King Coal’s Stages of Grief: Acceptance Reaches the Coalfields

, senior energy analyst | February 5, 2016, 1:16 pm EDT
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My recent “Stages of Grief” blog series compared the emotional debate around the decline of the coal industry to what a person might experience with the death of a loved one. In the last few weeks, statements from elected officials in West Virginia highlighted the urgent need for economic diversification in the coalfields, and it led me to wonder, has acceptance of the reality of this energy transition finally reached the coalfields?

The writing on the wall

I’ve come across dozens of stories over the past few months on the continuing decline of the coal industry. While we are still waiting for final numbers for 2015, it’s clear that the U.S. is using less coal than ever before. In November, coal plants generated 29 percent of U.S. electricity, dropping from almost 35 percent in July and 39 percent for all of 2014. SNL Financial reports the ten stories (subscription required) that explain why 2015 was a terrible year for the coal industry.

Strikingly, two states have actually committed to stop using coal altogether, driven by public pressure to address climate change. Oregon’s utilities have agreed to support a proposal that would phase out coal use by 2030. New York’s governor announced in his state of the state that he plans to close the state’s small number of remaining coal plants by 2020, affirming plans to cut the state’s carbon emission by 40 percent by 2030 and 50 percent by 2050.

While the announcements might not add up to much in terms of overall coal megawatts of coal capacity (neither state has much coal-fired generation), it’s clear that these two states, along with others, are making concrete commitments to a clean energy future.

And there’s not much optimism for coal internationally. China announced that it plans to close 4,300 small and inefficient mines and simultaneously ban new mines for three years. Much of China’s recent attention to reducing coal use is driven by the urgent need to reduce air pollution, which is estimated to kill 4,000 people per day, according to a new report.

Another report found that 65 percent of the world’s coal production is unprofitable at today’s prices, and it’s likely more than 70 percent of the coal in Central Appalachia.

Coal companies continue to falter under the financial pressure. Last month, Arch Coal, which holds the second largest coal reserves in the United States, filed for bankruptcy. Financial analysts are now speculating that the world’s largest private-sector coal company, Peabody Energy, may be next on the list.

Over the past five years, the coal industry has lost 94 percent of its market value, falling from $68.6 billion to $4 billion.

8CoalMining

Workers suffer most. Alpha Natural Resources, which went bankrupt in August, announced just last week that it would lay off more than 800 coal miners in West Virginia. As part of its bankruptcy proceedings, the company is also seeking to cut health and life insurance benefits for some 1,200 retirees to save $3 million a year, while simultaneously proposing to pay its executives $11.9 million in bonuses.

I guess that was their reward for making risky financial bets that bankrupted the company.

As a scientist, I’m trained to be analytical and unbiased. But it was hard, if not impossible, to contain my outrage when I read about this. I wonder: how do these people sleep at night?

Reality sets in

This month, American Electric Power, which through its subsidiary Appalachian Power controls electricity generation in the southern half of West Virginia, said that it plans to decrease coal use over time, with or without the Clean Power Plan.

The sober comments from a senior executive from a major utility were eye opening for many state officials. State senator Ron Stollings (D-Boone) said:

“We have to somehow have a huge sense of urgency to try to figure out what we can do, whether it’s workforce training, whether it’s somehow using post-mine land use opportunities or our proximity to Charleston.”

Boone County is the place where coal was first discovered in the region in the 1740s, and it remains home to the state’s largest coal reserves. Boone has been hit hard by the decline in coal use, not only through layoffs, but also by dwindling severance tax collections.

West Virginia Governor Earl Ray Tomblin, in his annual State of the State address on January 13, specifically called for diversifying the southern coalfields. The governor outlined specific proposals for investing in struggling coalfield communities, including a proposal for developing an industrial site using an abandoned strip mine site in Boone and Logan Counties.

Governor Tomblin and Senator Stollings join a growing chorus of people in West Virginia calling for change. It gives me hope that our elected officials are beginning to reach the acceptance phase. When another state legislator ridiculed climate change by jokingly handing out sunscreen to fellow legislators in preparation for snowstorm Jonas, the editorial board of the local paper in Beckley roundly criticized him for ignoring the overwhelming evidence.

It’s significant that a local paper in the southern coalfields recognizes the reality of climate science and our collective role in climate change.

A path forward

And there’s more cause for hope. The omnibus spending package approved by Congress in December included $19 million to the Department of Labor to provide job training and assistance for workers laid off from coal mines and coal-fired power plants, and $90 million for cleanup and economic development of abandoned mine lands in Kentucky, West Virginia, and Pennsylvania—and a bill just introduced in Congress would release $1 billion over five years for reclamation of abandoned mine lands. In Virginia, the General Assembly is considering legislation that would have the state join a carbon trading program, and direct some of the revenue toward coal communities in southwest Virginia.

As reality sets in, it’s critical that we put policies in place to chart a path forward for Coal Country, to ensure that the workers and communities who helped build this nation don’t get left behind.

 

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  • solodoctor

    Thanks for the series and for this particular update about various specific events, issues, and plans going on around the country.

    A word of caution: when people move through the various phases of grief they don’t just stay in ‘acceptance.’ They often go back and forth from acceptance to denial to anger and then back into acceptance once again. It is a gradual, cyclical, and at times tumultuous process of integrating and assimilating painful feelings and information. It is heartening that Congress, State governors and legislators, and a few business leaders are realizing that these workers, their families, and their communities need support to make this transition as least disruptive and painful as possible. More job training and social services are needed and will be needed for many years to come. It is necessary but it ain’t gonna be easy or smooth.

    • Jeremy

      Thanks for this insightful point. I recall when I was first thinking about putting this series together, that Elisabeth Kubler-Ross, the psychiatrist who came up with the framework, later expressed that it was a bit overly prescriptive–that people move in and out of each “phase” over time. So you’re quite correct that this will continue to be tumultuous over time.

      • solodoctor

        Yes, she did make that point in workshops, etc after her book was published. And I found it to be valid over the 30+ years that I practiced as a clinical psychologist helping people deal with grief. It can very tumultuous when the one(S) grieving are reluctant to let go of his/her former circumstances. Ergo, the coal industry has and will continue to struggle mightily with accepting the new normal, so to speak. Hopefully, it will get easier with time. But hang onto your hat for awhile yet!

  • neroden

    For some reason federal bankruptcy procedures generally tolerate executives looting the company. This has been true for decades. It doesn’t seem to have any basis in law, so it must be due to who the judges are.

    • Jeremy

      I’m not a lawyer and know very little about bankruptcy law, but it’s certainly true that this is not a novel approach and has been used for many years.