake effect snow to predict what future levels of lake effect storms could look like.

Four articles were used as resources to examine the effects of Climate change on Great Lake water levels. Earth’s “Climate Change could Leave Great Lakes not so Great” and Discovery News’ “Great Lakes Could Drain from Climate Change”, reference John King from University of Rhode Island and Steve Colman from Minnesota Duluth, using evidence of past drops in water levels to project future declines if similar climate conditions occur. “More than Just a Drop in the Lake” from New Scientist is by Jessica Marshall and references Jay Austin from Minnesota-Duluth and Cynthia Sellinger from the National Oceanic Atmospheric Administration; this article used observations of recent declines in the water levels and temperature of Lake Superior to project continued water level declines throughout the Great Lakes. The fourth was the abstract of an article from the Journal of Great Lakes Research titled “Response of Great Lake Water Levels to Future Climate Scenarios with an emphasis on Lake Michigan-Huron,” by James Angel and Kenneth Kunkel; it utilized the Canadian and Hadley Climate models that were also used in the UCS report.

Works Cited – Regional Climate Projections

Angel, James R., and Kenneth E. Kunkel. "Response of Great Lake Water Levels to Climate Change with Emphasis on Lake Michigan Huron." Journal of Great Lakes Research 36.2 (2010): 51-58.ScienceDirect. ElSevier, 21 Oct. 2009. Web. June 2011. <http://www.sciencedirect.com/science/article/pii/S0380133009001853>.

GLRA. Great Lakes Regional Assesment. Rep. USEPA, Oct. 2000. Web. June-July 2011. <http://www.geo.msu.edu/glra/PDF_files/GLRA_report.pdf>.

Johnson, Brian Fischer. "Climate Change Could Leave Great Lakes Not so Great." Earth April (2009): 15. Print.

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Kunkel, Kennet E., Nancy E. Westcott, and David A.R. Kristovich. "Assessment of Potential Effects of Climate Change on Heavy Lake-Effect Snowstorms Near Lake Erie."Journal of Great Lakes Research 28.4 (2002): 521-36. Print.

Marshall, Jessica. "More than Just a Drop in the Lake." The New Scientist 194.2606 (2007): 8-9. ScienceDirect. ElSevier, 4 June 2007. Web. June 2011. <http://www.sciencedirect.com/science/article/pii/S0262407907613396>.

Sohn, Emily. "Climate Change Could Drain Great Lakes: Discovery News." Discovery Channel : Science, History, Space, Tech, Sharks, News. Discovery News, 29 Jan. 2009. Web. 30 June 2011. <http://dsc.discovery.com/news/2009/01/29/great-lakes-warming.html>.

Union of Concerned Scientists. Climate Change in PA. Rep. Union of Concerned Scientists, Oct. 2008. Web. June 2011. <http://www.ucsusa.org/assets/documents/global_warming/Climate-Change-in-Pennsylvania_Impacts-and-Solutions.pdf>.

Systemic Parameters Affecting All Industry Sectors

We wanted to identify key climate-related factors from outside of our region which may influence how our regional industries progress in the coming decades. Our region exists within a broader system, and what happens in that system can have a direct effect on the region within. In order to account for these effects, our team identified four key system parameters. (Further details are addressed in the relevant sections to follow.)

First, we explored the possibility of the United States instituting some sort of carbon policy. Though current political interests make this seem unlikely in the short-term, other non-US entities (state and multi-state within the US, and country and multi-country outside the US) have adopted and will continue to adopt policies, such as carbon taxes, cap and trade systems, and joint implementation schemas. Though it is expected that in general these initiatives will not affect this region greatly in the short to medium run, effects on energy intensive industries could be much more locally pronounced.

Second, we looked into the role of policies for renewable energy. These types of policies are already strongly established in both Pennsylvania and the United States, and thus are already improving the viability of RE power generation and its associated components and technology. These policies are longer-term and, in general, under no immediate threat; specific policies like production tax credits, however, face uncertain short term prospects.

Third, we investigated the dominance of fossil fuels in our political and economic landscapes. Simple predictions suggesting steady, substantial peak oil-related price hikes have been largely discredited. As we seek to uncover new ways to reach new reserves, new technological innovations will emerge. In particular, the lower carbon shale gases will play a huge role in the future of fossil fuels, particularly in Pennsylvania, and hence shape the likely trajectories for alternative energy technologies.

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Finally, we discovered that this region is losing younger, working-age population to the Sunbelt region. However, as climate change exacerbates water supply shortages there, that region will struggle to compete with the water-rich Great Lakes region. Thus, there is considerable potential to reverse the population and industry movement trends, but this possibility is very uncertain.

How these systemic parameters will affect developments at the industry level will vary by sector, and will be incorporated into the specific analyses that follow.

The Agricultural Sector (by Cory Rectenwald)

Direct effects

The summer’s phase of research on the direct effects of regional climate change phenomena on the agriculture sector led to three general characteristics: potentially significant, wide-ranging, and difficult to predict with certainty. Moreover, the fact that essential agricultural inputs – water, sunlight, carbon dioxide, etc. – are provided by the environment and thus subject to variations due to climate and weather, the direct implications of changes in that environment, obviously, have potential to be vast. Simply, the climate projections for the future do not exist today, so distilling the most salient effects on agricultural production is not straightforward.

The most recent and authoritative research papers on the topic of climate change’s effects on U.S. agriculture – for which econometric modeling methods are used – seem to point to a conclusion that the productivity of the most popular U.S. crops will increase. This conclusion, according to the models, creates a positive direct impact on agriculture from climate change. Deshnes and Greenstone (2006) point to Pennsylvania as the biggest beneficiary with an overall increase in state agricultural profits of $570 million (p. 27). Another paper by Reilly, et al. (2003) also asserts that longer growing seasons from warming temperatures will increase the productivity of major crops (p. 56). UCS also notes that many moderate climate change projections indicate potential for grains like corn and soybeans to experience large yield growth (2008, p. 21). Both of the econometric papers will be referenced later for other aspects of their models, but it is worth noting the research context in which they both were written. Both Deschnes and Greenstone (pp. 3 –5) and Reilly et al. (p. 66) write that most of the previous research on the question of climate change’s effects on U.S. agriculture concludes that crops will suffer as a result of warming and weather. Further, both papers assert that the prevailing statistical modeling approaches used have been flawed in several ways, and more accurate methods can be used. The differences in outcomes of these various simulation-based agriculture production models speak to the uncertainties involved with predicting direct climate change effects.

