Friday, June 12, 2015

Kentucky: Are the Politics of Coal Changing?

At Crooked Timber John Quiggin has an interesting post suggesting that oil and gas industry representatives have been attacking coal--as in they want less coal production. They are doing this because they realize that in light of global warming, momentum is building for the world to impose an overall "carbon budget"--which means capping remaining CO2 emissions at levels intended to limit the global temperature rise over the balance of this century.  Oil and gas industries have tremendous investments in known and developed reserves and they want to use as much of this "carbon budget" as possible to bring their oil and gas reserves to market. This means it's in their interest that coal production (easily the dirtiest and most environmentally damaging energy source) be reduced.

Coal has a sizable constituency in the United States: coal mining occurs in 25 states, with total production (2010) of 1.1 billion tons. Mostly Red State country. It has an effect on politics.



Take Kentucky, the home of Senate Majority Leader, Mitch McConnell. In 2013, Kentucky was the third largest coal producer in the country (80.3 million tons). Coal production in Kentucky is equally divided between the Central Appalachian Basin of eastern Kentucky and richer, cheaper to access coal in the Illinois Basin in western Kentucky. Both of these areas have been mined for the past 220 years, but production in the eastern hills has fallen off 63% since the year 2000. 

After national financial and insurance interests, coal interests were the largest donors to Mitch McConnell's 2009-2014 fundraising cycle. During this period McConnell raised $30 million. It's a lot of money. By contrast, Diane Feinstein, Senator from California--which has a population nine times larger than Kentucky--raised just $11.8 million during the same period. It pays to be majority leader!

There are 4.4 million people living in Kentucky; the labor force is 1.9 million.  Coal exports (mostly to Southeast generators of electricity) account for as much as $3.5 billion in sales annually. Although sizable, this is less than 2% of Kentucky's GSP of $189 billion.



In fact, the coal industry in Kentucky employs fewer than 12,000 workers.  There are reports that, overall, the coal industry is a net drain on the state coffers. 

But coal has been a source of cheap energy in Kentucky and cheap energy has provided a competitive advantage for Kentucky in attracting diverse energy intensive manufacturing interests. Today, manufacturing accounts for 240,000 Kentucky jobs. Kentucky, for example, is one of the largest manufacturers of automobiles in the U.S. Legislators worry that any environmental measures that would make coal more expensive will remove this competitive advantage for Kentucky. 

This message is relentlessly marketed by lobbyists who fight against environmental legislation, and against programs like cap-and-trade. The coal industry, which employs just 0.6% of the state labor force, and which may be a net drain on state coffers, counts among McConnell's largest campaign contributors. McConnell has been a relentless booster of coal and he has fought tooth and nail against any regulations or restrictions on coal production. A year ago The Hill plausibly suggested that this is no coincidence:
"The coal industry has paid McConnell well for his service. According to OpenSecrets.org, during his years in office, McConnell has been by far the largest recipient of coal industry contributions of any member of Congress. He has raked in $748,899, compared to $640,825 for his nearest competitor, Republican Speaker of the House John Boehner (Ohio)."
It appears like the coal industry, which is causing great environmental problems, generating few jobs, and may be more trouble than it's worth overall, has an outsize influence on the Senate Majority leader.  I assume this pattern is repeated across the other 24 coal producing states. Having the oil and gas industry weigh in against coal can only help. 
Kentucky: Third Largest Coal Producer



1 comment:

  1. McConnell is the prototype Washington insider. Hypocritical, double dealing, sleaze. He is in a pickle with his "support" of Rand Paul. I am a pretty moderate fellow politically but I can't stand McConnell.

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