Cross-posted at WV Kossacks
Just How Open for Business should Wild, Wonderful, West Virginia be?
This is by far my longest post. By far, it's also the most important. Please stick with me to the end.
Last week I wrote on the importance of coal in American's energy policy (Coal Facts: Mountain Top Removal). Little did I realize it would also be this month's BILLION dollar question.
A Brief Aside: Partisanship, Bi-Partisanship and Non-Partisanship
We make no secret of our partisan leanings at WV Kossacks. We believe the path to progressive policies runs through the Democratic Party (not a 3rd party, not the Republican party). Many of the folks there worked hard on the Kerry 2004 campaign and the Mike Callaghan 2006 campaign. I never tire of asking "what interests do Shelley Moore Capito represent?"
This post is something that transcend partisanship--it's about issues that require not only bi-partisan but non-paritsan attention.
The Billion Dollar Question
How do we make sure W.Va. is Open for Business yet remains Wild, Wonderful, West Virginia?
In last week's news roundup we noted:
After eating breakfast in Wheeling with more than 400 union laborers, plumbers, pipefitters and contractors, Manchin "took off for Washington to find them more work, and to sell West Virginia’s coal reserves as an answer to the nation’s energy needs." He advocates "federal subsidies similar to those in the farming industry could be utilized to spur the development of coal liquefaction plants."
It turns Gov. Manchin didn't head to DC that day to sell coal liquefaction in general, he went to sell one project in particular. One that same day, the Mingo County Redevelopment Authority somewhat quietly announced "a Colorado company [Rentech: RTK] plans to build a $1 billion coal-to-liquid fuel plant in southern West Virginia to take advantage of the area's abundance of coal and mining infrastructure."
What's this? Why are the politicians headed to Washington instead of standing on a podium announcing a billion dollar investment? The clock is ticking:
If a 60-day due diligence report shows the project is viable, the parties plan to go forward with the early stages of planning.
If the due diligence is positive, expect a big announcement with great fanfare.
At this point you might be wondering, what is this coal liquefaction stuff? Let's take a moment to talk about it.
What is coal liquefaction?
It's the technology behind the proposed Mingo County:
Sheppard explained that Rentech concentrates on transforming coal into usable, ultra-high purity diesel fuel that has a shelf life of up to eight years. The coal is transformed using the Fischer-Tropsch (FT) technology which consists of three steps - gasification, FT conversion and upgrade. Sheppard said the FT process can work with any coal that can be gasified.
I'll boil down the longer story of coal liquefaction. It's burning coal at a low enough temperature to turn it into a liquid fuel--usually as a substitute for petroleum products. The process has been around for 100+ years but with abundant low-cost petroleum was rarely cost-effective.
Source: Ecological Hazards of H-Coal Liquefaction by Oak Ridge National LaboratoryThe two biggest challenges of coal liquefaction are (a) it requires a lot of energy (yes, it takes energy to ultimately produce energy) (b) it generates a lot of CO2--the "greenhouse" gas that is the main culprit for global climate change.
The former problem rears its head in the form of (in)efficiency--the ratio of "extra" energy produced ain't so great. The latter problem is another big question-mark. Large-scale carbon sequestration requires energy, adds to the cost of production and exchanges an immediate certain cost for a longer-term less certain benefit. It doesn't take Sherlock Holmes to figure out how a profit-maximizing firm, without substantial public/government pressure, will act on its own.
I've found consistently level-headed informative coverage of energy issues at The Oil Drum. There most recent discussion of coal liquefaction stresses these issues. With energy companies spending millions on PR, you'll also find a lot of "noise" out there--yet, even coal liquefaction proponents sheepishly agree strong government enforcement of C02 emissions limits is a good idea.
Public Due Dilligence
What happens next? Over the next 60 55 days multiple government offices will be working hard to make this deal happen. Once a BILLION dollar deal is on the table it take on a logic of its own. Everyone involved will be looking for ways to make it happen.
Gov. Manchin will be shuttling back and forth to Washington, visiting the new House Natural Resource'schair (conveniently, Rep. Rahall, D-WV). He'll be visiting with the new Senate Appropriations Chair (conveniently, Sen. Byrd, D-WV). It will help the project that the Republicans left unfinished business (mainly, the bulk of the 2006-2007 appropriations bills) to the new Congress.
Complicating matters, the project is joint public-private partnership: "Rentech and the redevelopment authority plan to cooperate in developing, financing, owning and operating the plant."
What does all this mean? We, the people, had best start asking some hard questions. We'll be living for decades to come with the decisions made in the next few weeks. Here are a few things I'd like to more about:
Public Interest
> What will the public review process be for this project?
> When will public input be gathered?
> What promises are public officials making--formally or informally--to Rentech?
> As petroleum grows more scarce, the W. Va. coal reserves grow in value. Is this deal with Rentech the best use of this valuable natural resource?
Worker Welfare
> What is Rentech's workplace safety record?
> How worker-friendly are Rentech's policies?
> Does Rentech's have a history of working with unions? Will they agree to support card-count elections in their WV operations?
> Will they pledge to encourage their suppliers to do the same?
> As a major consumer of coal they will be in a position to influence their suppliers. What coal production methods will they support or oppose? Will they pledge to put pressure upon their coal suppliers to operate in a more worker-friendly manner?
Community and Environmental Impact
> Gov. Manchin recently touted the importance of tourism to WV. What steps will be taken to make sure that this major new industrial facility is developed in a manner that does not negatively impact state tourism?
> Will Rentech pledge to support efforts to curtail future Mountain Top Removal and work towards less environmentally damaging coal production practices?
> So far, what little we've heard on this project stresses the very end result of production.
The proposed plant would convert synthesis gas, a combination of hydrogen and carbon monoxide produced from coal, into 3 million to 9 million barrels of clean-burning transportation fuel per year.
> What about the less positive by-products of production?
> What are the plans for C02 sequestration?
Good Idea: Let's Get it Right
From what little I can tell so far, this project sounds like a promising development if done in a responsible, worker-, community- environmentally-sensitive manner. It's up to all of us to make sure that the public interest is kept firmly in mind by Gov. Manchin, Rep. Rahall, the Mingo County Redevelopment Authority and everyone else involved with this project.