Along with warmer temperatures, changes in the frequency of weeds, pests and fungi present in different crop types will likely occur. According to Palikhe (2007, pp. 86, 87), warmer

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temperatures create the conditions for greater pest growth through longer growing seasons, which allow more insect reproductive cycles. Palikhe predicts similar types of increases for weeds – and invasive species in general – and goes on to note that higher use of pesticides is a likely secondary result (p. 87). He writes, “In plant communities, high levels of carbon dioxide stimulate the growth of invasive plant species more than native species.” These higher carbon dioxide levels, in turn may reduce the effectiveness of herbicides at controlling weeds (p. 87). The use of agricultural chemicals – pesticides, herbicides, fungicides and fertilizers – will be examined in particular in this report, as the topic appeared in several different climate change studies. For example, Reilly et al. model predictions for the change in pesticide expenditure for various crops as a result of changing weather patterns. Their results suggest that corn will require the highest increase in pesticide expenditure, increases ranging from 10 – 20 percent (p. 61). Although this prediction is not modeled as with respect to increased pests and weeds, it indeed further potentiates a scenario in which direct climate effects create conditions that require more chemical use to maintain crop yields.

The most significant changes in agriculture resulting directly from climate change are perhaps not all region-specific, but there do exist likely effects on agricultural products vital and unique to northwest PA. One of the sector’s most vital industries – dairy – faces consequences of warming temperatures. The heat stress on cows will likely negatively affect their ability to produce milk and birth calves (UCS, p. 22). The extent to which milk production will decline in the region is modeled by researchers but uncertain. According to Klinedinst et al., the Midwest and northeastern U.S. may experience declines less than that of the southern U.S., but the implications economically of the declines around our region will be greater (1993, p. 35). Moreover, the south is used to declined milk production during hot summers, while the northern states – which are the dairy powerhouses of the country – do not have the experience with these whether conditions or the mechanisms to cope with the declined production (p. 35). According to UCS, the region could suffer declines of greater than 10 percent under high emissions scenarios, (p. 22).

A crop unique to the region within PA is American grapes, grown along the lake in Erie county (see Agriculture Inventory report, p. 2). The direct effects from climate change will certainly have some effect on this growing industry. The UCS suggests that longer, warmer summers may reduce the likelihood of the grape harvest being lost to frost, a phenomenon that has hurt growers in Erie in the past decade (p. 23).

In short, climate change will directly modify agricultural practices on a local level, and the details and implications of these direct modifications are uncertain. The following sections will draw more linkages between these direct effects and some of the system parameters we researched.

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Indirect effects (system parameters)

The system parameters that we found as relevant to the effects of climate change will have substantial effects on the tools and methods used in the region’s agricultural production. The ones that I focused on during this summer’s research deal primarily with the intersection of fossil fuel prices, emissions and runoff policies, and use of fertilizer on highly commoditized crops like corn.

As mentioned, the direct effects of climate change – through increases in pests and/or changes in weather patterns and season duration – will likely lead to increases in the use of agriculture chemicals. One consequence of this could be higher input costs for farmers. As synthesized in the Inventory Report, costs of operation have steadily increased for farmers over the past two decades (p. 1). Updated machinery, seeds and chemicals contribute to this, and as the composition and frequency of pests and weeds change with the climate, new chemicals will likely become necessary and add to the cost burden. Another consequence of increased fertilizers and pesticides is the worsening of the long-existing problem of hypoxic zones (“dead zones”) at the bottom of Lake Erie (Erikson, 2011). Combining increases in agricultural chemicals with the projections for increased runoff as a consequence of regional climate change, the problem of hypoxic zones will worsen. Reilly et al. modeled projected increases in nitrogen runoff into the Chesapeake Bay resulting from increases in nitrogen-based chemicals used in agricultural production (pp. 61—63). They found that climate change will result in nitrogen load increases ranging from 17 to 30 percent of the bay’s current loads (p. 61). They also concluded that corn production is the largest contributor to the runoff problems.

The above phenomena lead into two specific system parameters that will shape future agricultural tools and methods: fossil fuel prices and carbon/nitrogen emissions policy. Firstly, petroleum is certainly a fundamental input to all sectors of the economy, agriculture included; but, it is specifically used to create many agricultural chemicals. Thus, upward movement of chemical costs will follow an upward trend in fossil fuel prices. Likewise, farm machinery, which is powered by petroleum, will become more costly to operate, and production costs will continue to increase. Secondly, the current efforts to eliminate hypoxic zones from Lake Erie (Erickson, 2011) will run face-to-face with the growing chemical runoff problem. As legislators begin to pass emissions policies in the future, the problem of nitrogen runoff from agricultural production could be addressed as well. This would further deincentivize the use of chemicals in production.

Because corn is such a large contributor to the runoff problem, it is important to consider projections for the future of the cash crop in the U.S. According to the Inventory Report, the demand for and production of corn surged early after the turn of the millennium. A large part of this demand was from the production of ethanol as a domestic fuel source. After researching this phenomenon, it has become apparent that the corn ethanol frenzy may die down over the next decade. To explain, state and federal legislators are beginning to become disillusioned from the

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efficiency of corn ethanol as a fuel source. Evidence of this can be found in the closing of Pennsylvania’s first and largest ethanol production plant in Clearfield. Thus, it is conceivable that play a smaller, albeit still large, role in the agricultural product mix of the region.

Opportunities

With the researched salient direct and indirect factors in view, the opportunities for agriculture in the region are not obvious; however, the research hints to some opportunities and points to some possible future directions. What seems clear is that if a longer growing season does indeed create better conditions for farming, then opportunities for higher yields – particularly in grains – will occur. This opportunity, however, is not specific to the region but rather may be spread across the Great Lakes region and/or Northeast U.S.

Another opportunity lies in sustainable agriculture and organic farming. Considering the projections for fossil fuel costs, pesticide and fertilizer costs and usage, and other barriers to large-scale farming, chemical-free agriculture may pick up in the region. Upon visiting Vine’s Farm and talking with Rebecca, however, the barriers to the sustainable model’s proliferation became clearer than the opportunities. Specifically, distribution channels are not intact such that organically grown produce can reach the markets where the highest demand is located. The sustainable model is clearly able to forgo many of the costs that modern farmers are finding as significant barriers, but other costs such as labor for weeding and uneconomical distribution are holding it back from profitability. What was also clear was that organic farms like Vines have a tendency away from expansion and lowering average cost and toward perfecting the cyclical system of zero waste and high varieties of crop. Thus, perhaps the profitable sustainable model is one with a more deliberate profit structure. This area of research is indeed ripe for further exploration; however, it does not seem to be for a project specific to Northwest PA but rather scoping several regions of the country in sight of the most profitable sustainable models.

