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Kentucky Resources Council, PO Box 1070, Frankfort, KY 40602 Phone [502] 875-2428

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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

Energy and the Environment: a speech.  Posted: October 11, 2002

Kentucky Resources Council, Inc.

Post Office Box 1070

Frankfort, Kentucky 40602

(502) 875-2428 phone (502) 875-2845 fax

e-mail fitzKRC@aol.com

Energy and the Environment

Presentation of Tom FitzGerald, Director,

Kentucky Energy Summit

October 10, 2002

Ari asked me to participate in today's summit, and I gladly accepted the invitation. Some weeks later, I finally got around to asking what my topic was to be, and was told "Energy and the Environment," a topic of sufficient breadth to give me no guidance at all.

As I prepared for today's presentation, I wondered why I was on the agenda - one wag wrote me that the agenda seemed to lean towards pro-coal, and then there was me.

I have decided that I am the comic relief.

I am a big believer in "full disclosure." I have for twenty-two years, represented low-income citizens in environmental matters in this Commonwealth - four as a legal aid attorney with the eastern Kentucky legal services corporation grantee Appalachian Research and Defense Fund of Kentucky, 18 as director of the Kentucky Resources Council, a non-profit provider of free legal and strategic assistance on environmental matters. My perspective has been forged by my experiences with the underside of the coal economy. I have buried one client who was crushed to death in a slurry impoundment collapse because of poor design and poorer construction, and have watched the quality of life of many hundreds of others suffer at the hands of coal mining operations. I have seen responsible operations, as well, though no one ever calls me when they are having a good day so I see fewer of those than their less-responsible brethren, but it is the knowledge that a mining operation can do much better than what has become the accepted norm in minimizing disruption to air, land and water resources that makes me that much more intolerant of the bottom-line practices that have been the legacy of the industry in this Commonwealth.

During the past year and a half, I have been involved as an environmental representative to the Governor's Energy Policy Advisory Board, and was a negotiator on the recently enacted electric generation and transmission siting law.

In addressing Energy and the Environment, I have assumed that my focus was to be more on the Kentucky landscape than the national or global picture. Regarding the larger framework, our nation will inexorably be drawn into better control of precursors of global warming, for while some remain skeptical, the overwhelming weight of scientific thought underscores the very real and very disruptive impacts of global warming on the health and welfare of nations and their economies. With the impending implementation of international treaties, the US will embrace strategies for reduction of precursor pollutants. The impact of those strategies on the combustion of fossil fuels will certainly affect a state producing significant tonnage of coal and relying on coal for most of its electrical output.

The Bush-Cheney Energy Policy, perhaps best described as the moral equivalent of their portfolios, is lopsidedly supply-sided, failing to embrace available energy conservation technologies that if deployed can create value, cut precursor emissions, and address the central consideration in our energy usage – the tremendous benefit of investment in energy conservation and efficiency in curbing pollution loading and controlling the rate of growth in energy consumption.

There is much that we cannot control in the energy picture. Today, in Louisville, the Governor and representatives of many industrial sectors and other states and federal government, are grappling with the issue of Standard Market Design. The helter-skelter nature of deregulation of the electricity industry in the nation has created crises, real and concocted, with Kentucky has largely avoided as a state in which retail service remains regulated. The SMD debate reflects a tension between the desire of low-cost states such as Kentucky to prevent imposition of market-based pricing of power, and to maintain the low-cost advantage against the other states that have much higher energy prices.

The question that remains unanswered, and will not be answered by an energy policy that papers over the tensions between low-cost power and Kentucky coal, between low-cost fuel and environmentally-responsible fuel production, is how Kentucky will fare in the short-term and what actions should be taken to best position this state to move forward.

Our economic fortunes as a state have been linked to inexpensive energy powered by coal combustion. Kentucky's challenge, in the next decade, will be how to transition from an economy that has been powered by extractive industries and low-cost electricity, to an economy that can sustain and remain competitive while more fully accounting for the costs of producing and combusting that fuel.

Governor Patton framed the challenge in his presentation of his environmental agenda to the 2002 General Assembly in this manner:

Those things we hold dear about our state - the unique beauty of

our landscapes, prime farmland, the wildlife, recreational opportunities-

have become even more important. As have our small towns and large

cities, which offer citizens a sense of community and a high quality

of life.

These qualities will determine our ability to compete for quality jobs in

the new economy of the 21st century, where technology allows companies

to locate virtually anywhere. Those areas that offer a high concentration

of skilled workers and are attractive, clean and have a high quality of life

will be the most successful.

Professor Florida, I read today in the newspaper, made a similar observation in his assessment of successful cities and the so-called “Creative class” that he sees as the key to success.

Our economic prosperity – a prosperity that has not been universal in a state where abject poverty is still the norm for many and third-world living conditions are still all too prevalent, has been tied to our artificially low energy costs. There are a number of forces at play that will cause a greater internalization of those costs of extracting and combusting fossil fuels for power. How we become and remain prosperous and healthy depends on our ability to understand and our willingness to accept change, and our wisdom to craft paths towards success out of chaos.

Within the coal sector, the industry has been living on the edge environmentally for many years, and the bill has come due. The industry has been rocked by judicial decisions that have challenged its waste disposal and mining method practices, and it must reconfigures extraction and spoil management approaches to respond to regulatory and judicial decisions.

