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How will the Navajo walk away from coal?

October 19, 2017

ASU receives grant from Department of Commerce to study the question, work on economically and culturally smart solutions

Last week the federal government awarded nearly $420,000 to the Navajo and Hopi tribes to prepare for the closure of a coal-fired power plant and mine.

The Navajo Generating Station in Page, Arizona, and the Kayenta Mine that supplies it with coal will shut down in 2019 unless a new owner for the power plant is found.

The U.S. Department of Commerce announced financial support Wednesday for Navajo and Hopi communities dealing with the declining use of coal. About $250,000 goes to Arizona State University for projects related to the power plant and mine closures.

Martin Pasqualetti, a professor in the School of Geographical Sciences and Urban Planning at ASU, is working on possible solutions.

“Nothing happens if the Navajo don’t want it to happen,” said Pasqualetti, an expert on renewable energy, energy policy and human factors in science and technology. “That’s the first step.”

The Navajo will lose an estimated 800 jobs: 500 at the power plant and 300 to 350 at the mine. They’re looking at how to replace the jobs and the revenues that the power plant and mine provided.

The university will work on what the implications are of closing that plant, and what the opportunities might be for doing something new. How do you come up with new jobs? What are economic development options?

“$200,000 doesn’t get you very far, but we’ll do something,” Pasqualetti said.

Pasqualetti wrote a paper last year about the cultural challenges of implementing renewable energy on the reservation.

The plant is adjacent to the LeChee Chapter of the Navajo Nation. They will be among tribal members who have the final say in what comes after the plant shutters.

“That is another aspect: getting the chapter interested in working with us,” he said. “It’s always a bit complicated; it doesn’t matter what entity you’re dealing with — there are always complications you don’t anticipate, and the Navajo nation is no exception. Even if we work with LeChee, there may have to be other characteristics we have to deal with.”

We spoke with Pasqualetti about the issues facing the area after the plant closes, the opportunities available, and how a giant art and energy project might take advantage of the area’s tourism draw.

Question: When the plant closes, what will the Navajo Nation have to work with?

Answer: You have a 2,000-acre site, you’ve got 800 miles of transmission lines that all emanate from there, you’ve got a water supply, and you’ve got workers, infrastructure, roads — everything is there. You don’t have to deal with any of that. To put in something else, you don’t have to find a new site, a new transmission corridor — it’s a very, very valuable site if you want to generate electricity, and that’s what they want to do.

Another aspect of this is renewable energy. Is that the best option? There’s been discussion of converting it to a gas plant. That doesn’t seem to be going anywhere, for a lot of reasons. It’s expensive to convert it. The closest nearby gas line is a line that goes across the Little Colorado at Cameron. I would imagine that’s about 80 miles in a straight line to the power plant. I can’t imagine that makes any economic sense.

Q: How could the issue of implementing renewable energy from a cultural standpoint be addressed?

A: There’s a group called the Land Art Generator Initiative (LAGI). It’s been in existence about 10 years. Every two years they have a competition to design the most beautiful renewable energy (facilities) you can design for a particular area. They did one in Dubai in the desert. They did one in New York, in Fresh Kills on Staten Island. They did one in Copenhagen and they did one in Santa Monica last year. ... The plant is closing, and 2020 is the next competition. If we can marry those two, the idea being that we can design a tourist attraction with renewables and make something strikingly beautiful. If you look up up LAGI ... not only is each one visually attractive, but they generate electricity. Some of them desalt water.

Getting back to your question, what about renewable energy on Navajo? You could put renewable energy there, but does it produce a lot of jobs? No. Jobs during construction, yes, but jobs during operation, no. ... You can operate that with a dozen to two people. Not much goes wrong. If you can combine these big arrays of photovoltaics with an enhancement there that is visually attractive and alluring and it’s the result of an international design competition ... that’s a possibility. There’s a lot of moving parts. You’ve got to get the Navajo to say yes. ... If you’ve got 3.5 million people going to Lake Powell, a million go to the dam, they go to Horseshoe Bend, they float down and fish, they go to Antelope Canyon — every time I’ve been up there it’s bus after bus after bus. Then you put this beautiful installation next to it that happens to be renewable and fit it in with the landscape and tell the Navajo story ... The Tate Museum in London is a great example. It’s a world-class museum in an old power plant.