There are future areas of research that could improve and further investigate many of the findings this summer. One would be an investigation into other alternative, low chemical agricultural methods that could be used for the region. In addition, a more scientific biological study of the pests, weeds and fungi present in the region’s crops would give significant authority to any further predictions of pesticide use due to climate change. One system parameter that was not researched enough was future water availability in the region and how it will positively or negatively affect agriculture. Our region could perhaps be uniquely well positioned to produce food if the high emissions scenarios play out and regions of the western U.S. go to where the water is. Many other questions have come out of this initial phase of research that could be explored in the context of U.S. agriculture in general, but some of the region’s own unique products – like grapes and dairy – could also be researched further for significant opportunities.

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Works Cited – The Agricultural Sector

Deschenes, Olivier and Greenstone, Michael. (Jan. 2006). The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather. Climate Change Modelling and Policy.

Erickson, Jim (13 July 2011). Great big trouble for the Great Lakes. Michigan Today. http://michigantoday.umich.edu/2011/07/story.php?id=8027&tr=y&auid=8648147.

Klinedinst et al. (Jan. 1993). The potential effects of climate change on summer season dairy cow milk production and reproduction. Climatic Change.

Palikhe, Bhakta R. (2007). Relationship between pesticide use and climate change for crops. Journal of Agriculture and Environment. Vol. 8, pp. 83—91. http://www.nepjol.info/index.php/AEJ/article/view/731.

Rectenwald, Cory (July 2011). Inventory Report: Agriculture.

Reilly, J. et al. (2003). U.S. Agriculture and Climate Change: New Results. Climatic Change. Vol. 57, pp. 43—69. http://ddr.nal.usda.gov/bitstream/10113/47519/1/IND44484561.pdf.

Union of Concerned Scientists. (Oct. 2008). Climate Change in PA. Rep. Union of Concerned Scientists, Web. <http://www.ucsusa.org/assets/documents/global_warming/Climate-Change-in-Pennsylvania_Impacts-and-Solutions.pdf.

The Built Environment Sector (by Thuc Vu)

According to the World Business Council for Sustainable Development, energy consumption in building is 40% of all energy used (10). In addition, there are three projected scenarios in the building industry. The first scenario is “Sleep Walking” in which the current trend of energy consumption continues without any attempts to reduce energy consumption. The “Too Little Too late” envisions that there are very few low-energy buildings and there are more talks than actions. As a result, this scenario is not much better than the first one. The most optimistic scenario is “Transformation” in which high energy prices force consumers to purchase “green” products. In addition, government puts more strict regulations and encourages new technological innovations (13-14).

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Direct Impact: Climate Change

Apparently, the hot weather and more precipitation will affect the building industry. The sector that will be affected the most is the stormwater system management. From a report created by Pennsylvania State University on its website, our Northwestern region had around 240 floods from 1950-200 or an average of 4.8 floods annually. According to Steven Halmi, an engineer of Deiss & Halmi Engineering company, if we did not update the current storm water system management, more areas will be affected by floods (Vu’s Interview). Unfortunately, I could not find any article to prove that how climate change directly affect the choice of consumers. However, as the experts said, consumers and businesses seem not to take climate change as a factor on how they should build their houses/buildings. For this section, I will summarize the main ideas from the experts:

+ Brian Gillette (AC Physical Plant):

He thinks that company cares mostly about the profit. Only when requested by customers, the companies will install green products. Therefore, he thinks that educating the customers and companies about the advantages of green building is important (Vu’s Report)

+ Steven Halmi (Deiss&Halmi Engineering):

He does not see how climate change will affect how consumers want to build their houses. However, he believes that climate change directly affect the stormwater system management. It is crucial for the local government to update new information annually and to improve the sewage system. On the other hand, he suggests us to consider the effect of climate change on tourism. (Vu’s Report)

+ Kathleen Greely (Performance System Development):

She seems pessimistic that political party will have any significant actions to enforce effective regulations in the future because of each party interest. In addition, she notes that consumers and businesses do not see the advantages of green buildings in the long term. Rather, they only want to see the short or intermediate benefit. She also suggests that we should send companies a list of questions about building industry and ask them to fill out. (Vu’s Report)

Indirect Impact: System Parameters

+ Water and Population:

According to Brett Walton, the author of The Price of Water: A Comparison of Water Rates Usage in 30 U.S. Cities, the price water in dry regions is relatively cheaper compared to wet region because of the government subsidy programs and regulations (Website). Moreover, our region is losing younger workers to Sunbelt states. For dry regions, this is not sustainable in the

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long run. However, the potential to reverse this trend is the potential water supply in the Great Lakes regions.

+ Government Subsidy and Regulation

PA Energy Act 129 tries to reduce electricity consumption by 1% by 2011 and 3% by 2013. Furthermore, there is federal tax credit for energy efficiency which encourages consumers to purchase energy-efficiency products or to install renewable energy in their house.

+ Renewable Energy:

Public opinion will play an important role on using alternative energy. Although it is very expensive to install renewable energy system, hopefully in the future, there will be new technological innovations. In addition, many experts say that our region has strong wind so maybe wind power?

The Significance of Stormwater Management System:

From its report Pennsylvania Stormwater Best Management Practices Manual, the Pennsylvania Department of Environmental Protection (PDEP) gives an overview about the impact of stormwater in PA. The department emphasizes that it not only creates flood, but also brings waste on the surface. Furthermore, it directly impacts on the quality of agricultural soil (1-2). Stormwater runoff causes degraded water quality by pollutants. Lastly, rain is supposed to replenish the groundwater, but stormwater runoff washes away the water supply from the rain (3). Overall, poorly designed stormwater management system is likely to cause flooding, water quality degradation, stream channel erosion, reduced groundwater recharge, and loss of aquatic species.

From 1971-1990, the annual average precipitation of Pennsylvania ranges from 37 inches to more than 45 inches (PDEP 6). More related to our region, the annual precipitation of Erie is 42.77 inches, the second city that has the most precipitation volume. Worse, from our climate projection, there will be more precipitation in the future in our Northwest region. Therefore, flood will be a critical problem for our region and economy. With the current system, it is possible that small storm can create flood in PA. Indeed, Steven Halmi also agreed that it is necessary to update the stormwater system and the measurement of water flow in river annually rather than a 50-years report.

