A recent Zoom meet-up for high school students from Wyoming and the Appalachia region was an opportunity to talk about how coal can be the foundation for flourishing post-coal communities—but only if dollars are reinvested back into those communities and the local tax base is not hollowed out.
In an overview of the discussion, the Ohio Valley ReSource describes how students from Gillette, Wyoming—a coal mining town in a state that extracted “about 40% of all coal mined in the country in 2018”—presented photos of a local coal plant, causing some students from Kentucky’s Appalachian region to note how much newer and shinier the facility looked than those in their community. Appalachia has long been tied to the coal industry and once flourished, in some ways, when the fuel was king. Now, the region is suffering economically through its decline.
But even amidst the “newer, shinier” coal plants of Wyoming, there is no doubt that the industry is on shaky legs, thanks to cheap natural gas (courtesy of the U.S. “fracking revolution”), the ever-dropping costs of renewables, and stricter environmental regulations.
“Since reaching a record-high in 2008 of around 466 million tonnes, coal mining in Wyoming has been on a steady decline,” writes ReSource, noting that the coal-rich mines of its Powder River Basin produced only 277 million tonnes in 2019.
But communities in Appalachia and Wyoming are facing very different futures in the low-carbon economy. The former is struggling with unemployment, crumbling infrastructure, and the consequent departure of the young people who keep towns alive, while the latter is seemingly well-positioned to thrive, with opportunities for diversification and all the amenities that attract young families. The reason for the disparity? The regions took very different approaches to extracting, and investing, the wealth from their dominant employers while the getting was good.
“Millions of dollars in taxes from the industry have paid for new roads, bridges, and schools. Western states knew they had a unique opportunity to benefit from the industry when it was heating up in the late 1960s and early 1970s,” writes ReSource, citing Mark Haggerty, an economist with Headwaters Economics. When coal mining companies first came calling 50 years ago, state officials thought very carefully about the terms under which they would welcome the industry, ultimately setting high severance taxes on the then highly lucrative mineral, and ensuring that the resultant monies were either invested in quality local infrastructure, or placed in permanent savings funds.
“They were intentional about making sure the revenue would last after the mining ended,” Haggerty told ReSource.
Appalachia’s story unfolded very differently. Ted Boettner, a senior researcher with the Ohio River Valley Institute, said the coal industry in that region was essentially left to regulate its own terms of operations and responsibilities—conditions that have not proven favourable to the public good. Industry-favouring state legislators haven’t helped the issue, a case in point being the 2019 decision by West Virginia lawmakers to cut the existing coal severance tax by 2%, thereby “punching an additional US$60-million hole in the state’s budget.”
Back in Gillette, city officials and the private sector are hoping serious investment in things like a new high school and sports facilities will help people stay on once coal is truly gone. The city is also working hard to attract to new businesses and the jobs they bring. One promising venture: an industrial park that hopes to house new business endeavours, including a start-up seeking to re-process coal waste to extract the rare earth elements used in cell phones.
While Wyoming’s determination to prepare for a life beyond coal by taxing the industry and investing its gains has borne fruit, Haggerty still expressed concern that the fiscal probity that drove and governed such determination is being eroded. “Instead of thinking of the windfall from coal as additional money,” he believes, “it has replaced the tax base,” reports ReSource.
Noting that a savings fund will be quickly drained in the absence of a “general tax base to fall back on,” Haggerty warned that Wyoming could find itself looking at a fiscal crisis “very similar” to that being endured in Appalachia, where everything from policing to clean water is in short supply thanks to “the environmentally destructive legacy of coal mining and a chronic lack of investment in basic infrastructure.”