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Ross Professors Help Shape Report on Carbon, Midwest Economic Revival

2/4/2010 --

Tom Lyon and Andy Hoffman of the Erb Institute say that efforts to control greenhouse gas emissions could benefit Michigan.

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ANN ARBOR, Mich.---Ross School professors Tom Lyon and Andy Hoffman were advisers on a new national report examining how the Midwest could add jobs and revenue from changes in U.S. climate and energy policy.

The report, issued by The Climate Group, found significant potential for job creation and revenue growth in the Midwest by 2015 from the manufacture of three low-carbon technologies: advanced batteries, hybrid powertrains and wind turbines.

The Climate Group, a nonprofit organization established to find ways to cut global emissions, commissioned and published the report. Lyon and Hoffman of the University of Michigan's Erb Institute for Global Sustainable Enterprise assisted in designing the assumptions and criteria to undertake the economic analysis and reviewed the report's content and writing. Deloitte Financial Advisory Services completed the report's economic analysis and background research.

Lyon is the director of the Erb Institute and an authority on corporate environmentalism and the interplay between corporate strategy and public policy. Hoffman is co-director of the Erb Institute and an expert on managerial implications of environmental protection and social sustainability for industry. Both also hold appointments at the U-M School of Natural Resources and Environment.

Lyon went to Capitol Hill Jan. 21 to brief Senate staff members and other interested parties on the report. He joined Allison Hannon of the Climate Group and George Korsun of Deloitte in the Hart Office Building to describe the results and answer questions.

"As someone from the state of Michigan, this report has particular resonance for me," Lyon said at the briefing. "With its roots in manufacturing and nearly 15 percent unemployment, Michigan is deeply concerned about how climate and energy legislation might affect manufacturing. This report shows that such legislation offers real benefits for manufacturing in the Midwest."

Hoffman says that efforts to control greenhouse gas emissions will have significant economic repercussions in the Midwest and the rest of the country.

"Every business and every state government should consider the economic pros and the cons of the variety of policies that are on the table, from a carbon price to renewable portfolio standards to regulating CO2 as a pollutant under the Clean Air Act. This report is a start for doing that in the Midwest by focusing on a small number of technologies that could offer economic benefits for the region."

The report, "American Innovation: Manufacturing Low Carbon Technologies in the Midwest," estimates that climate and energy policies could create up to 100,000 new jobs in the Midwest, and generate additional market revenues of up to $12 billion, boosting state and local tax revenues by more than $800 million by 2015. These gains were estimated from policy-assisted growth in the wind turbine component, hybrid powertrain and advanced battery manufacturing sectors.

The report considers the impact of three climate and energy policies: a $17-per-ton price on carbon in 2015, resulting from a cap on emissions; a national renewable electricity standard of 20 percent by 2020; and a green economic stimulus package. It compares job and revenue growth in Michigan, Illinois, Indiana, Ohio and Wisconsin with these policies in place, and without.

Of the five states, Michigan stands to benefit the most, according to the report. Michigan could potentially see more than 32,000 new jobs created, more than $4 billion in market revenue and about $244 million in state and local tax revenue through 2015, the report stated.

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Story written by Kevin Merrill, School of Natural Resources and Environment

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For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu