Wyoming’s Carbon Valley aims to turn ‘coal into gold’

California has Silicon Valley. Wyoming’s Powder River Basin wants to be known for the element one row up the periodic table. “Carbon Valley” is a vision of the future for America’s largest coal-producing region. The basin’s officials dream of a high-tech place where thick seams of coal are turned into graphene, aircraft fuselages, wind turbine blades and the black granules in water filters. The move is an act of desperation as much as inspiration. Wyoming thermal coal, which is burnt to generate electricity, has now followed the rest of the US industry into irreversible decline. The basin’s annual output has dropped by more than a third in the past decade to estimated 300m short tons in 2019, as US utilities demolish coal-fired power plants in favour of natural gas, wind and solar energy (a short ton is equivalent to 2,000lb). In a state with no income tax, where coal was the fiscal bedrock of the budget, politicians are now having to make hard choices. “We need new economic engines,” says Mark Christensen, a commissioner in Campbell County who is helping lead the Carbon Valley initiative. “Does that mean we have to abandon the energy sector? No. We need to find new uses for the products we have.”
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Coal-dependent economies such as Wyoming would be crushed if the US took aggressive action against the greenhouse gases that cause global warming. A steadily escalating carbon dioxide tariff starting at $25 a ton would reduce Powder River Basin production by 95 per cent by 2030 by rendering coal too costly, as it has the highest rate of carbon pollution among fossil fuels, according to government estimates analysed by Adele Morris of the Brookings Institution. This threat underscores why many lawmakers in coal precincts oppose policies to tackle climate change and why Wyoming voters gave President Donald Trump his greatest margin of victory of any state in 2016. Mr Trump made reviving the industry central to his campaign. He has since ended a moratorium for new coal leases on federal land and issued rules that would push coal-fired plants to run more often. Wyoming is suffering despite that support. The pain is especially acute for 578 local employees of Blackjewel, a mining company that filed for Chapter 11 bankruptcy on July 1. Workers on its Eagle Butte and Belle Ayr sites were ordered out. Gates were locked, and have not been reopened.
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A court-approved transfer of the open-pit mines back to their former owner, Contura Energy, has stalled as the federal government seeks $60m in unpaid royalties. Campbell County is claiming another $37m in back taxes. Blackjewel collapsed amid a darkening fiscal backdrop for the state. Annual receipts from Wyoming’s coal severance tax, paid when the mineral is removed from the ground, have shrunk by more than $100m from a peak of nearly $300m in 2011, with government forecasters eyeing further declines in the years to come. Coal royalties are also $100m lower. One-off “bonuses”, received when mining companies lease government land, reached $239m in 2013, a high-water mark for the billions of dollars that helped to build new schools in every county. This year bonuses will be zero. “That money is gone,” says Travis Deti, executive director of the Wyoming Mining Association.
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The state has been forced to dip into a $1.8bn rainy-day fund built up during the coal boom, withdrawing $450m over the past four years, according to legislative service documents. “It’s never easy to just turn the spigot off,” says Mark Gordon, Wyoming’s governor. “We’ve really focused on how do we land this in a way that is not painful overall.” Coal transformed Campbell County’s Gillette from a dusty cattle town into a city with a symphony orchestra, stylish brewpubs and paved streets shaded by aspen trees. Household income of $80,000 a year is well above the national median. Miners were driven by two factors when they first tore open the Powder River Basin’s ranchlands in the 1970s. First, the federal Clean Air Act of 1970 cracked down on sulphur oxide pollution, creating a market for Wyoming’s less sulphurous, sub-bituminous coal.
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Then the Arab oil embargo of 1973 exposed US dependency on imported fuels. “We can protect ourselves from uncertain supplies by reducing our demand for oil, by making the most of our abundant resources such as coal,” President Jimmy Carter said in a 1977 speech where he described the energy crisis as the “moral equivalent of war”. His administration outlined plans to increase annual US coal production by two-thirds to more than 1bn short tons. The US surpassed the 1bn ton mark in 1990 and remained there until 2014, largely helped by growing output from the basin. In 2019, government forecasters expect production to fall back below 700m short tons — as it was in 1977 when Mr Carter made his speech. If green policy sparked the basin’s coal boom, it is now contributing to its reversal. A majority of US states have adopted renewable electricity mandates which dictate minimum amounts of power from green sources and by extension, less from coal, lowering the cost of wind and solar power.
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Surging production of natural gas has also allowed utilities to abandon ageing coal plants and replace them with gas turbines. From a peak in 2011, US coal-fired generating capacity has fallen by 82 gigawatts — enough to power 28m households — to 235GW. Natural gas capacity increased by 61GW to 456GW in the same period, according to the Energy Information Administration. “There’s no question that coal is in secular decline in the US,” says Vic Svec, senior vice-president of investor relations at Peabody Energy. To cut costs the company plans to merge its North Antelope Rochelle mine, the world’s largest by volume, with Arch Coal’s Black Thunder mine. They share a seven-mile border in the Powder River Basin.
