The Impact of Clean Energy on the Kentucky Economy

By Hope Platzbecker, Associate Editor

Growing up in Roscoe, Illinois, my father worked for an environmental company. I recall many conversations with him regarding waste reduction, clean energy and other environmentally friendly practices. The interstate highway between my childhood home and my grandmother’s house was scattered with energy-generating wind turbines. But when I moved to Kentucky, I was surprised to learn that many people openly and regularly support—sometimes even encourage—the consumption of coal. I soon realized the fundamental impact coal companies have on the state and local economy, especially in mining communities. This led me to contemplate the questions: what impact would clean energy sources have on Kentucky’s economy and could the recent legalization of hemp in Kentucky be the answer to mining-related economic woes?

The Politics of Clean Energy

Clean energy laws are hotly contested political issues.  A great deal of political commentary involves discussions of unemployment, economic growth and climate change mitigation.  Addressing these issues, especially in Kentucky, directly affects the coal industry and its bottom line. For example, for many years, coal has contributed hundreds of millions of dollars to the economy in Eastern Kentucky through wages, taxes and support industries.[1] Coal is an integral part of the Eastern Kentucky economy because the economy’s health depends on the price of a ton of coal.[2] As the price of coal increases, coal companies hire more miners, bringing more jobs to the region. Alternatively, when the price of coal decreases, coal companies cut back on employees and wages, in an effort to decrease overhead costs. But the benefits of coal consumption— a low cost, reliable, and abundant power source—have outweighed and overshadowed the damage coal consumption causes to the environment.[3] In addition to increased competition from other coal-producing regions and the depletion of the most accessible and lowest cost coal reserves in Appalachia, and much to the Kentucky coal industry’s dismay, environmental regulation is a top contributor to the decrease in Appalachian coal production.[4]

Throughout his campaigns and presidential terms, President Obama frequently discussed the need for the United States to embrace clean energy solutions, enact green policies, and set aggressive goals to achieve cleaner energy consumption.[5] For example, the EPA passed the Mercury and Air Toxics Standards Rule (“MATS”) in 2012.[6] MATS would have required power plants to reduce their levels of air pollutants.[7] Despite MATS being overruled by the Supreme Court, many power plants had already made the switch from coal to natural gas powered electricity.[8] In addition to regulation changes, the Obama administration distributed funding, through a competitive grant and federal matching program, to aid individuals in reducing personal energy consumption.[9] During the Obama administration hundreds of thousands of homes were weatherized, resulting in a reduction of energy consumption by 35%.[10] These Obama-era polices have had lasting impacts on the coal industry.[11]

As a result of these policies and plans, between 2006 and 2016, coal production in Eastern Kentucky fell by over 80%.[12] While not all of these promises and ideas came to fruition, this progress demonstrates there are viable means to accomplish clean energy goals, depending on the administration. Thus, it would appear that the future of small coal mining towns is dependent on the presidential administration. Of course, individual states and Congress could get involved and pass their own legislation and policies. However, this becomes a complex issue of who has jurisdiction to pass what legislation, with ultimately many regulations and policies being overruled by the courts for lack of authority.[13]   

Because the production of coal in Kentucky is projected to decline 58% by 2035, federal and state governments must begin to develop alternative economic opportunities for regions whose economies have been almost exclusively supported by coal mining activities.[14]

Hemp Farming as a Replacement for Coal Mining in Kentucky

As recently as 2017, hemp was legalized in the state of Kentucky.[15] Introducing hemp as an income replacement for coal mining families would not only create jobs but would also reintroduce vegetation that would mitigate the effects of erosion. Whether or not hemp can help the Appalachian economy depends on whether it can be grown profitably.[16] Thirty years ago, the profitability of hemp in the United States was minimal as the U.S. market could not compete with foreign counterparts.[17] However, by the end of the 1990’s the hemp market in the United States began to see an increase.[18] One potential issue with profitability is the quantity of hemp that can be grown. The larger the land space, the more hemp can be grown thus allowing for money to be made. In the Appalachian region coal companies have purchased the mineral rights to much of the land.[19] In the event coal companies still own the rights to the land, coal companies could continue to employ workers, but now the workers would grow hemp rather than mine coal. Alternatively, in the event multiple individuals own smaller tracts of land, the government could provide them with tax incentives to group their land together to be able to grow larger quantities of hemp.