Although stormwater management system plays an important role in our region, there are not many opportunities that businesses can do. In another words, nobody, except for government, would hire companies to fix, repair, or make products directly related to stormwater system. Therefore, the PA government is the most important key player in this issue. Unfortunately, the scorecard for PA Stormwater System is a disappointing D. In my opinion, a suggestion for improvement in PA is to update the information on the climate change and its impact on water flow on rivers, to upgrade the current stormwater system, to imitate states that are rated A on stormwater system, to limit the population to immigrate to the region, and to raise awareness of climate change and its impacts.

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Jobs & Income

Assume that our climate projection comes true and the economy is normal, there will be more jobs needed to upgrade the current stormwater management system. Another factor that affects the number of employment is the population. If there will be more people living in PA in the future, more workers will be needed to build new houses. However, our region is losing young workers to Sunbelt states, the worker supply will decrease which possibly will increase the income of building workers.

Appendix A

Elements of an Efficient House

An efficient house is designed to reduce heat loss and to reduce water consumption. As the weather will get hotter in the future, the materials/methods are important in reserving the level of energy and water.

According to National Renewable Energy Laboratory’s (NREL) report, an energy-efficient house has these basic elements: “a well-constructed and tightly sealed thermal envelope; controlled ventilation; properly sized, high-efficiency heating and cooling systems; and energy-efficient doors, windows, and appliances.” (1)

+ Insulation: The higher the insulation rate of wall, ceiling, and floor, the less heat will be loss. This will keep the house warmer during winter time in our region without using much energy.

+ Air Ventilation: Depend on locations. (3)

+ Window: The window is responsible for 25% of the heat loss (NREL 3). Low-Emittance Window or EnergyStar window is recommended. (4)

+ Ventilation: Air leakage (in hot or cold weather) allows air from outside to go inside and thus we will see more energy use. (4)+ Heating and Cooling system: If all the standards above are met, only small cooling/heating systems are needed because the cool air will be in the house for a long time. (5)

+ Energy-Efficient Appliances: Consumers should buy Energy Star products like clothes washers, dish washers, air conditioners because these appliances will save consumers a lot of energy and reduce the CO2 emission. (6)

+ Advantage: Energy efficient users not only reduce cost and save the environment but also feel more comfortable with stable temperature and less humidity from the outside. (6)

+ Disadvantage: It is more expensive to buy these products and more time to build. Plus it demands skilled workers and companies familiar with this.

Appendix B

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Home Appliances

Although climate change somewhat impacts on what type of home appliances that consumers will purchase, I will argue that home appliance is one of the main factors that lead to climate change.

+ Air Conditioner

Let take a look at the heat wave on July, 2011. When the weather was hot, I saw the demand for air conditioners (ACs) rising. Many Allegheny summer students bought an AC for their room which turns out that more hot air is released into the atmosphere. As this cycle repeats itself, I can see that if businesses can innovate a new low-energy-consumed-

+ Toilet

Before 1994, a flush contained 3.4 gallons (13 liters). Since 1994, the Energy Act 1994 mandates that every flush only allowed 1.6 gallon (6 liters). In addition, High Efficiency Toilet only needs 1.3 gallons (4.8 liters).

The most effective toilet probably is the dual toilet that Australian government has promoted for its citizens. For it flush, it consumes 4.5 /3 L (1.2/0.85 gallons).

+ Clothes Washer

There are two types of washers: top-washers and front washers. It is very common to see top-washers in US and front-washers in Europe. Economically, it is recommended to purchase front-washers because of its long-term advantages. Kris Jensen-Van Heste, the author of Top-Loading vs Front-Loading Washers - Which is Better? and Reliable Appliance Repair Crew company, they explain the advantages of disadvantages of front-washers:

Advantages:

Energy Efficiency: faster spin mechanism (1000rpm vs 650 rpm). Less water-> less time to dry-> less energy.

Water reduce (1/3 of top-machine), more room (no agitator)-> fewer loads-> save water and energy

Clothing life will be longer. Less noise

Disadvantages: Much more expensive than top-washer ($800-$2000) People with back problem More expensive to maintain

+ Floor

Consumers choose floor material based on these criteria: location, comfort, and endurance (economic value).

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We assume that owners can afford these three types of floor: carpet, tile/stone, and wood. Each of which is used in different location. For example, tile/stone is used for bathroom floor since water will make carpet wet and wood destroyed. The disadvantage is that during the winter, title floor will make the house colder which the owner might need to increase the heat. In our region NW PA, we should use wood floor for locations that away from water such as living room or dining room. Carpet can be used for any building but commonly we can see in the bedroom. User will feel comfortable with carpet in any weather condition. The only disadvantages are easy to get damaged (especially by water) and to collect dusk/health threats.

According to Costhelper website, the data below is the average cost of each floor type: Wood Floor: $5 and above per square foot Carpet floor: $2 and above per square foot Tile Floor: $ 1 and above per square foot

+ Window Because the weather is projected to be hotter in the future, window plays an important

role on keeping the heat and preventing solar heat transmitted. Depending on the project and what site, Energy Efficient Collaborative, an organization that promotes energy-efficient windows, suggests appropriate windows for each situation. Here is the link for specific details. http://www.efficientwindows.org/index.cfm

Works Cited – The Built Environment Sector

Costhelper website. <http://www.costhelper.com/cost/home-garden/carpeting.html > Jensen-Van Heste, Kris. Top-Loading vs Front-Loading Washers - Which is Better.

http://housewares.about.com/lw/Home-Garden/Home-improvement-renovation/Top-

Loading-vs-Front-Loading-Washers-Which-is-Better-.htm

National Renewable Energy Laboratory. Elements of an Energy-Efficient House. July, 2000.

http://www.greatlakeshomeperformance.com/elibrary/Elements%20of%20and%20Efficient%20House.pdf

Pennsylvania Department of Environmental Protection. Pennsylvania Stormwater Best Management Practices Manual . Chapter 2.

