Issue August 28, 2007

Common sense takes a hike

Two recent coal decisions could hurt Kentucky in the long run. Why aren’t we talking about it?

As anyone in the coalfields knows, when it rains, it pours — debris from the mines, often into your home, yard and water supply. Learning to see peril as it barrels down a mountain at you is a quick and profound way to understand doom.

Two things happened last week that threaten Kentucky’s wellbeing, both in economic and environmental terms: The General Assembly passed a massive tax incentives package for a coal company to build a coal-conversion plant here without requiring it to clean up after itself, and the Bush administration expanded a rule allowing mountaintop removal mining operators to dump “waste” into streams, an attempt to codify illegal stream pollution.

Neither comes as a great shock. The Fletcher administration said in a statement it has been working for three years to adopt energy incentive legislation, and the last two months have been filled with discussion over the special session that birthed the monstrous package. For six years the Bush administration has tried to ease restrictions on mountaintop removal mining, a wildly destructive but economical technique that involves dynamiting the tops of mountains and dumping the waste into the streams and valleys below.

“They’ve been breaking the law all along,” Teri Blanton, past chair of the environmental defense group Kentuckians for the Commonwealth, told me Monday.

Blanton has spent a lifetime in the coalfields. She’s watched as the state regulatory agency has given coal companies waivers that allow dumping in streams supposedly protected by federal law. Of the 137 new or renewed permits for surface mines filed in Kentucky in 2005, 76 received full stream buffer zone waivers. The result: 149 named headwater streams were buried.

Under the Bush administration’s rule change, there’d be no need for the waiver.
During a floor speech in the state Senate last week, Sen. Ernesto Scorsone, D-Lexington, told his colleagues the energy bill they were about to pass* would’ve been good policy 100 years ago. He was the only senator to vote against the bill.

While the distinguished senators among us dutifully explore their gastrointestinal tracts, he was essentially saying, coal mercenaries continue to rip Kentucky off and fuck up our environment with official blessing.
What’s wrong with fleecing Kentucky?

We have some of the nation’s cheapest energy here, mostly because we export so much coal. That requires lots of large-scale coal mining operations. For every one of those, Kentucky receives money through the coal severance tax, which charges companies for the coal they remove. The fund was established in part to assist coal-ravaged communities in diversifying their economies as coal jobs — many replaced by the machinery of mountaintop removal — disappeared.

The $260 million, 25-year incentives package — probably going to Peabody Energy, the world’s largest private coal company, for a coal-to-liquid or coal-to-gas facility in western Kentucky — would give as much as 80 percent of the coal severance tax money collected from the new facility back to its operator.
“Where is the analysis that shows the short-term benefit of the new mining jobs is better than the long-term benefit of the coal severance tax?” asked Justin Maxson, president of the Mountain Association for Community Economic Development, a 30-year-old agency in Berea, Ky.

There is none. Maxson, who testified before the House Appropriations and Revenue committee last week, said he hasn’t seen any meaningful economic development analysis for the incentives package.
That gets at a broader problem with this legislation: The state is offering taxpayer money up front for an environmentally destructive practice that is not guaranteed to benefit Kentucky in any way other than adding a few hundred permanent jobs and a couple thousand temporary ones — two things that could be accomplished in myriad other ways.

“We’ve basically been driving economic development policy by looking through the rearview instead of through the windshield,” Maxson told me. “I’d rather see what’s the potential return of that $300 million invested in pre-K education, or rural development, or entrepreneurship? I think there are likely to be more impactful and long-term returns on our investment if we spent that money in different ways.”

House Speaker Jody Richards has tried to play both sides of this coin, and his failure is a public humiliation for the state. Trying to look tough against Fletcher, who is running for re-election, Richards initially adjourned the first special session, rebuking the governor for claiming that this energy bill was an emergency needing attention.

It didn’t take Richards long to sell out: He called for a meeting with Peabody’s CEO and, once he got it, promptly parroted the governor’s initial hogwash about the need to lure a coal company to a place where it: 1) already does massive business; 2) already has a trained workforce; and 3) is looking at a coal supply that won’t dry up for centuries.

Then, in a bizarre episode evoking Republican Sen. Jim Bunning’s penchant for comments that fail to graze reality, Richards called the energy bill an “environmental protection bill,” a feeble response to torrential criticism from environmental groups.

That criticism seems to be more rooted in reality than Richards.
“If coal is to continue as a primary component of the nation’s future energy supply in a carbon-constrained world, large-scale demonstration of carbon management technologies — especially carbon capture and sequestration — are needed to prove the commercial readiness of technologies to significantly reduce CO2 emissions from coal-based power plants and other energy conversion processes,” Tom Fitzgerald, director of the Kentucky Resources Council, told a special subcommittee on energy a couple weeks ago in a submitted statement.

A recent MIT study called “The Future of Coal” says essentially the same: Any expansion of coal technology and operations should come standard with an emphasis on capturing carbon emissions, a major contributor to global warming. The Natural Resources Defense Council reports that liquid coal used as fuel nearly doubles global warming pollution, as the refining process produces more emissions than other transportation fuels. Under this energy bill, Peabody (or whomever) would have to build a “carbon-capture-ready” plant. According to Fitzgerald’s testimony, all modern coal gasification plants are that way already. The designation is useless.
Put that in the current political context — a federal cap on carbon emissions is imminent — and Kentucky could face serious economic disaster for its disinclination to meaningfully address pollution.

Oh, excuse me, I’m being negative: The bill also demands that state government take steps to conserve energy, offers tax incentives for companies doing the same, and provides forgivable loans for students pursuing degrees that would be useful in the energy sector. That should solidify Peabody’s workforce here — other than its employees in the Capitol, that is.

*The vote was 33-1 in the Senate and 87-10 in the House. To see how your legislator voted, go to www.lrc.ky.gov.

Contact the writer at
sgeorge@leoweekly.com