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Protecting coal while benefiting from it

U.S. Sen. Joe Manchin, D-W.Va., speaks with reporters on Capitol Hill Thursday. Manchin has significant vested interests in the coal industry that he’s fighting to preserve tax credits and other benefits for as he withholds support for social and climate spending in President Joe Biden’s budget package.

Joe Manchin has made millions of dollars from coal.

Now he gets to take the lead in deciding coal’s future.

Since 2012, his income totals $4.35 million from stock he owns in Enersystems, Inc., the Fairmont-based coal brokerage he founded in 1988, according to his U.S. Senate financial disclosures.

Manchin made another $95,000 to $236,000 over the same span from notes receivable and stock he owns in Farmington Resources, a Fairmont-based mining services company. Senate financial disclosures report most assets in dollar ranges, not precise amounts.

In 2020, Manchin’s Enersystems stock was valued from $1 million to $5 million – easily his most valuable asset.

The centrist Democratic senator and chairman of the powerful Senate Energy and Resources Committee now finds President Joe Biden’s climate and social agenda resting largely in his hands.

West Virginia climate advocates fear his fingerprints.

“It’s difficult to question his motives,” said James Van Nostrand, director of the West Virginia University College of Law’s Center for Energy and Sustainable Development. “But at the same time, I can’t figure out why he’s saying no to this stuff.”

The “stuff” includes a bevy of key climate priorities in Democrats’ budget bill designed to achieve the immediate and large-scale reductions in greenhouse gas emissions needed to avoid the most devastating, irreversible effects of climate change.

“This report must sound a death knell for coal and fossil fuels, before they destroy our planet,” United Nations Secretary General António Guterres said in an August statement. The remarks accompanied a U.N. Intergovernmental Panel on Climate Change report that urged reaching net zero carbon emissions to reduce extreme rainfall and flooding in West Virginia and throughout the eastern United States for generations to come.

Manchin, whose vote is critical in the evenly divided Senate, has balked at what clean energy proponents view as the bill’s most pivotal climate measures, which advocates predict also would strengthen West Virginia’s economy.

Consistent with his policy motto of “innovation, not elimination,” Manchin has insisted on keeping fossil fuels in the nation’s energy framework.

“What’s the urgency?” Manchin, referring to the Democratic budget bill, said in a CNN interview last month.

In a July 28 agreement with Senate Majority Leader Chuck Schumer, D-N.Y., to start the budget resolution process, Manchin insisted fossil fuel tax credits be preserved if solar and wind energy tax credits are included and extended.

“Joe Manchin is protecting taxpayer subsidies for the very industries he is profiting from,” Lukas Ross, climate and energy justice program manager at Friends of the Earth, a national environmental group, said in an email.

Manchin’s soft-pedaling of the nation’s energy transition isn’t out of place in a state that still derives much of its identity from coal and relied on coal-fired generating plants for 91% of its net electricity generation in 2019, according to U.S. Energy Information Administration data.

But the senator having so much of his net worth tied to the carbon-intensive industry he’s helping preserve doesn’t sit well with clean energy backers.

Van Nostrand is concerned about Manchin’s relationship with American Electric Power CEO Nick Akins, alluding to a New York Times report last month that the senator was “listening closely” to the utility executive.

In a letter to the House Energy and Commerce Committee, AEP Senior Vice President of Governmental Affairs Tony Kavanagh said the clean electricity performance program “is forcing clean energy development too rapidly.”

AEP subsidiaries Appalachian Power and Wheeling Power have angered West Virginia clean energy and consumer advocates by asking state ratepayers to pick up a burden of nearly $22 million a year from Virginia and Kentucky customers to pay for environmental upgrades federally required to keep three in-state coal-fired power plants open past 2028.

Kentucky and Virginia state utility regulators who share jurisdiction over the plants already rejected the subsidiaries’ proposal as uneconomic. Appalachian Power and Wheeling Power previously estimated shutting down the Mitchell plant in Marshall County in 2028 – 12 years ahead of schedule – could save ratepayers more than $300 million.

