Home Energy and Environment Video: Del. David Toscano Demolishes “War on Coal” Nonsense; $1/2 BILLION in...

Video: Del. David Toscano Demolishes “War on Coal” Nonsense; $1/2 BILLION in Coal Subsidies

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Check out Del. David Toscano’s excellent speech yesterday on Virginia’s utterly wasteful coal tax credits (aka, taxpayer-funded corporate welfare on a massive scale) and the brain-dead rhetoric about a supposed “war on coal.” Next time you hear Republicans and fossil fuel industry flacks blabbering on about the “free market,” “Obama’s war on coal,” and other nonsense, just tell them to watch this speech.

Ladies and Gentlemen of the House:

I listened carefully yesterday as the gentleman from Salem detailed the shuttering of the corporate offices of Norfolk Southern in Roanoke. This is an important issue to him and everyone in his community. Any jobs lost in a community have a great impact.  Let me be perfectly clear. No one can be pleased with this decision. But let us not make more of this than it is. This is not a decision about coal and does not involve the so called “war on coal.”  It is more about economics and the private decision of a private corporation.

Just two days ago, CNBC reported that Norfolk Southern was bullish about the United States economy. According to this report, Norfolk Southern believes their profits will be boosted in 2015 because the U.S. economy is improving. As its CEO said, “we feel good about the state of the economy.”  There was nothing about coal in this announcement. And the letter from Norfolk Southern announcing their corporate restructuring said it was designed to “foster department synergies”   and “streamline management.”  There was nothing in this letter about coal.

It is interesting, then, that as soon as the announcement of the Norfolk Southern decision hit, Congressional Republicans Morgan Griffith and Robert Goodlatte immediately began referring to this as a by-product of the so called “war on coal.”  The talking heads were out with a vengeance.  But is there really a war on coal?

The decline in coal production and the market for coal has more to do with what is happening in the energy marketplace and the price of natural gas than it does with federal policy and President Obama.

In this session, we are going to hear a lot about the so called war on coal. There will be countless defenses of coal as a way of life. Say what you will, but economists agree that the only way to make coal competitive again is to have the price of natural gas and oil rise.  There are a number of ways you can do this, but it would involve things like stopping fracking, preventing the building of the Keystone pipeline, and maybe even preventing gas pipelines from being constructed through Virginia.  But I do not see any proposals from the Republican to do this during Session.

Coal has been in decline in Virginia for decades, independent of massive state subsidies which have gone to the region. The greatest subsidies have come in the form of two expansive coal tax credits passed in the mid-1990s.

Does anyone have any guess about what taxpayers have paid in the form of subsidies to coal companies and utility operators as part of the credits throughout these years?  The answer is over one-half billion dollars.  Yes, that is one-half billion dollars.

And what did we get for this investment which was designed to protect jobs and stabilize  production?  Well, in 1988, coal tonnage was $46 million per year; by 2013 it had dropped to $17 million per year. Employment in the coal fields was in excess of 11,000 in 1988 and it has now dropped to 3600.

If you were a private company which had invested one-half billion dollars to grow employment and production and your company declined instead, what would you do?  Keep investing?  Well, that is what the Commonwealth is doing — only it is doing it with taxpayer dollars.  No wonder that our independent watchdog, JLARC, concluded that we have not achieved our public policy goal in slowing the decline in coal activity and employment with our tax credit program.

And what if we were considering such an investment today? Using free market principles, we would not; the rate of return would not justify it. Governor McAuliffe has proposed a modest reform in the tax credits to cap at $500,000 per year.  He has not proposed an elimination of the credits but a cap on them.  This would raise a modest amount of money each year to help support education and public safety. Such a proposal is hardly a part of the “war on coal.”  Instead, it is an effort to build a government where taxpayer dollars are spent wisely on programs that work.  And isn’t that what we all want down here?

  • Jim B

    The republicans are pretty good with slogans that disguise the real facts. Since they have so many low information followers they can get away with a handy slogan. They will probably never hear of Del. Toscano’s explanation.

  • Elaine in Roanoke

    How about this slogan?

    WHO ARE THE BIGGEST WELFARE QUEENS IN VIRGINIA? COAL COMPANIES AND DOMINION POWER, THAT’S WHO.