Penn State homepage
name graphic

Speaker Abstract

Local Economic Implications of Bioenergy Production

John M. Urbanchuk
Director, LECG LLC

This study estimated the contribution to the Pennsylvania economy from the PennSecurity Fuels Initiative (“PFI”). This program was designed to replace a billion gallons of transportation fuel used in the Commonwealth with domestically produced renewable fuels within the next decade. Incentive programs such PFI that stimulate investment in, and production of, biofuels such as ethanol and biodiesel and other alternatives like liquid fuels derived from coal will have a significant positive impact for Pennsylvania. The impact of increased production and use of biofuels and coal derived transportation fuel on the Pennsylvania economy was estimated by applying the appropriate final demand multipliers for output, earnings, and employment for supplying industries calculated by the U.S. Bureau of Economic Analysis (“BEA”) to estimates of capital expenditures on plant and equipment for new production facilities and annual spending on raw materials, other goods and services necessary to sustain production. The spending associated with alternative fuels production and investment spending on new plant capacity represents the purchase of output of other industries will circulate throughout the entire Pennsylvania economy several fold stimulating aggregate demand, supporting the creation of new jobs, generating additional household income, and providing new tax revenue. When the value of bioenergy production is added to the gross output generated by construction and operation of the biofuels industry, the total impact on the Pennsylvania economy measured by GDP is nearly $15 billion (2006 dollars). Additionally, the increased economic activity will support the creation of as many as 25,775 new jobs in all sectors of the Pennsylvania economy and household income will be expanded by an additional $6.6 billion (2006 dollars) over the next decade.