West Virginia Governor’s Coal-Subsidy Pitch Troubles Westerners

By Stephen Lee

Coal companies from outside Appalachia, and the Republicans in Congress representing them, are taking a dim view of West Virginia Gov. Jim Justice’s efforts to win a $4.5 billion subsidy for eastern coal.

To those non-Appalachian coal companies, Justice’s request for a $15 per ton subsidy to power plants that burn regional coal smacks of unfair treatment. Justice announced earlier this month that he would switch from the Democratic to the Republican party.

Amy Estes, a spokeswoman for South Dakota-based Black Hills Energy, told Bloomberg BNA the company “has never asked for anything more than a level playing field for our fossil fuel resources.”

Travis Deti, executive director of the Wyoming Mining Association, said he understood Justice’s desire to protect his state’s coal industry.

“However, the federal government should not be in the business of picking winners and losers in the market through subsidies that pit one coal producing region against another,” Deti said.

Justice told Bloomberg News Aug. 9 that Trump is “really interested” in the subsidy idea, and that the president is “trying to vet the whole process.” White House spokeswoman Kelly Love told Bloomberg News that the administration had nothing to announce.

No Mother Teresas

The pushback from out-of-state producers competing with West Virginia should come as no surprise, said Tom Sanzillo, finance director at the Institute for Energy Economics and Financial Analysis. The institute conducts research and analyses on financial and economic issues related to energy and the environment.

“Do you think the Illinois and Powder River Basin producers would become Mother Teresa? I don’t think so,” Sanzillo told Bloomberg BNA.

Some 60 percent of the nation’s coal now comes from Western states, according to the Energy Information Administration.

Congressional lawmakers from western coal states—many of them Republicans—have also signaled their displeasure with the idea. Rep. Liz Cheney (R-Wyo.) said in a statement that any policy that “uses taxpayer dollars to advantage eastern coal over our western coal” would be “flat wrong, unjust, bad economic policy, and would be adopting the worse tactics of the Obama era.”

Similarly, Senate Environment and Public Works Committee Chairman John Barrasso (R-Wyo.) told Bloomberg BNA in an email, “Selecting certain companies or regions to be more competitive at the expense of others doesn’t make sense. The best way to encourage growth of Wyoming and Appalachian coal is to continue streamlining regulations, expanding exports, and developing new solutions to common challenges.”

Environmental groups don’t like the plan any better, and are wary of any effort to improve the business environment for coal.

“We want to see utilities continue to invest in renewables and efficiency, not take a step backward and invest more in coal,” Thom Kay, senior legislative representative at environmental group Appalachian Voices, told Bloomberg BNA.

Kay said a $15 per ton subsidy is probably enough to have some impact on coal production and consumption, even if it won’t spur utilities to build more coal-fired power plants.

“But a lot of that mining would be mountaintop removal mining, which means more pollution near communities,” Kay said.

Good News for Appalachia

Appalachian business representatives greeted Justice’s plan warmly.

Bill Bissett, president of the Huntington, W.Va., Regional Chamber of Commerce, told Bloomberg BNA that local coal producers “welcome the help.”

He also said he understood other states’ concerns about competitiveness. “But the downturn in the markets has really affected the Appalachian coal basin first,” said Bissett, former president of the Kentucky Coal Association. “So we would argue that that help is needed to a much greater degree where we are than where they’re located.”

Companies that mine coal in Appalachia include Arch Coal, Alpha Natural Resources, Patriot Coal Corp., and Consol Energy.

Justice also told Bloomberg News that the subsidy would protect national security, on the grounds that it would guarantee a ready energy supply in case terrorists cut off the supply of coal from the west.

But Sanzillo rejected that idea.

“Terrorists can’t blow up the wind,” he said. “And it’s very hard for them to blot out the sun. If we’re worried about security, why not keep the eastern coal in the ground in case we need it? Then we’d be really safe.”

To contact the reporter on this story: Stephen Lee in Washington at stephenlee@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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