August 23, 2018
VIA ONLINE ELECTRONIC SUBMISSION
Mr. John Warren, Director
Department of Mines, Minerals & Energy
1100 Bank Street, 8th Floor
Richmond, VA 23219
Re: Comments of Virginia Coal and Energy Alliance 2018 Virginia Energy Plan
Dear Director Warren:
The Virginia Coal and Energy Alliance (“VCEA”) appreciates this opportunity to comment on the 2018 Virginia Energy Plan (“Plan”), which is intended to provide a strategic vision for the energy policy of the Commonwealth over the next 10 years. The Plan is a profoundly important document that sets Virginia above and apart from many other states by reinforcing the Commonwealth’s commitment to fuel diversity (i.e., an “all of the above” state energy policy) and highlighting the challenges and opportunities facing each of the Commonwealth’s energy sectors, including coal.
VCEA is the voice of the coal industry in Virginia. Our membership consists of companies that operate in and around Virginia’s coalfields and whose businesses depend in one way or another on coal extraction and distribution within the state. As part of our mission, VCEA seeks to identify and respond to proposed regulatory and policy changes that would impact how its members do business.
Coal is an essential resource in Virginia, not just for in-state energy production and generation, but also for Virginia’s rail and port infrastructure, local communities and skilled workforce. In 2017, Virginia recorded 13.4 million tons of production from over 50 coal mines employing over 2,000 miners.
Coal continues to be the most valuable mineral resource produced in the Commonwealth. It accounts for a significant percentage of rail freight traffic in Virginia, and the coal industry provides American railroads with more traffic and revenue than any other commodity. Coal exports from the Port of Virginia account for 36% percent of all U.S. coal exports, making it the most significant coal export hub in the country. In the third quarter of 2017 alone, Virginia exported approximately 20 million tons of coal, providing substantial employment and economic development opportunities for Virginia’s maritime community.
Coal is used for baseload power generation in the Commonwealth (12% of Virginia’s net electricity generation in 2017), helping to ensure cost-effective and reliable power for an increasingly power-hungry new economy. We note that recent studies show that existing coal-fired plants are less expensive and oftentimes more reliable than building new gas, wind or solar generation. See https://www.troutman.com/files/upload/LCOE-Are-Existing-Coal-Plants-Less-Expensive.pdf. Coal is also used for coking and steelmaking, industrial steam and a range of other industrial, institutional and commercial purposes. Metallurgical coal produced in Virginia is prized in the international markets, and demand for “met” coal has helped turn the tide on overall production trends in recent years (including a marked increase in production in just the last two years alone, from 12.2 million tons in 2016 to 13.4 million tons in 2017). Virginia has also become a leader in “clean” coal and related research, making the Virginia Center for Coal and Energy Research at Virginia Tech one of the leading academic institutions in the world for coal-related studies.
Over the past ten years, coal mining companies have paid over $320 million in severance taxes to Virginia’s coalfield counties, accounting for more than 9 percent of all the tax revenue collected. This is in addition to the normal taxes paid by companies and their workers. These tax revenues enable continuing improvements to vital local infrastructure, including roads, water systems and sewers across southwest Virginia.
Since Virginia continues to be a net importer of energy, it is important that we harness the use of Virginia steam coal for existing coal-fired power generation. Moreover, since coal is the only energy-producing export in Virginia, it is important that we continue to promote and sustain the rail and port infrastructure that enable Virginia steam and met coal to be distributed elsewhere around the country and internationally.
VCEA appreciates that all of our in-state energy resources need to be leveraged to meet growing demand, and that Virginia needs to continue to explore new ways to use those resources for optimal efficiency, cost-effectiveness, reliability and environmental stewardship. Without question, coal plays an important role in the strategic vision for the energy policy of the Commonwealth over the next 10 years. VCEA urges DMME to continue to present the current “state of coal” in the Commonwealth as part of the Plan, and also to take a fresh look at how coal can help Virginia achieve energy independence, security, competitiveness and leadership.
/s/ Harry D. Childress