Q: How will Page be helped to transition?

A: I read an article in the local Page paper about a month ago and they said they’ll be fine without the power plant ... you still have millions of people going there. It’s astounding the number of tour buses you see up there. ... It’s still the shortest way from Zion and Bryce to the Grand Canyon, so along the way they stop and see the dam, Antelope Canyon and Horseshoe Bend.

Top photo: Colorado River with the Page, Arizona, city area on the right and Navajo generating station in the background. Photo by Adbar/Courtesy of Wikimedia Commons

Scott Seckel

Reporter , ASU Now


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ASU economics professor decodes Trump’s tax plan

October 19, 2017

The Republican-led Congress, with the backing of President Donald Trump, has been promising sweeping tax reform legislation before the end of the year. The president’s proposal includes cutting the corporate tax rate from 35 percent to 20 percent and shrinking the number of personal tax brackets from seven to three. Trump’s ambitious promise: “the largest tax cut in the history of our country.”

To assess the potential impact of a major overhaul of the tax code, ASU Now reached out to Dennis Hoffman, professor of economics and director of the L. William Seidman Research Institute at Arizona State University's W. P. Carey School of Business. Among his warnings is the risk of lost revenue:  “Rarely do tax cuts ‘pay for themselves’ even if they do stimulate the economy,” he said.

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Dennis Hoffman

Question: The last time there was tax reform it was in 1986, and it passed with strong bipartisan support. Why do you think this issue is emerging once again after 31 years?

Answer: Reform of the corporate tax code has been discussed for several years with no action from Congress. President Trump ran on a platform of tax reform/reduction seeking to reverse the modest increases we saw in 2012 and deliver tax cuts.

Q: Is tax reform necessary, and why? What needs to be fixed?

A: The tax code is indeed quite complex and the corporate rate among the highest in the developed countries. So some form of reform makes sense. However, the economy is actually quite strong and the labor market is very tight. So from an efficiency perspective reform makes sense, but the economy is not really in need of a stimulus.

Q: How could tax reform positively affect the United States?

A: If tax reform helps stimulate business investment that boosts productivity, it could indeed accelerate the pace of GDP growth. It is unclear how much of this acceleration will affect workers in a positive way. Indeed, some new investments may be “labor saving,” e.g. more robotic production that displaces labor. This is the price of innovation. In the long run the economy will adapt and more job opportunities will occur, but it could be disruptive in the short run. Further, there are large numbers of people employed today in businesses that exist to help corporations cope with a cumbersome tax code. Tax reform may render these positions obsolete.

Q: Is there a risk that tax cuts may leave the federal government short of revenue to run the government?

A: This risk is very real. Rarely do tax cuts “pay for themselves” even if they do stimulate the economy. The stimulus comes with lower tax rates and likely lower tax revenue. There are countless examples with the most recent one being the reduction in corporate taxes in Arizona. There is no evidence whatsoever that the tax rate reductions in the state have generated any additional economic stimulus that has helped recoup lost revenue. 

Q: The issue of income inequality has become an increasingly critical challenge for American society. Do you think tax reform is likely to exacerbate or fix the problem?

A: Income inequality has its roots in vastly different skill levels. It makes more sense to address it through providing incentives and opportunities for people to invest in skills that can help them succeed in the marketplace. Trying to fix or avoid inequality through the tax code is really quite distortionary. Some will argue that high-income people need to pay more and/or that the tax cuts should go to middle- and lower-income people. The reality is that high-income people do pay significant amounts of tax so most types of tax reform or tax rate reduction will likely deliver significant tax cuts to them.

Top photo courtesy of Pixabay