Here’s an idea for how coal-producing counties can build a new economy once coal goes away.
It might not be a great idea, but there are so few ideas out there that even a subpar idea goes to the front of a very short line. So let’s get to it. First, bear with us as we work through the chain of logic:
We recently wrote about Gov. Ralph Northam’s executive order that sets a goal of Virginia having a carbon-free electric grid by 2050. We pointed out that was good for people who like to breathe air and good for the planet but not so good for Virginia’s coal-producing counties whose chief product would be phased out.
We’ve also written about the “Green New Deal” proposed by some Democrats. It’s more ambitious — it calls for fossil fuels to be phased out by 2035. It also has little to say about what would happen to the localities whose economies have been based on those fossil fuels. There’s just a single line: “Transition assistance for affected communities, including unemployment and healthcare.” Transition to what, though? (Sound of crickets chirping.)
Now, we realize mentioning the Green New Deal is like waving a red cape in front of a bull for some people, but here’s a reality check: Coal is dying with or without the Green New Deal. The marketplace is seeing to that as other forms of energy become cheaper. Coal is no longer the biggest source of electricity in the United States; natural gas is. Even the world’s biggest consumer of coal— China — plans to reduce its consumption of coal as it, too, transitions to renewables. The question is not whether coal will die as a source of generating electricity but how quickly.
Coal is hardly the first product to run its course in the marketplace. So have lots of others —from ear trumpets to typewriters. Nobody elevated their passage to a matter of public policy. The difference, of course, is that ear trumpet factories were scattered around. No single community was decimated by their demise. Coal production, though, is concentrated geographically. When politicians declare themselves in favor of carbon-free electrical generation, they are effectively saying they’re willing to sacrifice those communities. To be clear: We shouldn’t burn the planet to a crisp just to keep some people employed, but we should recognize that even the most noble actions have some pretty negative consequences in Appalachia and elsewhere. Shouldn’t a sense of social justice compel some kind of mitigation?
There are other industries that have declined or died as a result of government actions over the years. Is the government responsible for bailing out their communities, too? That’s a distracting argument. The absence of action in one place shouldn’t shackle us to a lack of action everywhere else. We do have one example, though, where a government took action to tie the decline of a once-dominant industry to investment in a new economy.
What far-sighted government did such a thing? Umm, Virginia did. In the 1990s, 46 states sued the tobacco industry over the health care costs they were incurring for people with tobacco-induced diseases. In 1998, there was a “master settlement.” The nation’s four largest tobacco companies agreed to change certain marketing practices and, closer to our point here, pay out billions in perpetuity — $206 billion over the first 25 years.
Most states used their share of the money for health care, at least originally. That was, after all, why they sued. Virginia, though, did something that no other state did: It set aside a share of the settlement to create a new economy in tobacco-growing counties. The governing body for that fund is the Virginia Tobacco Region Revitalization Commission, usually simply called “the tobacco commission.” Its mandate is to use the $1 billion endowment to “enhance the economic growth and development” of 40 localities in Southside and Southwest Virginia.
Now, over the years, some of the commission’s appropriations haven’t always been, shall we say, wise. The $50,000 spent to market “heritage products” such as the brand of jelly endorsed by bluegrass legend Ralph Stanley probably has not built a new economy. It’s always easy, though, to single out one small thing that seems ridiculous. The bigger picture is more complicated and perhaps more complimentary: The tobacco commission is responsible for more than $196 million worth of investments in education in rural Virginia, $130 million worth of broadband and $126 million in industrial “megasites.” In the most recent fiscal year, the tobacco commission used its funds to help companies create more than 2,000 jobs and $157 million in taxable assets. Southside and Southwest Virginia still lag the rest of the state in lots of ways, but the question is where they’d be without those tobacco commission investments. Umm, probably further behind. Building a new economy is a generational — perhaps even multi-generational — enterprise.
Perhaps by now some of you have guessed where we’re heading with this: Maybe what we need is a tobacco commission-style fund for coal-producing counties. The big question is where that money would come from. The tobacco settlement money came from tobacco companies settling lawsuits. There’s no lawsuit here. We’re seeing coal companies go bankrupt — four major firms have filed for bankruptcy in the past year. Nobody’s going to be shaking them down for funds. That means we must look elsewhere.
The coal counties — both in Virginia and elsewhere—tend to be conservative and conservatives might like the general thrust of what we’re proposing. They might not be so happy about where the funds might come from, though: Taxes. There are at least two ways to do this. Some liberals often talk up a “carbon tax” to come up with a way to make carbon users pay for the environmental damage they’re doing; perhaps some of that could be set aside for our proposed Coalfield Commission. The other way would be to tax the equipment used in renewable energy — wind turbines or solar panels. The problem with the latter, of course, is that a tax would raise the cost of renewable energy and discourage its deployment when we need to be encouraging it. We don’t claim any of these ideas are perfect. Don’t focus on the details. Focus on the big picture: Do we have a responsibility to help coal communities build a new economy? If yes, then what’s the solution? If no, then it’s useful to know who is in favor of depopulating Appalachia.