A grand experiment is underway to direct clean energy companies to coal country

A grand experiment is underway, so big it’s hard to picture, and parts of Southwest Virginia are smack dab in the middle of it.

That experiment is about whether coal country can be turned into clean energy country.

You may recall last summer much political drama in Washington over the Inflation Reduction Act of 2022 (a title that Democrats loved and Republicans hated), also sometimes called “the climate bill.” The bill passed the Senate thanks to a tie-breaking vote from Vice President Kamala Harris, but the only reason there was a tie in the first place was that Sen. Joe Manchin, D-West Virginia, had unexpectedly agreed to vote for the bill. You don’t usually expect a senator from West Virginia to vote for anything that goes by the shorthand title of “the climate bill.” But Manchin did. One of the reasons was that Senate Majority Leader Chuck Schumer, D-New York, agreed to bring to a vote a separate measure from Manchin on energy projects; of particular relevance to us was the provision that would have greenlighted the Mountain Valley Pipeline.

That vote happened in December, and Manchin’s bill was voted down in a pretty spectacular fashion — Democrats didn’t like speeding along a natural gas pipeline, Republicans wanted to get back at Manchin for voting for the Inflation Reduction Act (or whatever you want to call it) in the first place.

In one sense, Manchin traded his vote for … well, maybe nothing. 

Or did he?

There are other parts of that bill that were more appealing to Manchin, and which we’re now starting to see put into action. Ultimately, our concern here isn’t Manchin — he’s West Virginia’s senator, not ours — but rather the parts of the bill that deal specifically with coal communities.

Let’s back up just a bit: Economically speaking, one of the problems with the transition from fossil fuels to renewables is that they’re not produced in the same place. It’s a fine thing to say that clean energy creates more jobs — that’s the central premise behind the Green New Deal — and the basic math does work out. There are lots of studies that show renewables really do create more jobs than the ones they’re displacing in the fossil fuel business. The problem, though, is that they haven’t been in the same place. That’s felt more like the Green Raw Deal.

That’s also one of the things that the Inflation Reduction Act (yeah, I hate the title, too, but that is the formal name) has tried to correct. Some of the more interesting parts of that bill are specifically aimed at encouraging clean energy jobs to locate in what the bill refers to as “energy communities.” 

Earlier this month the Biden Administration began putting some of the provisions of that bill — and some others — into action. 

• The U.S. Department of Energy announced $450 million in federal funding from the Infrastructure Investment and Jobs Act — better known simply as the bipartisan infrastructure bill — “to advance clean energy demonstration projects on current and former mine land.” (Yes, the infrastructure bill was passed in 2021 and this is 2023, but government moves slowly. Yes, I know you’re shocked.)

• The Energy Department also announced it’s using $16 million from the infrastructure bill funding “to complete design studies for the first-ever full-scale domestic demonstration refinery that will extract and separate rare earth elements and other critical minerals from coal ash, acid mine drainage, and other mine waste.” That work will be done at West Virginia University and the University of North Dakota, but let’s set that aside. The pandemic has given us new appreciation for so-called critical minerals and how many of them are mined in places that are less than friendly to the United States. There’s also been talk about how we might be able to extract those same minerals from mine waste that’s just sitting around here at home. I remember interviewing Rep. Morgan Griffith, R-Salem, about this seven years ago. He called it “significant” and something with “big potential.” Talk, though, doesn’t do much good. Here’s a chance to prove the concept works on a commercial level. 

• Finally, the Treasury Department and the Internal Revenue Service issued formal guidance on how companies can take advantage of one of the provisions in the Inflation Reduction Act: tax credits for locating clean energy projects in one of those “energy communities.”

Here’s what caught my eye: As part of that guidance, the Energy Department has launched an interactive map that identifies just where those energy communities are. We’ve all understood that much of Southwest Virginia would be included. Now we can see exactly who’s in and who’s out. The criteria are based on census tracts, so it’s not as simple as saying this county or that county. The important thing to know is that much of far Southwest Virginia automatically qualifies because these are either census tracts with a coal closure or they directly adjoin tracts with a coal closure. The other important thing to know is that much of broader Southwest Virginia, quite far afield from traditional coal country, might also qualify pending further government action. 

If you want to eyeball all this, you can see the map above. If you really want to dig into the data, you can go to the site itself. I’ll have more to say tomorrow about why some of the regions not directly connected to coal country qualify for these tax credits.

Very big picture: The single biggest concentration of these eligible areas is in Appalachia. Others are in southern Illinois, long an oil- and coal-producing area, and lots of places out West.  

In any case, the point here is that this seems an opportunity for all these communities to create a new economy. 

Will it work? Will the power of tax breaks succeed in luring renewable energy companies in sufficient numbers to these places? We don’t know. This is essentially a variation of enterprise zones, a concept once promoted by Ronald Reagan to encourage economic development in urban areas. Those enterprise zones have met with mixed results, at best. Sometimes tax breaks alone aren’t enough to overcome other siting challenges, such as workforce issues. These are enterprise zones on a much broader scale. There’s an unbroken line of eligible counties from northern Alabama around Huntsville into central Pennsylvania. Can that part of the country become to clean energy what Silicon Valley is to technology or what the Rust Belt was to manufacturing before it became the Rust Belt? 

It will surely be years — perhaps many years — before we truly know. So here’s the challenge for now: What can we do to make sure Virginia’s eligible localities are well-positioned to take advantage of whatever opportunities there are? I’ve raised the prospect before of localities in this part of the state calling a clean energy summit to strategize. At the risk of repeating myself, would this be a good time to do that?

Coming tomorrow: These tax credits could pay big dividends in some non-coal areas, too, including one particular part of Southside Virginia.