Formerly accepted practices, such as construction of fills in watersheds, mining under homes, hauling overweight on small rural roads; mining near and in streams without adequate consideration of protection of stream health, dumping of coal mine wastes in slurry impoundments; have all come under new scrutiny and opposition. Combustion of coal in utility plants is increasingly identified as a significant cause of the failure to maintain health air quality in areas of the state, and in disruption of the use of public lands for recreational purposes.

Each of these issues will affect which reserves are economically and technologically accessible and how they can be mined and the waste products managed for disposal.

It is a certainty however that the role of the research, applied technology and creative engineering in addressing these challenges has never been more important. The question is not only whether the industry can adjust technologically, but whether the political and cultural environment within the industry has enough wisdom and commitment to allow the profession to address these challenges.

I am not sanguine about the near-term. We are so used to being a cheap date – a state whose attractiveness to industry has been a combination of rock-bottom environmental standards and cheap power, that we have a hard time envisioning ourselves otherwise. The tension between the new economy and the old, between the desire for cheap power and the desire to advance the interests of the Kentucky coal industry, have surfaced in several issues, such as allocation of NOx credits, but there is as yet no consensus on the goal or the strategies.

The coal industry has never been long on introspection. Throughout the thirty years that I have worked on environmental issues related to the coal industry, the industry I have observed and known has been incapable of assuming ownership of the reality that extracting coal and upending the earth to do so, handling and disposing of wastes, moving the product from minesite to market, combusting the coal in power plants not designed with Best Available Control technologies, and disposal of combustion wastes, cause harm to the public's resources and the legitimate rights of others that must be accounted for, prevented and minimized. Instead, it is always someone else's fault – environmentalists, Washington, the jealous Northeastern states, the UN, God. The self-image the industry sees is a bunch of good apples with one rotten one, beleaguered and set upon by ignorant citizens fueled by misinformation and a vengeful press.

The truth is that the industry, through its bottom-line, skating on the edge approach to mining, to worker safety, and to social responsibility, has brought its woes on itself, and that the viability of the eastern coal industry in the short-term will rest on the ability of the industry to understand and resolve, not avoid and ignore, several core issues relating to mining. The failure to comes to terms with the need for reform in areas such as hauling overweight, excessive and improper blasting practices, end-dumped fills, damage to water supplies, reflects an industry still in denial. Anyone with passing familiarity of the lay of the land in the coalfields would have to note the resurgence of vocal communities and coalfield citizens groups, fueled by anger at the scale of abusive practices, including massive end- and side-dumped fills, overweight haulage on minor secondary rural roads, as perhaps the most significant trend in recent years in the area of coal mining. It is not going to end until the practices themselves are reformed.

The failure of the industry to understand the need to accept limitations and to learn to operate profitably within them, rather than always pushing against the grain in order to cut short-term costs, costs more in the short and long-term.

The lack of adequate characterization of the extent, proximity and condition of underground works relative to new mines and to slurry disposal sites, can have catastrophic consequences and can threaten life and limb.

The lack of adequate consideration of protection of aquatic resources, brought on by an arrogant avoidance of the plain language of federal law borne of years of custom, can shake the industry to its boots.

The propensity of the industry to ride the margin, profiting while the market is high and bankrupting companies when the inevitable bust follows the boom, adversely affects public and worker confidence in the companies and is a direct cause of the difficulties that the industry faces in obtaining bonding and insurance coverage.

In the short and mid-term, eastern coal generally and Kentucky coal specifically will continue to gradually lose market share, as companies who produce in this region maximize the profit from their western holdings, and utilities continue to purchase lowest-cost fuel. Barring mandates to install flue gas desulfurization controls on utility plants, western Kentucky coal fortunes will not dramatically improve.

In the longer term, distributed energy will replace much of the electrical load now produced by coal-fired generating plants. The development of fuel cell technology and unplugging of commercial, residential and industrial users has already begun and will accelerate dramatically in the next 10-20 years.

The short-term question is whether, in an effort to lower costs in order to maintain market share, the industry will continue to cut corners on mine safety, reclamation and protection of the public off-site. The future is always less then clear, but in order to create a more sustainable role for Kentucky coal as a bridge fuel, creative engineering and application of technology, and a regulatory framework intolerant of shoddy mine planning and execution, will be needed to find

* approaches to minimize placement of spoil in or near waters of the United States through better mine sequencing and planning, through disposal on pre-existing benches, through side-fill construction and through constructed, compacted fills;

* approaches to management of coal processing wastes that do not rely on embankment dams made of coarse coal refuse but instead backstow mine wastes into mine voids, dry filter press, and otherwise manage wastes to avoid impoundment failures;

* approaches to underground mine planning to avoid protected areas and to minimize future subsidence;

* approaches to coal transfer from minesite to market to minimize disruption to communities and relieve stress on minor roads;

* approaches to mineral resource development that assure fairness to all holders of interest in property and avoid costly title battles and negative public perception through minor-interest "broad-forming,"

* collection of realistic and adequate biological, hydrologic, and geologic information to avoid impacts from mining and waste disposal on the public and streams.

The regulatory goal for state and federal agencies regulating coal extraction, combustion and disposal should be conservative design, not minimum compliance. My job has been for thirty years to demand that accountability of the industry – it will fall to the research and educational institutions to show the state and industry the way to use better design, better planning, and better engineering to meet the triple bottom line if they have the wisdom to take the high road instead of continuing to haul, overweight, on the low road.



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