<http://www.elibrary.dep.state.pa.us/dsweb/View/Collection-8305>

Pennsylvania State University. Floods. http://climate.met.psu.edu/features/Floods/PEMA_flood.php

Reliable Appliance Repair Crew Company website.

http://www.reliableappliancerepaircrew.com/advantages-disadvantages-Of-front-load-washer.html

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Thuc Vu Interview. “Interview with Brian Gillette” 30 June, 2011

Thuc Vu Interview. “Interview with Kathleen Greely” 9 August, 2011

Thuc Vu Interview. “Interview with Steven Halmi” 11 August, 2011

Walton, Brett. The Price of Water: A Comparison of Water Rates, Usage in 30 U.S. Cities. 26

April, 2010. <http://www.circleofblue.org/waternews/2010/world/the-price-of-water-a-comparison-of-water-rates-usage-in-30-u-s-cities/>

World Business Council for Sustainable Development. Energy Efficiency in Building:

Transforming the Market. August, 2009.

http://www.wbcsd.org/DocRoot/Ge2Laeua8uu2rkodeu7q/91719_EEBReport_WEB.pdf

The Energy Sector (by Tyler Danzey)

The following is intended to be a preliminary look into how the effects of climate change may influence the energy sector in northwestern Pennsylvania. To begin, we will identify and discuss certain system parameters which may alter how the industry moves forward in the coming decades. Following this discussion, we will analyze why the energy sector will continue to be vital to the Pennsylvania economy. Next, we will progress to see how certain impacts from climate change will lead to opportunities for firms in the energy sector. Finally, suggestions for future work will be presented, including ideas that may have been under-explored and factors that have yet to be considered.

Importance to our region

The future of the energy sector in northwestern Pennsylvania is secure due to the abundance of resources located within the region. If the Great Lakes region were itself a country, it would stand as the world's second largest economy, and the potential of the energy industry is major driver in that assessment (McCurry). Pennsylvania is a national leader in fossil-fuel based production, and has an abundance of renewable energy resources (PA Fact Sheet).

According to interviews, the Utica play will be “huge” in our region. The sweetspot for this play is located beneath our region, and will be larger than the Marcellus currently being touted as the future of Pennsylvania energy. Though high costs will price out local firms, large firms will be moving in to the area, providing need for services from these smaller firms. In some cases, the large firms will purchase the smaller firms, as was the case for Range Resources, Chesapeake, and Chief Oil and Gas. Areas with gathering systems already in place will be the first to see major action, but a demand will be created for areas willing to invest in further infrastructure. In addition, extraction companies do not seem concerned about the environmental impact of the drilling, believing that the improved technologies in use now and on the horizon will resolve any

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issues. The point was raised that this energy will come at a relatively cheap cost, and thus labor will be needed to work in its production. Thus we could see an influx of workers looking to migrate to our region that would stimulate our economy.

Besides the shale gases, there is significant potential for renewable energy in our region. Much of NWPA is classified as Class 2 wind, ideal for small commercial farms, while Lake Erie is Class 3 and higher and thus a possibility for large-scale wind farms(County Wind Maps). Furthermore, bio-fuels have the potential to play a hugE role in future energy market in Pennsylvania, as evidenced by the Hero BX plant in Erie (HERO BX).

The Direct Effects of Climate Change on the Energy Sector

The preliminary exploration into the effects of climate change seem to suggest that the energy sector is extremely policy driven. Thus, the direct effects of weather-related climate impacts on the energy sector will be minimal. Instead, the main impact of climate change on the energy sector in northwestern Pennsylvania will result from the policies designed to regulate its effects. As public opinion calls for action to be taken to limit climate change impacts, and with carbon policies unlikely, initiatives favoring renewable energy will see increased backing. Already several major opportunities are available.

The Pennsylvania Alternative Energy Portfolio Standard guarantees that both alternative and renewable energy sources will advance in the coming decades. The standard assures that 8% of electricity generation will be from renewable sources and that 10% will be the result of alternative energy sources by 2020(PA Portfolio). In addition, the standard creates Alternative Energy Credit (AECs) and Alternative Compliance Payments (ACPs) which help to ensure the standard is followed (PA Portfolio).

At the federal level, several major initiatives have been put in place to encouage firms and individuals to invest in renewable technology. Among these are the Federal Prodution Tax Credit (PTC) and the Business Energy Investment Tax Credit (ITC). The PTC awards a credit of 2.2 cents/kw for wind, geothermal, and closed loop biomass and a credit of 1.1 cents/kw for other eligible technologies (Production Tax Credit). Unused credits may be carried for twenty years or used for the year prior and generally apply to the first ten years of operation(Production Tax Credit). Pennsylvania has its own production tax credit, established through the 2008 Alternative Energy Investment Act. The credit covers 15% of total development, equipment, and construction costs after all other programs are subtracted, up to one million dollars (PA DEP). The ITC is a corporate tax credit that applies to 30% of the costs for solar, fuel cells, and small wind and 10% for geothermal, microturbines, and combined heat and power. In applying a federal credit, one must choose between either the PTC or the ITC; only one credit may be applied for the investment(Production Tax Credit). A complete list of federal policies can be located on the Database of State Incentives for Renewables and Efficiency website.

Though most energy sources will face no direct effects from climate change, the production of bio-fuels could benefit from the changing environment. Predictions from the IPCC suggest longer summers and warmer winters, which would suggest a longer growing season for warm

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weather crops. Firms like Hero BX have already recognized the potential for bio-fuels, and this impact could lead to even greater reward for their investment.

The lack of direct climate impact effects does nothing to diminish the overall impact climate change will have on the energy sector. The current fossil-fuel based generation market is one of the leading causes of climate change, and thus the pressure to revamp the system will be immense. Therefore, the strength of policies instituted will play a huge role in pushing the energy market into a cleaner future.

Future Work

We have previously theorized that carbon policy is unlikely near-term. However, as non-US entities begin to adopt these policies, the reverberations could be felt inside the US economy. Specifically, how will energy-intensive industries adapt to these changes? Meanwhile, renewable energy policy has already been established as the major driver behind the restructuring of the energy industry as a result of climate change, and has already significantly improved the viability of renewable technology. Rumored policies, like a feed-in tariff, could greatly change the American energy landscape. Just how much influence these types of efforts have had (or could have) on the industry have yet to be explored. The development of fossil fuels will also play a huge role. Just how severely the shale gas play will inhibit renewables should be explored. Already, we have learned that NWPA is reluctant to invest in wind energy. Could this reluctance cripple the opportunity for advancement and profit in our region? Finally, water-intensive industries will almost certainly look to relocate to NWPA, energy industries included. Monitoring of which firms are entering our region, and which have done so recently, will give vital input as to whether the fear of climate change impacts will significantly alter the movement of firms.

Cross industry effects must also be considered. Several obvious correlations seem to be present. We discussed the potential for increased bio-fuel production, which would lead to increased revenue for agricultural entities. In addition, increased renewable energy generation implies increased production of the associated components. This would suggest a great opportunity for manufacturing firms to become leaders in the production of renewable energy parts, which could expand outside our region into a national brand. Major impacts in the built environment and transportation are less obvious, and thus will need further investigation to find relationships.

