Federal policy

Some West Virginians worry about Biden’s impact on fossil fuel industries, while others see a new opportunity to expand federal support for transitioning communities.

“Those most affected by coal’s collapse don’t have to be collateral damage in the transition to renewable energy; we can be the leaders of an entirely new and better economy. In fact, I believe Appalachians have the exact skills our country will need to remain globally competitive in this new, more sustainable economy.”

For Flaccavento, the National Economic Transition platform provides the investment needed for Appalachian communities to navigate a second economic transition.

The second report in a just transition policy series analyzes the economic impacts of federal programs for environmental remediation and infrastructure.

“A national just transition policy that drives unprecedented public investment into fossil fuel-dependent communities is a moral imperative. It is also a political one if we hope to take ambitious climate action.”

The Environmental Defense Fund and Resources for the Future are collaborating on an extensive research project to assess existing policy proposals that address the needs of fossil fuel workers and communities during the energy transition.

A call for stronger state leadership in Montana and Wyoming to address “the displacement and financial devastation to families and communities” that stands only to worsen.

As debate builds around the Green New Deal, one question on the table revolves around potential federal legislation that would help former coal miners get back on their feet.

“While Trump reiterated his support of the industry during last year’s address, pushing the benefits of ‘beautiful, clean coal,’ he notably failed to mention the energy source once this year.”

White House-engineered regulatory relief to prop up the coal industry continues to fall flat as markets shift. “The main challenge for coal is not regulation,” writes the author. “It’s technology.”

As energy policies continue to evolve, “The federal government will need to play a role, but so too will states, tribes, local governments, universities, professional societies, and private sector firms.”

Attorneys general in Delaware, Illinois, Maryland and the District of Columbia say they will fight Trump administration policies against clean energy expansions that have created hundreds of thousands of jobs.

Opposition across much of the competitive energy industry to a Trump administration initiative to subsidize coal-fired electricity plants appears to have effectively killed the plan. “The problem they’ve got is every option they might consider raises the costs for somebody at a time when nobody has an appetite for increased costs anywhere,” one analyst said. “The political will to pay for it is not broadly there enough yet for them.”

In lobbying for a reduction from $1.10 to 50 cents per ton in the excise tax it pays to support the national Black Lung Disability Trust Fund, the U.S. coal industry is seeking a break because it is struggling and because coal executives think too many miners are filing claims. “Both arguments are indefensible. Miners’ health costs are not to blame for the coal industry’s financial troubles; the problem is competition from natural gas, wind and solar power. And black lung disease is easy to distinguish from smoking-related lung damage. It’s outrageous for the industry to shirk its responsibility to help the workers whose health it has destroyed.”

Trump administration tariffs meant to curb expansion of the U.S. solar energy have proven ineffective, concludes a report published this week by the Wood Mackenzie Power & Renewables research group and the Solar Energy Industries Association. The two groups estimate that deals for 8.6 gigawatts of new utility-scale solar were made in the first half of the year—enough capacity to power 1.4 million homes—and said solar industry’s expansion would continue.

“Powerful economic forces that have been pummeling the sector for years” will continue to undermine the coal industry, as analysts agree that the trend is not likely to be reversed by Trump administration policies. Utility companies, for the most part, have decided to move on. “Our strategy going forward is really focused on investment in renewables, natural gas, and other advanced technologies, including battery technology and modernizing the grid, and that strategy doesn’t really change,” said a spokesman for American Electric Power, which has over five million customers in 11 states. 

Colstrip Power Plant, which is one of the biggest power plants in the western U.S. and is struggling to survive a sea change in how electricity is generated, would probably not benefit from the Trump administration’s proposed revision to the EPA’s Clean Power Plan. Two of the plant’s four units are already scheduled for retirement and the other two have been closed recently for failure to comply with federal rules that are not addressed in the Trump proposal. “In terms of the big picture, it doesn’t really change the underlying pressures on the utilities, and particularly Colstrip, that are facing things like customer calls to divest in coal and restructure assets,” said one industry analyst. “It’s one thing to set policies that try to help, but it’s not a bailout and it’s not going to make power plants any younger.”

A regulatory rollback proposed by the Trump administration to ease emission rules on coal-fired electricity plants is being seen as unlikely to have much effect on the declining viability of the industry. Market forces will most likely prevail, and legal challenges to the planned reversal will take years to play out. “Coal's true nemeses are innovation and economics. Fracking has made natural gas abundant and cheap. Breakthroughs in windmills, solar and other renewable technologies are making them affordable alternatives.”

