Aluminum Not Foiledby Clark Williams-Derry
The Daily Score, August 1, 2006
An interesting tidbit from yesterday's Bellingham, WA newspaper:
The 450 jobs at Alcoa Intalco Works are safe for now, thanks to a new power supply contract that is expected to keep the aluminum smelter west of Ferndale operating at its current reduced capacity for the next five years.Apparently, the Bonneville Power Administration, which manages most of the hydroelectric dams in the northwest US, has agreed to subsidize Alcoa's power so that the Intalco smelter can stay up and running. What doesn't appear in the Bellingham paper, though, is the total value of the BPA subsidy. For that, we have to look to the newspaper in Pittsburgh:
The Bonneville Power Administration, the Portland, Ore.-based federal agency that markets electricity from hydroelectric dams, is subsidizing Alcoa's purchase at $12 per megawatt hour up to $38.4 million annually. [emphasis added].
So, 450 jobs saved for $38.4 million a year. By my calculations, that's over $85,000 in power subsidies per job saved. Oof.
I never know quite what to think about the Northwest's aluminum smelters. They consume huge amounts of power -- to the point that aluminum is sometimes called "congealed electricity." And electricity is the nation's number one source of greenhouse gas emissions. Even if smelters purchase their electricity from hydropower dams, smelting ultimately increases climate-warming pollution, since the hydropower consumed for aluminum would otherwise have offset coal- and natural gas-fired power generation elsewhere in the northwest.
Still, it's not like shuttering the Northwest's smelters -- as happened to most of them after the 2001 west-coast power crunch -- reduced overall global emissions from the aluminum industry. Production just shifted somewhere else, where power, land, or labor was cheaper. (Obviously, shifting the location of production could, in theory, change the climate impacts of the industry. It all depends on the marginal sources of electricity that are added and displaced, and on how modern the plants themselves are. Still, closing a Northwest smelter doesn't necessarily reduce the global climate impacts of aluminum.)
So for the most part, the news about the Intalco smelter makes me feel relieved for the smelter employees and their families; smelter jobs are among the few high-wage manufacturing jobs available in many areas.
Still, it's worth remembering that smelter jobs are almost entirely made possible by a BPA subsidy, paid to Alcoa, without which the company couldn't make a profit by operating the smelter. And that subsidy ultimately is borne by other electricity ratepayers -- that is, you and me.
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