Dive Brief:

• West Virginia Gov. Jim Justice (R) is proposing a federal homeland security incentive he says would help ensure the security of the Eastern power grid, as well as preserve coal jobs in Eastern states, WV Metro News reports. 

• The proposed incentive would pay utilities $15 for each ton of coal they burn from fields in West Virginia, Pennsylvania, Ohio, Virginia, Kentucky and Tennessee.

• The aim would be to provide an incentive for utilities to burn Central Appalachian or Northern Appalachian coal as a safeguard against potential disruptions such as bombings of pipelines or bridge used to transport natural gas or Western coal, according to Gov. Justice. 

Dive Insight:

The U.S. Energy Information Agency projects that U.S. coal use will be flat or falling through 2040 as coal is displaced by renewable energy sources and cheaper natural gas. In the EIA’s analysis, coal use declines even without policy proscriptive such as the Environmental Protection Agency’s Clean Coal Plan, which the Trump administration is in the process of challenging and revising.

One way to solve coal’s decline would be add an incentive to burning it. Gov. Justice’s plan would do just that, providing $15/ton in federal funds for Appalachian coal. That could go a long way toward making coal competitive, but perhaps not far enough. Recent EIA coal prices put Central Appalachian coal at $52.60/ton and Northern Appalachian coal at $45.65/ton.

Even taking $15/ton off that price would not make those grades competitive with the $11.55/ton cost of the nation’s most popular coal from Wyoming’s Powder River Basin.

But Justice says cost could help prevent a possible disaster if Western coal supplies were to be disrupted. “If you’re all on gas or you’re all on gas and western coal and somebody puts a bomb at a gas junction point or somebody puts a bomb on a bridge coming from the west you could very well lose the entire eastern power grid,” he said, according to the news outlet. 

Justice is not alone in using coal as a hedge for national security risks over pipelines and other infrastructure. U.S. Environmental Protection Agency Administrator Scott Pruitt said utilities needed to store "solid hydrocarbons onsite" to call on during times of peak demand, raising concerns about the vulnerability of a grid system heavily reliant on natural gas. 

Justice recently switched political parties, registering as a Republican, in conjunction with President Donald Trump’s visit to West Virginia.