A public backlash is growing against policies that promote extractive industries at the expense of businesses that rely on conservation of natural resources. “While President Trump tries to prop up the dying and dirty coal industry with taxpayer subsidies, the outdoor recreation industry has been roaring along,” writes the author. “It is a $374-billion-a-year economy, by the government’s own calculation, and more than twice that size by private estimates. That’s more than mining, oil, gas and logging combined. And yet, the centerpiece of a clean and growing industry is under attack by a president with a robber baron view of the natural world.”

A Texas newspaper is questioning former Energy Secretary Rick Perry—a former Texas governor—on a proposed federal program to save failing coal-fired power plants. “It’s bad economics and bad environmental policy. Perry should remember what he championed as governor. That would mean endorsing energy policies in the interest of American consumers and enterprise, not select industries.”

Researchers at Duke University have published a visually-rich study showing how surface mining has spread over the years in Central Appalachia, leaving behind a deeply-scarred 32,000-square-mile landscape across Eastern Kentucky, West Virginia, Tennessee and Virginia. The study notes the growing difficulties facing coal companies as coal seams are tapped out and as they have to move three times as much earth as they did 30 years ago to produce a ton of coal. The researchers want to make their findings available to local and state governments to help identify sites that qualify for federal reclamation money, including through the Abandoned Mine Lands pilot program and the RECLAIM Act.

A proposal by the Trump administration to save failing coal plants by invoking the Cold War-era Defense Production Act would have little lasting effect on the U.S. electricity-generation sector. A broad cross-section of executives and policymakers concur that the plan would not stop momentum behind a fast-moving transition to cleaner energy. That idea at its core is “a futile attempt to thwart long-term, fundamental change in U.S. energy markets that will proceed nonetheless, and to the benefit of customers everywhere,” the author writes.

Businesses in Ohio are pushing back against plans by the Trump administration to bail out failing coal plants. Ohio’s competitive energy market is at risk, say skeptics of the proposal who see it as a subsidy that would cost electricity customers of every kind. “We favor free-market competition in all industries, including the energy industry,” said a spokesman for the Youngstown/Warren Regional Chamber of Commerce. “We are opposed to all unbalanced state and or/federal support without a defined return on investment for the taxpayers and consumers.”

As the Trump administration, at the behest of coal companies, continues to explore ways to roll back mine dust regulations, a new report shows an upsurge in black lung among miners. The study, “Continued Increase in Prevalence of Coal Workers’ Pneumoconiosis in the United States, 1970-2017,” finds the disease especially prevalent in Appalachian, where it afflicts 20 percent of veteran miners. “We can think of no other industry or workplace in the United States in which this would be considered acceptable,” researchers concluded.

An Ohio newspaper, weighing in on Trump administration proposals to bail out the faltering U.S. coal industry, argues that such initiatives will only deter economic development in more promising sectors. “The loss of coal-related jobs unquestionably has been painful for coal regions, and their anxiety is justified,” the Columbus Dispatch writes. “Trump has exploited that anxiety and anger, winning support by making promises that are bad for the country and most likely can’t be delivered anyway.”

Trump administration proposals to subsidize failing coal plants continue to anger the oil and gas industry, among others. Administration proposals to impose steel and aluminum tariffs will also damage the U.S. energy as a whole, critics say. One Arizona oil field services company owner said Trump’s “tortured coal policy penalizes natural gas” and that is “seems counter to what he campaigned on.”

The utility company Exelon, which does business in 48 states, is joining a campaign to urge enactment of a federal carbon tax on the U.S. utility industry as a way to discourage further reliance on power generated from coal, natural gas, and oil. Other supporters of the initiative include ExxonMobil, BP, Royal Dutch Shell and General Motors, and the proposal “has a good chance of getting across the finish line,” said Kathleen Barron, Exelon’s senior vice president of federal regulatory affairs.

One clear result of a White House plan to subsidize failing coal plants: Bigger utility bills for households, businesses, and industry in West Virginia. Skeptics of the proposed bailout include officials with the Public Service Commission’s Consumer Advocate Division, the Center for Energy and Sustainable Development at the West Virginia University College of Law, and the Natural Gas Supply Association. The plan “would definitely drive rates up,” one analyst said.