Hemp would not only help stabilize the economy of coal mining regions but could also repair the environmental damage left behind. Strip mining is a widely used technique for coal mining. Through strip mining, equipment scrapes away at the surface of the earth revealing coal underneath.[20] This scraping process not only removes coal, but also removes all vegetation, leaving the area prone to erosion.[21] For the same reason strip mining would enable hemp to be planted, hemp needs to be planted. Hemp roots are capable of growing deep into the soil, which would hold the soil in place and prevent further erosion.[22] Additionally, hemp has been used to remove some of the heavy metals and other contaminants left in the soil by mining operations.[23] Researches have discovered that when hemp is planted in soil laden with mining contamination, the hemp absorbs many of the heavy metals.[24] However, this absorption does not eliminate the profitability of the hemp. The contaminants will show up in the hemp leaves, but not the flower buds, which is where the majority of the valuable CBD oil is found.[25] Introducing hemp as an economic source for coal mining regions would not only help their economy, but also mitigate the environmental impact from the coal mining.[26]

Conclusion

As coal production decreases in the Appalachian region, the jobs the coal industry brings to the area will have to be replaced. The recent legalization of hemp and the projected future growth of the hemp industry in the United States provides a viable option to replace the coal industry in the Appalachian region. Hemp will not only benefit the Appalachian economy but also begin to repair the environmental damage from coal mining. Introducing hemp into the Appalachian region as an income source would not happen instantly, as there are extensive licensing requirements for farmers to grow hemp in Kentucky.[27] However, to help the area the government could waive or reduce the processing fee or offer informative meetings specifically in the Appalachian region to aid individuals in filing the paperwork.  

[1] Noah R. Friend, Collateral Damage: The Impact of Obama-Era Regulations on the Eastern Kentucky Coalfields, 9 Ky. J. Equine Agric. & Nat. Resources L. 441, 442 (2016-2017).

[2] Bryan C. Banks, High above the Environmental Decimation and Economic Domination of Eastern Kentucky, King Coal Remains Firmly Seated on Its Gilded Throne, 13 Buff. Envt’l. L.J. 125, 134 (2006).

[3] Id. at 134-136.

[4] Randal A. Strobo, The Shape of Appalachia to Come: Coal in a Transitional Economy, 4 Duke Forum for L. & Soc. Change 91, 94 (2012).

[5] Hari M. Osofsky, Diagonal Federalism and Climate Change Implications for the Obama Administration, 62 Ala. L. Rev. 237, 243 (2011).

[6] Friend, supra note 1, at 455-56.

[7] Id. at 456.

[8] Id.

[9] Osofsky, supra note 5, at 254.

[10] Id. Weatherizing a home includes increasing insulation and replacing the seals on windows and doors to prevent drafts.

[11] Id. at 462.

[12] Id.

[13] See David E. Adelman & Kirsten H. Engel, Adaptive Federalism: The Case Against Reallocating Environmental Regulatory Authority, 92 Minn. L. Rev. 1796 (2008).

[14] Strobo, supra note 4, at 91-94.

[15] KRS § 260.858 (2017)

[16] Susan David Dwyer, The Hemp Controversy: Can Industrial Hemp Save Kentucky?, 86 Ky. L.J. 1143, 1155 (1998).

[17] Id. at 1152-1153.

[18] Id.

[19] See Friend, supra note 1 at 442-449.

[20] See Bank, supra note 2.

[21] Banks, supra note 2, at 137-144.

[22] Canadian Hemp Trade Alliance, The Hemp Plant, http://www.hemptrade.ca/eguide/background/the-hemp-plant (last visited Feb. 20, 2020).

[23] Chris Roberts, Hemp clean toxic soil and produces clean CBD flower, study finds, Leafly (Dec. 23, 2019), https://www.leafly.com/news/industry/toxic-soil-produces-clean-hemp-cbd-flower.

[24] Id.

[25] Id.

[26] Banks, supra note 2, at 137-144.

[27] KRS § 260.858 (2017).