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Replacing Coal, part 3: 'The Clean Power Plan is the battle, not the war'


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Replacing Coal, part 3: 'The Clean Power Plan is the battle, not the war'

This articleis part three in a three-part series stemming from discussions around "Buildinga Resilient West Virginia," the theme of the recent National EnergyConference 2016 held in Morgantown, W.Va., and sponsored by the West VirginiaUniversity College of Law. Part one is available and part two can be read .

Sen. Jay Rockefeller, D-W.Va., retired from the U.S. Senatelast year, and while he said he misses policymaking, he does not miss politics.Now, the five-term senator wants diversification in West Virginia's economyregardless of whether or not that pressure must come from inside or outside thewalls of the U.S.Congress.

Rockefeller is frustrated with the status of today'spolitical dialogue and process. In a keynote at a recent energy conference, helamented politicians'and the media's drifting away from policy-based discussions.

But what would it take to dislodge what is clogging upCongress?

"It's going to take the American people getting totallyfed up," Rockefeller said in a brief interview after his keynote. "It'sgoing to take getting the people that are running for those positions totallyembarrassed by what they have caused their parties to not do. It may nothappen. We may go through another decade of this mess."

The keynote where Rockefeller was speaking was co-hosted byhis namesake, the John D. Rockefeller IV School of Policy and Politics and heldat the West Virginia University College of Law. The April 8 conference inMorgantown, W.Va., focused on efforts to build a more resilient West Virginiaeconomy as coal dwindles in the state.

Adele Morris, senior fellow and policy director for theclimate and energy economics project at Brookings Institution, spelled out coal'schallenges early in the conference. She said declining demand for coal on theglobal stage looks even more dismal when you drill it down to domestic U.S.producers and it only gets worse when you further zoom into Central Appalachia.

Morris said that it "almost doesn't matter what kind ofclimate policy wehave." The fact remains coal has "key disadvantages," includinga high carbon intensity and competition from a lot of alternatives that suggestcoal country should likely brace for even further declines in coal production.

Global headwinds against coal have already some of the most iconicnames in the business, such as PeabodyEnergy Corp., ArchCoal Inc. and AlphaNatural Resources Inc. into bankruptcy.

Clean Power Plan isnot the war

Jeremy Richardson, a seniorenergy analyst with the Union of Concerned Scientists, saidtalking about climate change and the need to act is a sensitive issue in thestate. He would know, as Richardson's brother went to work in the same mine hisfather did.

"The way that I like to tell people from outside ofWest Virginia that don't come from coal communities is talking about climatechange is roughly equivalent — to a coal miner is roughly equivalent — tosomeone barging into my living room and saying 'Jeremy, the fact that you're ascientist is destroying the planet and you have to do something else now,'"Richardson said. "It's a part of my identity as a person that I'm ascientist."

Still, outside of red states and coal country, there isincreasingly support for policies that restrict carbon dioxide emissions.

Michael Gerrard, director ofthe Sabine Center for Climate Change Law Columbia Law School, said the CleanPower Plan, potentially the climate action legacy of the Obama administration,is just one of many routes to reducing carbon dioxide in the atmosphere. Hesaid that all signs are pointing to a desire to act on climate change, even asstates like West Virginia lead the legal battle against the U.S. EPA regulation.

"Even if the Clean PowerPlan goes down, that that's not the end of it," Gerrard said. "TheClean Power Plan is the battle, not the war. Even if the Clean Power Plan isstruck down, there are numerous additional legal authorities the EPA and otheragencies now have to drive down the use of fossil fuels without congressionalaction."

With momentum , particularly in lightof international agreementsmade at the Paris climate talks,the odds of a climate policy are climbing. In the meantime, Gerrard saidnon-regulatory market forces will continue to batter the U.S. coal industry.

Policy proposals onthe table

Rep. Evan Jenkins, R-W.Va., sent along a video message forconference-goers. In it, he touted the proposedRECLAIM Act: Revitalizing the Economy of CoalCommunities by Leveraging Local Activities and Investing More. The billwould accelerate the release of $1 billion in funding at a rate of about $200million annually from the Abandoned Mine Reclamation Fund to revitalize coalcommunities hardest hit by the coal industry's downturn.

The bill already has supportfrom both sides of the aisle and would include distributions for reclamationefforts that would create more areas for development.