Works Cited – The Energy Sector

"Federal Business Energy Investment Tax Credit (ITC)." DSIRE: DSIRE Home. Web. 02 Sept. 2011. <http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US02F>.

"Federal Renewable Electricity Production Tax Credit (PTC)." DSIRE: DSIRE Home. Web. 02 Sept. 2011.

<http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US13F>.

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"Pennsylvania Alternative Energy Portfolio Standard." DSIRE: DSIRE Home. Web. 02 Sept. 2011. <http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=PA06R>.

“2009 Pennsylvania Alternative Energy Production Tax Credit Program.” PA DEP. Web. 02 Sept. 2011.

“Pennsylvania Energy Fact Sheet.” eia.gov EIA, n.d. Web. 02 Sept. 2011.

McCurry, John W. “Power Source: Energy projects abound across the Great Lakes region.” Site Selection Online. Web. 02 Sept. 2011. <http://www.siteselection.com/ss /features/2008/may/Great-Lakes- Region/>.

“County Wind Maps of Pennsylvania." Renewable Energy Center. Saint Francis University. Web. 02 Sept. 2011. <http://www.francis.edu/countywindmaps.htm>.

"HERO BX Plant | Advanced Biodiesel Technology." HERO BX | Advanced Biodiesel Technology. Web. 02 Sept. 2011. <http://herobx.com/HERO-BX-Profile/HERO-BX-Plant.php>.

Climate Impacts & Opportunities for NW PA Manufacturing (by Dan Eiben)

Climate change has the potential to impact the manufacturing sector of Northwest Pennsylvania from several different angles. The shifting of the local climate from the current one, to one that resembles the current climate of the southern United States, has both direct and indirect effects. Although the direct effects may be minimal, the range of influences that climate change could have makes the indirect effects immense. By affecting other sectors that determine manufacturing’s demand and costs and influencing policy that will have dramatic impacts on the sector, climate change will surely have impacts for manufacturing in the region. Along with these impacts, the same influences will create new opportunities.

Impacts & Opportunities from Other Sectors

When studying the manufacturing sector in Northwest Pennsylvania, it becomes clear that its success is dependent on the resources it uses from other industries. In particular, the manufacturing sector depends on the energy and transportation sectors. So impacts of climate change on these sectors will certainly impact manufacturing.

It is possible that climate change will create new patterns in transportation in the area, which is certainly integral to the manufacturing sector. Interviewees mention trucking access as possibly the biggest advantage of being located here, while the decline of rail is a disadvantage. If fuel price and/or regulatory changes disadvantage trucking relative to rail, and/or there are other

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drivers of improvements to rail or waterway shipping, this could affect the efficiency of local manufacturers and the broader supply chain that they operate within.

The energy sector also carries a lot of weight in the bottom line of manufacturing firms. Manufacturing in the region is usually energy intensive, so energy price increases (which are predicted) would certainly impact the profitability and competiveness of the sector (Pew Center). On the other hand, the availability of nearby deep shale natural gas supplies could cut in the other direction.

Impacts & Opportunities from System Parameters

Climate change’s Impacts through system parameters could be dramatic in the manufacturing sector. Almost all of the state governments have passed some form of greenhouse gas emission legislation, and national level legislation is plausible. According to one survey, 67% of businesses expected greenhouse gas legislation to take effect between 2010 and 2015 (Pew Center). The policies expected implications are to limit the carbon output of firms. 19% of direct emissions come from the manufacturing sector, so it is one that will no doubt be impacted by such policy (Pew Center).

Carbon policy and limits on GHG emissions present a significant threat to the competitiveness of manufacturing, but investment and policy options present opportunities to mitigate costs and become more economically viable (Bassi 3057). The range of these effects varies from firm to firm based on the energy intensity of the firm, the types of energy it uses, and the way in which it uses the energy. The ability to pass costs to the customers also plays a role (Bassi 3057).

Projections of potential carbon policies show increased production costs for the industry via increased energy prices. Whether it is through a tax of carbon, or limiting the supply of energy that firms can use, policy is sure to increase energy prices. The magnitude of production cost increases would be based on amount used, type used, and ways used of energy inputs.” Those industries that rely more on natural gas, fuel oils and coal as fuels for heat and power would show relatively more substantial cost increases” (Bassi 3057).

Industry simulations show profits declining as carbon costs increase if firms cannot pass along costs and do not make mitigation targeted investments. Taking international competition into account, the difference in market price and total cost is projected to shrink in these models. The magnitude of the loss is associated with the magnitude of increase in production costs (Bassi 3057). Losses in profit can be avoided by passing along costs to consumers, but the increases in market price still hurt the company’s competiveness. According to the model, increasing market prices would result in a loss of market share for the firms (Bassi 3057-3058). These impacts will certainly apply to the manufacturing sector in Northwest Pennsylvania. The primary aluminum sector, which can be found in Northwest PA, will have to cut back “17% in fuel use and 8% in electricity” in order to “offset the energy cost impacts from climate policy” according to models (Bassi 3059).

Although the threats of climate change are clear, there are opportunities available; not only to mitigate the damage, but also to build the industry. The most promising opportunity is the

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potential of investment opportunities in “green manufacturing.” This is the manufacturing sub-sector that produces alternative energy, green energy, and clean technology (e.g. wind turbines, solar panels, and electric cars). This not only includes making the final products, but all the inputs and tools that supply the final producers. The latter is where there is great opportunity for Northwest Pennsylvania.

Incentives such as subsidies and production tax credits are encouraging investment in green manufacturing. Incentives are coming from the U.S. government as well as incentives from Europe and Asia. The 2009 federal stimulus bill allocated money to firms who invest in these industries. For the solar manufacturing plant in Ohio “DuPont received $50.1 million in federal manufacturing tax incentives from the American Recovery and Reinvestment Act of 2009. It also gained $7 million in state aid” (Schneider).

The energy industry is huge, $65 trillion per year, and it is becoming more diverse. Capturing even a tiny percentage of this market presents the opportunity for substantial gains. There is currently a rare opportunity as “environmental economic and strategic imperatives have all converged” in favor of moving to renewable energy sources (Battelle Memorial Institute). Meeting the growing demand for energy will require a diverse mix of sources, and with policy and public pressures favoring renewable energy, entering this market presents a great opportunity for any region (Battelle Memorial Institute). Demand for climate solutions is an opportunity to create jobs in a very direct way. Estimates project 5 million manufacturing jobs could potentially be created by a “low-carbon economy” (Gereffi 3-4).

