Mich. manufacturers need fossil fuels
When most people think about energy, it’s not complicated. If the lights come on, and the heat flows when needed, they don’t think twice about energy.
For Michigan’s manufacturers, energy is more complicated. The largest sector of the Michigan economy, manufacturing directly employs more than 565,000 people. Manufacturing has been driving the Michigan recovery and leading the nation in manufacturing job growth, creating 110,000 new manufacturing jobs since 2009. For us, energy is a competitive issue, rooted in price and reliability.
Federal environmental policy is systematically forcing the closure of many coal-fired power plants, which will force the state to make very expensive choices about how it will make the lights go on when customers hit the switch. These regulations will fall most heavily on the economies of the industrial Midwest.
While some celebrate the regulatory vice grip on the primary source of electricity and the increased costs imposed by the regulations, manufacturers are concerned about our ability to sell our Michigan-made products at a competitive price. Shutting these plants abandons the billions of dollars ratepayers have paid to build these plants over the years, and forces the construction of new generation.
As popular as renewable energy is in public surveys, because of the intermittency of sources like wind, the officials that operate the electric grid rely on it for capacity planning only 11 percent of the time.
The true bright spot in America’s energy future is the production of shale gas. Shale gas now makes up 50 percent of total U.S. natural gas production, compared to just 1 percent in 2000. So now, America produces 97 percent of the natural gas we use in America. That amount of production is truly fortuitous, as the federal government shuts off our primary power source of electricity generation in the Midwest.
Before we simply shut all coal plants and shift them to natural gas, energy policy must recognize that natural gas is used to manufacture products. Natural gas is split apart to make chemicals, plastics, rubber, fertilizers and pharmaceuticals — most everything you use every day. Natural gas has eight times the value of just combusting it for electrical generation. Energy policy must avoid over-reliance on natural gas for electric generation to avoid pricing this raw material out of viability for manufacturers.
However, the greatest risk to the economic benefits created by shale gas is over-regulation. While Michigan is not a major producer of shale gas nationally, about 12,000 shale gas wells have been built since the 1950s, without any incidents of water contamination.
Energy policy is not simple. Our goal to remain a strong manufacturing state that supports strong job growth for its citizens, however, is very simple.
Mike Johnston is vice president of government affairs at the Michigan Manufacturers Association.