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Wyoming’s legislature, where 77 of 90 seats are held by Republicans, is groping for a solution. Mr Gordon has signed a bill that requires utilities in the state to seek buyers for coal-fired plants scheduled for retirement. A second bill, under discussion, would require Wyoming’s utilities to source all their electricity from coal, oil, gas, nuclear and hydropower and none from wind and solar. Officials are embracing “technology” to provide an answer. The Powder River Basin is now a hive of state-backed projects designed to discover ways to process coal as a raw material for industry or convert CO2 emitted by power plants into valuable products.
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This summer the county commission hired consultants to study the Carbon Valley concept as an “ecosystem” of industrial sites, supply routes and a trained workforce that could research and manufacture carbon goods, Mr Christensen says. The county sees a potential model in a Gillette company called Atlas Carbon, which takes coal by the truckload from the nearby Wyodak mine and cooks it in tall cylinders to create activated carbon, the granules used in water and air filters. Last year it received a $15m loan from the state. While Powder River Basin coal sells at the mine mouth for about $12 a short ton, the company adds value by selling its products for as much as $2,000 a ton, says Frank Levy, Atlas chairman. The same industrial area could become home to the Advanced Carbon Products Innovation Center, a county initiative meant to host entrepreneurs making industrial goods from coal. The Trump administration last month granted $1.5m to the project.
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Two miles away, a fence topped with barbed wire encloses an open space known as the Wyoming Integrated Test Center, another coal rescue scheme built with $15m in state funds. The site was designed to deliver CO2 from the exhaust of the neighbouring Dry Fork coal-fired power station to researchers and start-up companies aiming to turn it into useful goods. Among them will be five finalists for the $20m Carbon Xprize innovation contest who are exploring ways to turn planet-warming CO2 into materials such as plastics, methanol, insulation and cement.
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CO2 from the power plant could also be injected into depleted oil wells, coaxing out barrels while locking the coal emissions underground, says Jason Begger, executive director of the Wyoming Infrastructure Authority. Collectively, these technologies are known as carbon capture, utilisation and storage (CCUS).
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“We’re the only state that I’m aware of that is pushing large-scale technologies to reduce CO2,” says Mr Begger, a former executive at mining group Cloud Peak Energy. “If Wyoming finds even just one technology, let alone a suite of technologies, that can be utilised in India or China or Vietnam or Malaysia, we’ve done far more to solve global climate emissions than California.” Yet the projects are tiny in scale. Atlas Carbon can only use up to 32,000 short tons a year of coal. Two of the 60 trains leaving the basin every day can haul that much coal with dozens of cars to spare. “We can’t keep a coal mine open,” Mr Levy says, shrugging his shoulders. Since a ribbon-cutting in May 2018, the Wyoming ITC remains unused. The Xprize recently postponed the finalists’ deadline to June 2020. Walking across the empty gravel site in the shadow of the Dry Fork smokestack, Mr Begger says his biggest challenge is recruiting tenants: “We’re still patiently waiting for that first one.”
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a value on carbon that reflects the cost of pollution “is needed” to create a business case for projects. Economists have embraced a carbon tax as the most efficient way to spur such technology to drive down emissions. Such ideas are seen as non-starters in the Powder River Basin. “Within Wyoming, there’s zero appetite for anything like a carbon tax,” Mr Begger says.
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There is not even consensus, in Wyoming, that CO2 emissions are a cause of global warming. “It’s really high school statistics: one of the first things they would teach is correlation does not equal causation,” says Chuck Gray, a state representative and radio talk-show host from the city of Casper. He dismisses efforts at climate regulation as a “power play” by “the left”. Instead, Wyoming wants to give people a reason to pay more for carbon rather than tax it. “Part of what Wyoming is trying to do is appreciate exactly what carbon is valued at and what the worth of it is. Because I think at this point, CO2 is considered a waste product,” says Mr Gordon, the state governor. However, success at selling carbon technology products would require “incredible government subsidies”, says Shannon Anderson, staff attorney at the Powder River Basin Resource Council, a Wyoming land protection group, who says the state has a long history of trying to “spin coal into gold”. That might still not be enough to prop up the state’s coal industry or its tax receipts. Mr Deti, the mining lobbyist, tried to put the best face he could on the situation at a hearing before Wyoming legislators in August. “We believe technology is key,” he told the panel. “We’re supportive of efforts by individual companies to develop value-added coal and carbon products. [But] is that industry ever going to make up for 100m tons? Probably not.”