Two months after Blackjewel LLC abruptly declared bankruptcy, closed its Belle Ayr and Eagle Butte mines and locked out 600 Campbell County workers from their jobs, Wyoming remains in limbo. No one knows when or if the mines will reopen, and millions of dollars in unpaid debts and taxes owed to workers, local businesses and local, state and federal governments remain unpaid.
Wyoming’s elected officials have had since July 1 to formulate a response to this crisis and much longer than that to develop a meaningful plan to address the sharp contraction of the coal industry that the closures represent. Unfortunately, these politicians so far exhibit neither the willingness to acknowledge the hard truths of this pivotal moment in Wyoming’s history, nor the courage needed to steer our state through it.
What are the hard truths Wyoming and its elected officials need to accept?
First, some argue that Blackjewel is just a bad actor in an otherwise sound industry. The reality is far different. The structure of America’s energy market is evolving, and the arrival and swift end of Blackjewel in Wyoming is symptomatic of a permanent shift in U.S. demand away from coal. Driving this shift is a vice-like squeeze between the lower-cost coal alternatives and the new energy preferences of Wyoming’s former customers.
As professor Rob Godby, director of the University of Wyoming’s Center for Energy Economics and Public Policy, recently testified to the Wyoming Legislature’s Joint Minerals Committee, fracking has driven the price of natural gas down to one-third of what it was before the advent of that drilling technology. Factor in that natural gas plants don’t require expensive systems to mitigate harmful pollutants like mercury, sulfur oxides and particulate matter intrinsic to burning coal, and it becomes clear why in 2018 natural gas-fired combined-cycle power plants surpassed coal facilities as America’s leading source of electricity generation. According to the Department of Energy, new gas plants will continue to replace shuttered coal plants for years to come, solidifying them as America’s foremost generation fuel.
Second, many of Wyoming’s old coal customers are taking action to reduce what they view as their impact on climate change. Coal boosters can quibble all they want about that perspective, but it’s the energy consumers that get to make that call, and that call has been made. By the end of 2018, 29 states and the District of Columbia — accounting for 63% of 2018 U.S. retail electricity sales — had laws on the books requiring utilities to procure minimum quantities of renewable energy. And those standards will continue to tighten. At least eight states and D.C. now legally require a minimum of 50% renewable energy in state supplies within the next 10 to 30 years. This is the policy landscape that major utilities — Wyoming’s customer base — are planning and investing for, and it does not include burning coal.
The net effect is a price-tanking, profitability-destroying market for Wyoming’s signature commodity. Blackjewel’s bankruptcy is just the latest in a parade of Chapter 11s that has humbled the state’s foremost coal corporations.
Some of Wyoming’s elected officials argue that Asia will buy the excess output no longer wanted by domestic customers. Yet China’s coal demand is on track to begin falling by 2025 due to aggressive buildout of nuclear and renewable energy projects, and India’s fleet of coal plants is now being hamstrung by water shortages, overcapacity and spiking renewable energy supplies that are cheaper.
The bottom line is that Wyoming coal will never regain its former glory. So how will we respond?
Gov. Mark Gordon, the state Legislature and our delegation to Washington D.C., owe Wyoming’s citizens a robust, substantive, fact-based debate on ideas to help our state through what will be a wrenching and painful transition. To keep schools open and roads in repair, we will need a new tax structure that doesn’t depend on a collapsing industry. To retain our talented young people and preserve the vibrancy of our communities, we need to fast track labor-intensive mine reclamation and make smart new investments in worker retraining and the industries that will continue to pay their bills — tourism in Wyoming’s great outdoors, high-value agriculture and innovative manufacturing and technology.
Appropriating scarce tax dollars to fanciful coal marketing schemes or foolish litigation against other states is both wasteful and dishonest.
Wyoming politicians who refuse to acknowledge this reality and do the hard work they owe us to move our state forward deserve to be held to account in the next election.