This opportunity is already being taken advantage of in the region. In the Midwest, the clean technology sector is beginning to flourish. Eight manufacturing plants have been established between the DuPont solar plant in Ohio and Hemlock Semiconductor’s new plant in Midland, Michigan, all eight allocated to the production of solar energy technologies. The Midwest’s capabilities that allow for such investment include “history of advanced manufacturing, and machined parts,” as well as “an abundance of shuttered plants that can be readily converted to new uses and are close to highway, rail and shipping supply lines”(Schneider). These capabilities are certainly present, and prevalent, in the manufacturing sector of Northwest Pennsylvania. A geographic region that is known for its specialty in “tool and die” manufacturing, Northwest Pennsylvania is already equipped to produce the parts, tools, a die casts necessary to power the “green manufacturing” sector. “A wind turbine contains 8,000 parts, so demand for each one of these parts is rising, too” (Gereffi 4). This is where Northwest Pennsylvania could flourish.

In fact, the industry is already taking root in Pennsylvania. Pennsylvania is one of the top five states in employment in the solar industry (Schneider). Other clean energy sectors already exist in the state as well. In Fairless Hills, PA an old steel mill has been converted into a green manufacturing plant. The site houses multiple companies contributing to the wind turbine and solar panel industries (CNBC). The sector is present in Northwest Pennsylvania as well. In Newcastle Pennsylvania, Axion Power International has revived a lead-acid battery plant that had been shuddered. The company now employs 59 workers towards the production of lead-carbon batteries for use in electric cars (Spisak). Hodge Foundry, in Greenville, is one of the only foundries that produce the large parts for wind turbines. President and GM Joe Simko says

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production tax credits are largely to thank for bringing his company’s wind energy involvement to the area and foresees demand for wind energy increasing over the long run (Simko).

General Electric and Lord Corp. are two of the largest employers in Northwest Pennsylvania; both are involved in alternative energy manufacturing. The Lord Corporation provides adhesives and assembly materials to firms that manufacture different types of solar products. They provide a similar array of products for the wind energy industry, as well as offering consulting to firms in the industry from their engineering team (Lord Corp). “GE is committed to developing new, cost-effective technologies for reducing greenhouse gas emissions and other environmental impacts” (General Electric). General Electric’s “ecomagination” program is committed to making the company environmentally friendly and innovating new technologies. The program has a list of goals including the investment of $10 billion dollars in green research and development and cutting their own energy intensity by 50%. GE was also the world’s first to use sugarcane-ethanol in a commercial scale gas turbine to create electricity (General Electric).

Although the green manufacturing sector has began to take root in the region, it is still predominantly overseas. Asia is dominating the solar manufacturing sector while Germany and Spain dominate wind and high-speed rail (which is totally absent in the United States). Subsidies for green manufacturing have only been so effective in bringing the industry to the U.S. because companies that assemble domestically qualify. This leads to companies taking advantage of lower manufacturing costs overseas then assembling in the United States for tax breaks and subsidies (Uchitelle).

Northwest Pennsylvania is certainly capable of housing a substantial green manufacturing sector (GSP Consulting 39). The region already houses several leaders in the industry and the same capabilities and resources that brought them here give the area the potential for expansion. The manufacturing expertise and resources in the area make it appealing to any manufacturing sector and existing investments can easily be expanded or converted (GSP Consulting 39-40). In particular, the region’s expertise and existing investment in precision manufacturing and tool and die manufacturing give it the resources to perform a similar role in the green industry. Joe Simko believes wind energy and solar energy are competitive with fossil fuel energy sources. He also believes that a company that produces in these industries domestically and locally can be appealing to domestic customers who are forced to buy overseas currently. However, he is skeptical about the continuation of current tax credits and about the political atmosphere of the region (Simko).

Works Cited – The Manufacturing Sector

Bassi, Andrea M., Joel S. Yudken, and Matthias Ruth. "Climate Policy Impacts on the Competitiveness of Energy-intensive Manufacturing Sectors." Energy Policy 37.8 (2009): 3052-060. Science Direct College Edition. Sciverse, 2009. Web. Aug. 2011. <http://www.sciencedirect.com/science/article/pii/S030142150900216X>.

Battelle Memorial Institute. Assessment of Renewable Energy, Alternative Energy and Clean Technology Manufacturing Opportunities for Western Pennsylvania, Eastern Ohio and Northern

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West Virgini. Rep. Bettelle Memorial Institute Technology Partnership Practice, June 2010. Web. Aug. 2011.

CNBC. "Green Job Manufacturing Site in Fairless Hills, PA Replaces Steel Industry." GreenEnergyforEarth.com. 27 Mar. 2010. Web. Aug. 2011. <http://www.greenenergyforearth.com/2010/03/27/green-job-manufacturing-site-in-fairless-hills-pa-replaces-steel-industry/>.

General Electric. "GE Citizenship: Energy and Climate Change." GE Citizenship. General Electric, 2011. Web. July 2011. <http://www.gecitizenship.com/about-citizenship/global-themes/energy-climate-change/>.

Gereffi, Gary, Kristen Dubay, and Marcy Lowe. "Manufacturing Climate Solutions." Center on Globalization Governance and Competitiveness. Duke University, Nov. 2008. Web. Aug. 2011. <http://www.cggc.duke.edu/environment/climatesolutions/greeneconomy_Fullreport.pdf>.

GSP Consulting. "Northwest Pennsylvania Comprehensive Economic Development Strategy." Nwcommision.org. Northwest Commsion, Apr.-May 2009. Web. Aug. 2011. <http://www.nwcommission.org/images/PDFs/NW%20CEDS%20STRAGEGY%20REPORT%206-10-09.pdf>.

Lord Corp. "Products & Solutions." LORD Ask Us How. Lord Corp., 2011. Web. Aug. 2011. <http://www.lord.com/Products-and-Solutions.xml>.

Pew Center. "A Climate of Change." Industry Today. Pew Center. Web. Aug. 2011. <http://www.usitoday.com/article_view.asp?ArticleID=F272>.

Schneider, Keith. "Midwest Emerges as Center of Clean Energy." Energy & Environment. New York Times, 30 Nov. 2010. Web. Aug. 2011. <http://www.nytimes.com/2010/12/01/business/energy-environment/01solarcell.html?emc=eta1>.

Simko, Joe. "Wind Power Production at Hodge Foundry with Joe Simko." Interview by Dan Eiben and Don Goldstein. Print.

Spisak, Dennis. "Putting the Obama Stimulus toward Green Manufacturing." Solidarityeconomy.net (2009). Solidarityeconomy.net. 4 Oct. 2009. Web. Aug. 2011. <http://www.solidarityeconomy.net/2009/10/04/putting-the-obama-stimulus-toward-green-manufacturing/>.

