Legislature looking to boost state’s coal industry

Multiple bills would provide tax breaks or other benefits.

By Dylan Sherman, NDNAEF

BISMARCK – The North Dakota Legislature has heard a number of bills that seek to support the established coal industry in the state.

The bills have received widespread support from legislators who believe that helping the industry will continue important revenue streams, keep jobs and bolster a strong power grid.

House Bill 1412 would provide a coal conversion tax exemption on facilities for five years and would cost the state $42.6 million during the 2021-23 biennium, according to the bill’s fiscal note. It received a “do pass” recommendation from the Senate Appropriations Committee Friday.

Rep. Craig Headland, R-Montpelier, cosponsor of the bill, said it is important to help the coal industry in North Dakota.

“Most of us believe we need a consistent baseload power for our inclement weather that we experience on a regular basis,” he said. Also, “Coal has been an important provider of revenue to the state in the past.”

Headland said the tax exemption is an effort to encourage continued production and generation through the sale and purchase of Coal Creek, one of the state’s coal plants. The Coal Creek plant is slated to close in 2022, but is currently in negotiations over a sale that would keep it open.

“It is just one of the pieces we felt we needed to get into place to make sure that it was done,” he said. 

Jonathan Fortner, vice president of government affairs for the Lignite Research Council, testified in favor of HB 1412, saying the industry needs the break.

The bill “would provide much needed temporary tax relief from the coal conversion taxes for struggling lignite power plants which employ thousands of working families,” he told the Senate Appropriations Committee.

Fortner said the coal industry is responsible for over 13,000 direct and indirect jobs in North Dakota.

“It is the lifeblood of many communities and counties in central North Dakota,” he said.

Geoff Simon, executive director of Western Dakota Energy Association, said the legislation would buy time for the coal industry in North Dakota.

“I may be fairly optimistic, but I think there is going to be a growing realization in the next five years the importance those baseload power plants bring to the grid,” he said.

As the bill was being referred to Senate Appropriations, Sen. Jordan Kannianen, R-Stanley, said on the Senate floor, “This is an attempt to save an industry that provides a lot more to our state.”

While HB 1412 would provide tax relief to the coal industry, those against it feel it isn’t the right way. 

Scott Skokos, executive director of the Dakota Resource Council, testified against the bill and said it would just be a “Band-Aid” over a much bigger problem.

“Money could be spent better elsewhere in diversifying the economy,” he said. “It is a bailout toward the coal industry that may or may not work.”

Skokos said the utility industry is moving away from coal across the country as power plants usually last 40 to 60 years. Most of the North Dakota plants are nearing the end of that timeframe, according to Skokos. 

“We understand communities are going through tough times and we need to look out for those communities, but not in this way,” he said. Better to invest in the communities to plan for the long term, “figuring out other ways that we can actually start moving toward the next energy economy, where you can create a future economy in North Dakota that isn’t constrained by fossil fuels.” 

Another bill aiming to support the industry is HB 1452, which would fund technology relating to carbon capture at coal power plants and give $40 million to a new Clean Sustainable Energy Authority, which would provide grants and loans for carbon-cutting projects. The plan has the support of Republican legislative leaders but has drawn scepticism from environmental quarters. On Friday, Senate Appropriations reduced the allocation to $20 million and recommended passage.

Jason Bohrer, president of the Lignite Research Council, stated in written testimony that the bill would provide “substantial opportunities” to the sector. “(We have) been supporting substantial investments in carbon capture projects, which could spur a new market for carbon dioxide and funding research into rare earth minerals found in lignite,” he said.

Headland, too, said that with carbon capture, coal could become a clean source of energy in the future.

“It is going to become a really clean source of energy that is reliable,” he said. “I do believe it is important that we move these measures forward to support a coal industry that is going to be needed in the future.”

Skokos said carbon capture does not work as well as hoped where it has been implemented.

“The truth of the matter is carbon sequestration has not worked anywhere that they have tried it on large scales,” he said.

Skokos said in Texas a project called Petra Nova Carbon Sequestration Project was considered a failure after costing $1.2 billion.

“Why not prop up other things as coal plants are nearing the end of their use?” he said.

HB 1452 would also not include sustainable energy producers, making the Clean Sustainable Energy Authority biased toward the fossil fuel industry, according to Skokos.

“It actually doesn’t have any representation from renewables or any other innovative technology like batteries,” he said. “If we are going to talk about clean sustainable energy we have to have actual clean sustainable energy at the table.”

With wind and solar developers in the state, Skokos said they should be a part of the legislation as they have innovative ideas as well. Skokos added if the bill had better representation he would probably support it.

Skokos said even if the plan is to go into place, he questions how long it will be used and how much it will cost the state. “For us to think in North Dakota that we’re exceptional and we can do better than what all these people have done in other states I think is short sighted,” he said.

Some conservative legislators also have raised questions about the proposed spending levels.

The Clean Sustainable Energy Fund would have received an additional $250 million, through a Senate amendment to HB 1431, the sessions bonding bill, but it was removed from the bill as it passed the Senate on April 9.  

If HB 1452 moves forward, it will have the $20-million investment into the fund as stated in the bill.