A 55 percent congressionally-mandated cut in revenue to the federal Black Lung Disability Trust Fund comes as an epidemic in the fatal disease gains momentum. The GAO reports that as a result of the impending reduction, the fund will incur a deficit of as much as $15 billion over the next 30 years. Fund revenue comes from taxes on coal companies, and the National Mining Association says maintaining support for the fund “would burden the coal industry.”

After President Trump ordered the Energy Department last week to devise a way to subsidize failing coal plants, an assortment of other energy interests criticized the initiative as a “misguided” policy move that will disrupt markets and hurt consumers. Opponents include solar and wind energy interests, the natural gas industry and the American Petroleum Institute. Should the plan proceed, “litigation would begin almost immediately,” one analyst said.

Most discussion around the possibility of the federal government invoking the Defense Production Act of 1950 in order to keep failing coal-fired and nuclear electricity plants alive has avoided exploring more sensible policy recommendations.

Various proposals for federal subsidies to coal companies are out of step with the times, says Peabody Energy’s hometown newspaper. Among the bailout mechanisms is invocation of the Defense Production Act, “an idea that tree-hugging liberals and free-market conservatives can all hate.”

The “decarbonization” of the economy is gaining momentum, even with stiff political resistance in Washington, as gains in technology continue to translate into cost advantages that favor wind and solar over fossil-fuel-fired electricity generation. “The renewable energy future is already pretty much here,” writes the author.

The Government Accounting Office is recommending termination of a federal program that allows coal companies to “self-bond” against mine clean-up costs. The practice lets mining companies promise to pay for reclamation, even though they may be in no financial position to do so. The recommendation to amend the Surface Mining Control and Reclamation Act would protect taxpayers but come at no small expense to already-struggling coal companies.

In a blow to the coal industry in Montana and Wyoming, a federal judge has ruled that the Bureau of Land Management must consider potential impacts on climate change in deciding on further permitting of federal coal leases. The case could ultimately put a legal limit on the amount of coal mined in the region. “This ruling is the latest example of courts forcing the federal government to be honest with the American public,” one plaintiff said.

Several coal country programs at risk of being scrapped in the latest budget bill out of Congress survived. The law maintains funding for black-lung clinics. The Appalachian Regional Commission will receive more money for its economic-development work, much of which goes into the POWER Initiative, which operates job retraining programs in areas hard hit by the collapse of the coal industry. West Virginia will continue to get $30 million in grants to support development in struggling coal counties. The bill was enacted largely through the insistence of Congress and over the objections of the president.

Trends in electricity generation are being driving increasingly by state policies that are adding to the larger momentum of market forces. Twenty-nine states have enacted requirements for more reliance on solar and wind which—combined with “the cheap price of natural gas and the rapidly falling cost of renewables,” as one analyst puts it—undermines Trump administration policies and rhetoric aimed at bringing coal-fired electricity back.

In a shift in long-standing federal policy, the Trump administration is beginning a $1.2 trillion infrastructure-improvement push that prioritizes attracting profit-motivated investors over determinations based on public benefit. The strategy could put impoverished communities at a disadvantage. “Instead of the public sector deciding on public needs and public priorities, the projects that are most attractive to private investors are the ones that will go to the head of the line,” one analyst said.

Even with a recent uptick in coal-industry jobs in Kentucky, analysts do not consider the gains sustainable. Even the federal government is skeptical: “The U.S. Energy Information Administration projects that after an upturn in coal production in Central Appalachia in 2017, production in the region will generally decline.”

Pushing back against new federal policies aimed at propping up the old U.S. energy economy, local governments are crafting their own electricity-generation strategies, note the authors: “2018 is shaping up to be a year when neighborhoods, towns and cities take control over their own energy destinies, working to promote a just transition to clean energy for all, regardless of income, race or zip code

Political rhetoric from Washington will neither reverse market forces that are making old ways of generating electricity obsolete nor help hard-hit communities. “What miners need are real programs to help transition them to new jobs, not promises of ‘beautiful, clean coal.’”

Three members of Congress are co-sponsoring the America Wins Act, a proposal to invest $1 trillion in U.S. infrastructure with a special focus on communities hard hit by the coal industry downturn. The bill would be funded by a tax on carbon emissions, and would earmark $5 billion a year for economic transition.

An analysis published by researchers at the Brattle Group finds that Trump administration policy toward natural gas industry production will undermine coal companies, “leading to net mining employment losses of 13,000-16,000 jobs” compared to Obama administration policies had they been left in place.