Uchitelle, Louis. "Green Economy Is Not Yet Made in U.S.A." Energy & Environment. New York Times, 22 Apr. 2010. Web. Aug. 2011. <http://www.nytimes.com/2010/04/22/business/energy-environment/22PLANT.html>.

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The Transportation Sector (by Christopher Brennan)

This section investigates the role of transportation in the region and how climate change will affect the sector in the future. Specifically, it describes the role of the major modes of transportation, such as shipping, rail, and trucking. Then, it illustrates how climate change could present problems for certain industries. Finally, the report highlights the potential economic opportunities that could arise from the effects of climate change.

Role of Transportation

Transportation facilitates economic activity in Northwestern Pennsylvania by providing the region with methods for moving commodities and individuals. For instance, Port Erie provides the region with a shipping industry ideally located on Lake Erie. It handles much of the region’s international and domestic trade by shipping commodities, such as iron, coal, and limestone, to foreign markets, like China, Southeast Asia, and Northern Europe, and to domestic markets throughout the Great Lakes region (Port of Erie).

The five railroads in the region concentrate on hauling bulk commodities and large quantity shipments over long distances. They are a long distance link in providing intermodal freight services. Railroads in the United States are classified as either Class I, II, or III depending on their gross operating revenues. U.S. Class I railroads are line haul freight with operating revenue in excess of $319 million. The major Class I railroad that runs through Northwest Pennsylvania is the CSX. It runs through our region into major areas like Buffalo and Baltimore thereby connecting Northwestern Pennsylvania to the east coast. The remainder of the railroads in the region is comprised of Class II and Class III railroads, which act as feeders to the CSX railroad. These freight railroads serve almost every economic sector including manufacturing, mining, wholesale, and retail trade. They not only move bulk commodities but time sensitive goods as well. U.S. freight trains are carrying more loads and traveling farther than ever before. The average freight train carried over 3,100 tons of freight in 2004, a record high for the rail industry. While the average load per train rose, the average cargo weight per rail car dropped reflecting the higher growth rate of lighter freight, like trucking.

Railroads face competition from the trucking industry. Trucks provide competition on higher value shipments such as intermodal and finished vehicle transport. “The relationship between railroads and truck lines is probably the most complicated of the modes because trucks have the ability to both generate freight for the railroads and take it away from them”.  Railroads and trucks are business partners in providing intermodal services.  Trucks provide the short haul connections between the firm sending the freight and the railroad as well between the railroad and the customer receiving the freight.  Trains provide the long haul service between origin and destination. “When trucks and trains compete, they compete for types of traffic — mostly the goods that give the railroads their higher profit margins — intermodal, transportation equipment (automobiles — finished products as well as assembly supplies), chemicals, and good products.  Intermodal freight is subject to competition from long distance trucking companies.  As a result, even when there is a rail/truck business relationship with one motor carrier for an intermodal move, there is a competitive tension with other long distance truckers seeking to capture the same business” (Railroad Industry Overview).

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Impacts and Opportunities

The warmer temperatures brought about by climate change will accelerate the rate of evaporation on the Great Lakes. As a result, the water levels are projected to decline by as much as 1.3 feet by the end of the century (UCS). Expensive dredging will likely become routine as the water levels decline with the higher temperatures. Dredging in the Great Lakes- St. Lawrence shipping channels will likely cost between $85 million and $142 million annually. Without dredging, the lower water levels will be hindering the movement of goods along a route that is responsible for around 60,000 jobs and $3.5 billion annually. If the shipping industry becomes dramatically affected by the lower water levels, freight costs for the region are expected to increase.

However, the rise in temperatures is projected to have another effect. Currently, major Great Lakes waterways are closed for two months every winter due to ice conditions, but by the end of the century the temperatures will be so high that snow and ice cover in Pennsylvania is projected to disappear. As a result, the shipping season will likely be extended leading to a longer utilization of ships and loading facilities, less need for stock piling, and lower costs for ice breaking. In order to offset the potential impacts of dredging, the region needs to take advantage of the opportunities brought about by the longer shipping season.

Other adaptations may include reducing vessel loads, designing or adopting different kinds of vessels, and changes in locks, port facilities and interconnections with other transport modes such as rail and trucking (Millerd; TEMS).

The railways in Northwest Pennsylvania are largely under-developed and under-utilized, but they could become a cleaner, more efficient method of transportation that would significantly improve economic activity in the region. As of now, the Erie Inland Port initiative is planning to “redevelop two Lake Erie Ports (Conneaut, OH and Erie, PA), a new rail-served industrial park, and an intermodal rail terminal in order to grow the East Lake Erie Region’s manufacturing, shipping, and logistics industries.” By creating this “rail-port,” the Erie Inland Port initiative will save industries on transportation costs. Companies will no longer have to unload commodities from ships onto trucks in order to utilize the railway system; instead, the railway will run into the port, so it can be loaded directly for distribution (Erie Inland Port Initiative).

Works Cited – Transportation Sector

Millerd, Frank. Global Climate Change and Great Lakes International Shipping. Prepared for Committee on the St. Lawrence Seaway: Options to Eliminate Introduction of Nonindigenous Species into the Great Lakes, Phase 2. Transportation Research Board and Division on Earth and Life Studies, Wilfrid Laurier University. Waterloo, Ontario: May 2007.

“Railroad Industry Overview.” IRS.gov. Oct. 2007. Web. Aug. 2011. < http://www.irs.gov/businesses/article/0,,id=175602,00.html#8>.

TEMS. IMPACT OF HIGH OIL PRICES ON FREIGHT TRANSPORTATION: MODAL SHIFT POTENTIAL IN FIVE CORRIDORS. Prepared for: Maritime Administration, U.S. Department of Transportion. October 2008.

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“Erie Inland Port Initiative.” Economic Development Corporation. Web. Aug. 2011. < http://www.erieinlandport.com/.>

U.S. Department of Transportation. Federal Transit Administration. Web. Aug. 2011. < http://www.fhwa.dot.gov/.>

“Port of Erie.” World Port Source. Web. 15 Jun. 2011. <http://www.worldportsource.com/ports/

Union of Concerned Scientists. Climate Change in PA. Rep. Union of Concerned Scientists, Oct. 2008. Web. June 2011. <http://www.ucsusa.org/assets/documents/global_warming/Climate-Change-in-Pennsylvania_Impacts-and-Solutions.pdf>.

USA_PA_Port_of_Erie_1617.php>.

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