“Clearly, it would serve the public interest if Senator Manchin would divest himself of fossil fuel investments while he serves in the United States Senate, and in particular while he chairs the Senate Energy and Natural Resources Committee,” West Virginia Climate Alliance cofounder Perry Bryant said in an email. “That would remove any doubt that he is acting in the nation’s interest and not his own financial interest.”

A Manchin spokesperson noted he has been in compliance with Senate ethics and financial disclosure rules and is working to “find a path forward on important climate legislation that maintains American leadership in energy innovation and critical energy reliability.”

Senators commonly own stock in industries they oversee, presenting conflicts of interest that long have rankled supporters of congressional ethics reform.

But those who view the current, likely fleeting Democratic governing majority as the nation’s best hope of meaningfully limiting global warming are especially troubled by Manchin’s defense of coal in the nation’s energy mix as he makes hundreds of thousands of dollars from the fuel every year.

“Senator Manchin is holding America’s future, and the future of our planet, hostage to his own unabashed financial interests,” Phoebe Galt, spokeswoman for Food & Water Watch, a Washington, D.C.-based advocacy nonprofit, said in an email. “While he feigns concern for the people of West Virginia, his obstinance risks missing the biggest opportunity we have to move toward a clean energy economy.”

Questioning clean energy incentives

Manchin has questioned the need for the clean electricity performance program, a carrot-and-stick approach to getting electricity providers to increase their use of renewable energy at what AEP has said would be too rapid a pace.

The $150 billion program would authorize grants for electricity providers that increase clean electricity use by 4% or more annually from 2023 through 2030 and penalties for those that don’t.

Proponents predict the direct pay incentive would keep ratepayers from bearing the cost of the energy transition.

A report released last month by Analysis Group, an independent economics consulting firm, found a clean electricity payment program would trigger an increase of 7.7 million jobs, a $907 billion economic boost and $154 billion more in increased tax revenues for federal, state and local governments by 2031.

The analysis includes renewable energy, nuclear, low-emission fuel (such as synthetic gas) and carbon capture and sequestration as qualifying sources as well as 10-year clean energy tax incentives.

An analysis released in July by environmental scientists and public health experts found a clean energy standard like the one pending in Congress would prevent more premature deaths per 100,000 people in West Virginia than in any other state except Kentucky.

Reaching the program’s 2030 carbon emissions reduction goal would add 3,508 full-time jobs here, swell total earnings for state residents by $172 million through 2040 and bring $20.9 billion of investment in new power plants, according to a report by West Virginia University researchers and economic modeling experts.

“How do you say no to that?” Van Nostrand said.

Manchin demonstrated how in a Sept. 12 interview with CNN.

Asked if he supports clean energy provisions in the budget reconciliation package, Manchin noted the declining share of electricity produced by coal.

“Now they’re wanting to pay companies to do what they’re already doing,” said Manchin, whose office has declined to comment on the clean electricity performance program. “Makes no sense to me at all for us to take billions of dollars and pay utilities for what they’re going to do as the market transitions.”

But the resource portfolio for AEP still hasn’t pivoted to renewable energy.

Hydro, wind, solar and pumped storage composed 18% of AEP’s generating resource portfolio as of April 2021 — just 14 percentage points more than in 1999. That’s a net annual increase of only 0.63 percentage points over 22 years. AEP has said it wants to raise that share to 51% by 2030 — still only 3.7 percentage points a year.

A coalition of eastern U.S. power grid operators issued a policy paper Tuesday calling for a “reliability safety valve” in clean energy legislation to address potential grid reliability issues. This would introduce a “timeout” to address an identified reliability problem, the paper said.

The paper from the Eastern Interconnection Planning Collaborative said challenges presented by higher levels of renewable energy production “are not insurmountable” but require grid operators and planners to be more engaged in policy discussions.

The paper did not call for any adjustment to the clean energy transformation timeline targeted in Democrats’ budget package.

