The Future of Coal Regions: Public and Private Finance

Speakers: 

• Dr. Brian J. Anderson, Executive Director, Interagency Working Group on Coal & Power Plant Communities & Economic Revitalisation
• Baylen Campbell, Director of Community Impact, Invest Appalachia
• Vonda Brunsting, Program Manager For The Just Transition Project, Initiative for Responsible Investment, Harvard Kennedy School

Campbell spoke about Invest Appalachia’s business model, their priority sectors for investment (clean energy, community health, creative placemaking and food and agriculture), and the focus of providing a mix of private and public funding as concessionary finance and catalytic capital to ventures that are investment worthy but not investment ready. Brunsting emphasized the exclusion of workers and communities in the deliberations around plans for transition and divestment and how finance products were designed to meet the need of investors but not the need of the place or the communities. Anderson talked about the once-in-a-lifetime federal funding opportunities available to coal communities via the Bipartisan Infrastructure Law and the Inflation Reduction Act and the current bipartisan effort of a Rapid Response Team to bring together federal agencies and their regional staff to partner with local officials and community leaders to navigate energy communities’ energy transition. Some of the main takeaways from the event include:

• Coal regions, such as Appalachia, have been historically under-invested in and have poor infrastructure that does not support development of new industries

According to Campbell, Central Appalachia receives less than 1% of investments nationally. He contrasted $43 per capita of grants received by the region versus the national average of $400. Unsurprisingly, the region suffers from infrastructure issues such as unavailability of broadband, water and sewage facilities, inadequate roads and other transport infrastructure. This has curtailed development of manufacturing and related industries to substitute for the coal-related jobs. Anderson further emphasized the importance of infrastructure to enhance capital absorption and community investability.  

• While a significant amount of federal funding is available to coal communities, matters of finance and government policies remain inaccessible to most in the community, which contribute to distrust in the state and create barriers to the efficient deployment of federal funding 

Bulky and jargon-filled financial documents, forms, and government policies naturally exclude most of the community from discussion and deliberations on investment and transition matters. This is especially salient when oil, gas, and coal related jobs that are being eliminated are high paying, while the viable alternative jobs in renewable manufacturing are likely to be minimum wage. This brews further distrust between investors and the local communities, according to Brunsting. Instead of looking at workers as “costs to be mitigated” and communities as “entities to be managed”, these workers and communities need to be driving the agenda. In addition, local energy communities do not have the resources and expertise to write grant applications, creating a hurdle for them to get the federal funding they need despite the availability of the funding.   

• Public perceptions and narratives of coal communities can have an impact on whether they can attract investment from outside (either domestically or internationally) 

Coal regions are often perceived as poor and underdeveloped areas without the knowledge capital to invest for new businesses and economic growth. Additionally, the blanket branding of coal regions as ‘Trump Country’ has further limited private investment and philanthropy. However, coal regions have certain competitive advantages that other regions may not have for business and economic development, such as the ecological diversity, the wealth of national resources, and labor forces with industrial experience. This is illustrated through the evolution of Ravenswood, WV aluminum plant from being shut down to now receiving investments in developing a state-of-the-art titanium melt facility from Berkshire Hathaway Energy. 

This is a report for a study group titled The Future of Coal Regions, co-sponsored by the Reimagining the Economy Project and the Belfer Center's Environment and Natural Resources Program, designed for Harvard students to learn and share knowledge about the challenges facing coal-producing regions, to identify opportunities for overcoming these challenges, and to foster connections and collaborations between students, faculty, and affiliates. Over the course of Spring 2023, the study group focused on coal-producing regions around the world, but the discussion generated insights applicable to other fossil-fuel-producing regions.