THE BUZZ: Black as Coal

By on February 16, 2016

The plight of an endangered industry is illuminated as Teton County looks for school construction funds.

(Photo: wikimedia commons)

(Photo: wikimedia commons)

JACKSON HOLE, WYOMING – Winding trenches of black coal seams carve across Powder River Basin’s infertile earth. Since the 1970s, commercial coal companies have been stripping a 200-mile-long cleft of land in northeast Wyoming that supplies the U.S. with 40 percent of its coal. Although there are still more than 100 billion short tons of coal left in the Powder River Basin, the future of coal is bleak. But while strip mining may leave massive scars on the countryside, another casualty of coal’s pending collapse is the budget hole it will leave in the Cowboy State.

In the past, royalties from coal leases on federal lands were set aside specifically for Wyoming public school construction. But the coffers are empty. Now school districts in Wyoming are looking for alternative funding two years sooner than expected. A week ago Teton County School Board trustee Keith Gingery estimated there was roughly $433 million in coal lease bonuses left to fund public school construction. To the surprise of the school board and legislators, however, legislative budget hearings last week revealed the designated fund for school construction has evaporated entirely.

Back in 2004, the Wyoming legislature voted to funnel the surplus from coal lease bonuses into a designated fund for public school construction. According to Gingery, nearly a billion dollars in school construction has been completed since then. In fact, Jackson Elementary School is a product of coal lease bonus funds. But as Teton County’s population swells, one coal school will not be enough. A capacity study ordered and funded by the state concluded that not only are Colter and Jackson Elementary schools currently over capacity by state standards, the problem will worsen in the coming years.

In an effort to get ahead of the curve, the school board petitioned the state in January for funds for a second plot of land to add a fourth elementary school by 2020. But a purchased plot of land acquired through coal lease funds at Hog Island, intended to alleviate some of the school congestion, now finds itself in limbo as the legislature “re-prioritizes” school construction funding this week.

Rep. Andy Schwartz (District 23) says he’ll attend the week’s budget hearings with an open mind but he’s uncertain what the future holds. “I need to consider funding schools in the broad context to understand how we can replace coal lease revenue,” he said.

Cowboy fuel domination

In the United States, Wyoming is the number one producer of coal, the number seven producer of oil, and the number five producer of natural gas, according to the U.S. Energy Information Administration. With a record like that, Wyoming would appear fiscally stable. However, economic diversification rarely extends beyond natural resources, leaving the state bound to the fickle fossil fuel market.

A study by the University of Wyoming’s Center for Energy Economics predicts that if the coal industry folds, approximately one in five Wyomingites will feel the pain. The state would also lose its second largest pool of tax revenue, which funds highway construction and maintenance, water system maintenance, and government operations.

Wyoming Governor Matt Mead, however, is not ready to let the dying dog die. Rallying behind the coal industry, Mead is spending millions of taxpayer dollars attempting to revitalize the industry. State measures to preserve the industry—things like underground coal gasification (UCG), carbon sequestration, and coal-to-liquid fuel conversion—have come under fire for being too costly and, particularly in the case of underground coal gasification, environmentally destructive. Senior advisor for the National Toxics Network, Dr. Mariann Lloyd-Smith cautioned that “UCG has been linked to a number of environmental impacts including contamination of ground water, air pollution, subsidence of the overlying terrain [creates sinkholes], and climate change exacerbation.” She also said the waste streams produced by UCG contain “mutagenic and carcinogenic pollutants” that could potentially invade groundwater supplies.

In Mead’s State of the State address, the governor referred to the Obama Administration’s “anti-coal agenda,” making reference to a political “war on coal.” President Barack Obama’s Clean Energy Act calls for a 30 percent reduction in greenhouse gas emissions by 2030; Wyoming, specifically, will need to decrease its emissions by 44 percent.

But as Mead struggles to resuscitate the coal industry, Gingery is looking toward bonds and potential tax increases to make up for the loss of revenue. During his 10-year tenure in the Wyoming House of Representatives, Gingery was present for the legislature’s decision to use coal lease bonuses for public school construction. But before that revenue pool existed, Gingery pointed out that the state was still finding ways to build schools. “We used bond elections before coal lease bonuses,” Gingery explained. “They’re trickier, because you have to petition the people for the funds, but there are alternatives to coal.”

Dirty deeds

Some call the coal industry’s collapse an economic decision, not a political one. Dr. Robert Godby is chair of the department of economics and finance at the University of Wyoming. “The demand for coal is falling off,” Godby told The Planet. He explained that as natural gas has become cheaper, and produces fewer greenhouse gas emissions, it would be foolish of companies not to invest in it. Especially with the advent of fracking, which has given states across the country easy and cheap access to previously unreachable natural gas. Fracking, or hydraulic fracturing, involves shooting a highly pressurized mixture of water, undisclosed chemicals and sand into rock deep in the earth, fracturing it in order to force fuel to the surface.

Fracking is a particularly vexing topic for environmentalists due to fears of groundwater contamination, pressure-induced ground tremors, and cheap natural gas that encourage countries to avert their focus from renewable energy technology. In Pavillion, Wyoming, located on the Wind River Reservation, a fracking debacle became the poster child for fracking-related groundwater contamination.

After five years of water quality concerns, citizens of Pavillion contacted the EPA in 2008 about the water pollution they were experiencing. Their water was discolored, had a foul taste and smell, and in one illustrious case, could be set ablaze from the tap. In 2009 the EPA sampled an assortment of ground wells in the surrounding area. The study concluded that fracking could not be ruled out as a cause of groundwater contamination, leaving many to blame fracking for the polluted wells.

But the EPA took a lot of flack from the state of Wyoming for its conclusions, and was eventually bullied into handing off the investigation to Wyoming regulators EnCana. Their findings, along with the Wyoming Department of Environmental Quality, concluded unsurprisingly, that fracking was “unlikely” to have caused contamination of well water in Pavillion. The citizens are still fighting.

Meanwhile, coal is becoming more and more inefficient to harvest and cost-prohibitive to ship. Coal sold at market value straight from the Powder River Basin costs as little as $5 a short ton. But by the time it reaches the East Coast, it costs an average of $30 a short ton—a hike derived solely from transportation-associated costs. “So even if there were no greenhouse gas regulations and no increased stringency in the future—even if none of those things had happened and never happened in the future—coal faces a really rough ride,” Godby said.

Last month, two of the largest coal mining and processing companies in the country, Arch Coal and Alpha Natural Resource, filed for bankruptcy. Most economists believe Peabody Energy will follow suit. These are three of the largest mining companies in the Powder River Basin. Arch Coal alone supplies approximately 16 percent of America’s coal, but due to poor investments, it is now $4.5 billion in debt. In coal’s heyday in 2008, Alpha Natural Resources’ stock was selling for more than $100 a pop. Today it is a penny stock, selling for two cents a share.

“If these companies are filing for bankruptcy, obviously they are not going to be able to purchase future coal leases,” Godby said.

Gingery urges legislators to explore alternatives to coal-funded school construction even while many believe there to be nearly a half-billion dollars in coal lease funds left. “I think most of us knew back then [when they initially decided to use coal lease as a fund for schools],” Gingery said, “it might be short-lived, but we thought we should do what we could while we had the ability. I think we’ve accomplished a lot of good in the last 12 years. But the times are changing and we now need to make another smart decision for the future.” PJH

About Natosha Hoduski

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