The Eastern Interconnection Planning Collaborative’s membership includes PJM, the regional transmission organization that coordinates wholesale electricity movement in West Virginia and all or parts of 12 other states and Washington, D.C.

The politics of coal

Responding to Manchin’s opposition to much of Democrats’ budget framework, Jonah Kone described concerns rooted in class, not the environment.

A leader in the greater Morgantown chapter of the Sunrise Movement, a youth movement against climate change, Kone, 24, said even backers of former President Donald Trump would agree with many of the package’s key initiatives. Trump carried the state with more than two-thirds of the vote in the past two presidential elections.

“A lot of the programs in the [budget] bill are gonna get paid for by increasing the taxes on the rich and increasing the corporate tax rate,” Kone said. “ If you talk to regular working-class West Virginians about lowering the Medicare age to 60, paid family and medical leave, making hearing aids more accessible, I don’t think you’ll get a damn Trump supporter living under the poverty line in this state who opposes those sorts of things.”

Democratic budget proposals include Medicare expansion, paid family and medical leave, avoiding tax hikes for those making less than $400,000 a year and raising the top corporate tax rate from 21% to 26.5%.

An August poll of 600 registered West Virginia voters commissioned by the nonprofit Americans for Tax Fairness found support for Biden’s budget plan rose from 48% to as high as 70% when respondents were given the option of raising taxes on the wealthiest Americans and corporations and closing tax loopholes the wealthy have exploited to avoid paying taxes.

A survey that drew from 400 interviews in West Virginia and three other states each last month found two thirds or more of West Virginia respondents had favorable responses to many goals of the budget proposal, including stronger labor protections, modernizing factories and schools and prioritizing investments to energy workers affected by the nation’s transition to clean energy.

“If the senator keeps up his act, West Virginia stands to lose out on millions of dollars of federal investments to create good, well-paying clean energy jobs for the future,” Galt said.

But West Virginia poll respondents were split on support for the budget package and showed significantly less support for its clean energy priorities than the three other states where voters were surveyed: Arizona, Colorado and Virginia.

Conducted by Washington, D.C.-based public opinion research firm Hart Research, the survey found just 40% of West Virginian respondents saw revitalizing manufacturing to meet demand for clean manufacturing and clean energy technology as a very important reason to pass the package.

Only 36% of West Virginian respondents saw achieving a clean energy economy that cuts pollution, including pollution causing climate change, as a very important reason to approve the package.

Support for those priorities was much lower than in Arizona, Colorado and Virginia — mostly by double digits.

Just 48% of West Virginia respondents were favorable to increasing clean and renewable energy sources and achieving 80% clean electricity by 2030. At least 60% of respondents in each of the other three states surveyed were favorable to the same measure.

It’s been less than a year since West Virginians awarded second terms by two-to-one margins to Gov. Jim Justice, a coal magnate with a long history of environmental and workplace safety violations at his mines, and Sen. Shelley Moore Capito, R-W.Va. The junior senator has joined Manchin in decrying a “War on Coal” as market forces push renewable energy consumption past coal. She has joined fellow Republicans in opposing the bill.

The number of coal employees statewide plummeted by half from 1990 to 2019, and coal production declined 30% from 1970 to 2019, according to West Virginia Office of Miners’ Health, Safety and Training data.

Manchin has kept profiting from coal, but southern coalfield counties such as Boone and Logan have seen funding from coal severance taxes dwindle. Boone eliminated landfill transfer stations for free garbage drop-offs and stopped supporting privately run parks and recreation initiatives. Logan reduced support for community organizations.

But defending coal is still a winning hand in West Virginia. Manchin benefits both politically and financially when he plays it.

“From a political perspective, I totally understand why he’s doing what he’s doing,” Kone said. “It’s a damn shame.”

Mike Tony covers energy and the environment. He can be reached at 304-348-1236 or mtony@hdmediallc.com. Follow @Mike__Tony on Twitter.

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