"The mountainous terrain and proximity to abandonedmines pose real challenges to … economic development goals," Jenkins said."Without undergoing the reclamation process, these lands cannot supportjob-creating economic development projects that our communities are asking for.This legislation would allow us to facilitate economic development on abandonedmine lands in communities where it is needed most."

Sen. Joe Manchin, D-W.Va., also sent along a videoencouraging solutions that would develop West Virginia opportunities andrevitalize the state's economy.

"Like every state, West Virginia needs a diverseeconomy," Manchin said. "We must have an educated and skilledworkforce to attract new opportunities to West Virginia. When it comes toenergy, we must use all our domestic resources: coal, oil and natural gas,hydro, wind, solar, everything."

Manchin also encouraged efforts to push new technologies forcoal and said it was "so important to lead clean coal research" inWest Virginia. Recent efforts to encourage coal-based technologies have maderelatively little progress.

Early efforts such as Southern Co.'s Kemper project has proven more than expected.Meanwhile, funds dedicated specifically to carbon capture resource have largelystayed at the U.S. Department of Energy unused, despite Manchin's call topromote use of the funds.

Given the relative infancy of carbon capture technology andthe difficulties of storing, selling or reusing carbon capture technology, sucha solution could be many years in the making even if it does provide WestVirginia relief in the future. Recent workby the National Coal Council, an industry-heavy advisory council to the DOE,has suggested such developments would require policy parity that incentivizesand subsidizes new coal technology on the same level renewable energydevelopment currently receives.

"We will very quickly develop low-carbon emission coal,"said former Peabody executive Fred Palmer said at a March industry conference. "Coalneeds to change its game: embrace technology, be positive and proactive andgrow business to enhance the quality of life for everyone, everywhere."

Selling a carbontax in coal country

Morris said that while there is no precedent for thesudden economic shift that must occur in Appalachia as coal declines, a policythat includes a source of revenue for the region would likely best aid atransition.

Morris called for a carbon tax that would allow lawmakers totarget burdened areas, return revenues to taxpayers and distribute funds in away that holds poorer households unharmed. Noah Kaufman, an economist withWorld Resources Institute, also advocated for a carbon tax at theMorgantown event.

Kaufman said that there is a "real crisis" in WestVirginia, but that climate change itself is a different sort of crisis thatwhile perhaps slower-paced, is risking the future habitability of the planet.He said that because climate change policies and regulations are likely "hereto stay," West Virginia would be better off with a carbon tax over theU.S. EPA's Clean Power Plan.

"It's not the best pathway forward for West Virginia,"Kaufman said. "The reason is that West Virginia isn't compensated foressentially regulations ensuring that its key industry won't rebound. That'sjust not a fair deal. It's also not smart from an economic perspective."

He said a carbon tax could produce $100 billion to $200billion in revenue annually and just a small portion of that going towardinvestment in coalfields communities would push tremendous change.

Kaufman is the co-author of an April report from the WorldResources Institute titled Putting a Price on Carbon: Ensuring Equity. Thereport noted that how funds would be distributed would be in the hands ofpolicymakers and is likely the most influential factor in determining regionaland socioeconomic variations in the effect of a carbon tax.

Coal industry workers and the communities aroundthem, the report states, are a critical group in need of the support a revenuefrom a carbon tax would provide. Because a carbon price would accelerate atransition away from coal-fired generation, a tax without allocations for coalminers could compound the significant problems faced by the community.

"Coal miners represent just 0.057% of total U.S.employment, with combined salaries of 1 to 5 percent of the revenue generatedfrom a moderate carbon price," the report states. "Billions ofdollars in annual investments to revitalize coal communities could be fundedwith a very small portion of carbon pricing revenue."

While talk of carbon pricing or cap-and-trade once rankledcoal states like West Virginia, groups like Kaufman's suggest it might be theirbest hope as momentum to take climate action builds. The report co-authored byKaufman suggests criticism of carbon pricing focuses too heavily on the effecton energy prices.

"When the policy as a whole is considered — includingthe revenue uses, which are the most influential driver of distributionaleffects — it is clear that pricing carbon need not harm particular regions ofthe country or socioeconomic groups," the report states. "Policymakerscan design an equitable carbon pricing policy that achieves cost-effectiveemissions reductions while addressing regional disparities and protecting thecountry's vulnerable households and workers."