Marion Loomis

PERSPECTIVE

The Equality State Policy Center recently claimed that the Wyoming Legislature is looking to erode Wyoming's tax base through targeted sales tax incentives for locating new industry in the state (Star-Tribune, Feb. 13).

Their comments are directed at a bill to give a sales tax exemption to plants using Wyoming coal to make gas or liquids.

They appear to be taking the Wyoming coal industry for granted by continuing to assume that the $530 million generated annually in taxes, royalties and fees will always be available, and we don't need to look at the strategic assets of Wyoming. As we look down the road, can we assume that the status quo will continue to provide these critical royalties, taxes and fees to the citizens of the state? Perhaps the decision-makers in the state of Wyoming should take a critical look at how the industry will be forced to adapt to significant changes over the next two decades.

When you look at how the industry is going to have to change in the future, it becomes clear that we should start addressing now how we're going to have to adapt. Following is a quick review of the issues that the Wyoming industry will face over the foreseeable future.

Environmental regulations: The U.S. Environmental Protection Agency and Congress are currently proposing either legislation or rules that would reduce SO2, NOx and mercury emissions by 70 percent in 2018. The reductions in SO2 and NOx are on top of significant reductions that have already been accomplished over the past 15 years. For mercury, this will be the first program designed to reduce emissions from coal-fired power plants. Wyoming has greatly benefited from environmental regulation in the past, so we should anticipate the same for the future, right? Unfortunately, the answer is no. Under previous rules, utilities could comply with the environmental regulations (particularly SO2) by avoiding expensive emission control technology by switching to low-sulfur Wyoming coal. Under the proposed legislation or rules, emission control technology will be required no matter which coals are used. EPA's computer modeling of the proposed program shows that the primary beneficiaries

will be Illinois Basin and Northern Appalachian coals.

Combustion technology: Whether you believe in global climate change or not, there is going to be a fundamental change in combustion technology for new coal-fired power plants. The energy bill before Congress contains funding for more than $2 billion in clean coal technologies. These dollars will be spent over the next decade. Further, the U.S. Department of Energy has proposed the Future-Gen initiative that would achieve a near-zero emission level from new advanced technology coal-fired plants. DOE would like to have a plant in place sometime in the next two decades.

Coal gasification: This technology has generated a lot of interest over the past couple of years, and basically is a process that transforms coal from a solid to a gaseous state, and significantly reduces constituents that lead to air pollution. At this point, the technology is significantly more expensive than current combustion technology, and also has not been validated at higher elevations, or with Powder River Basin coals. It is anticipated that the relative cost of a coal gasification plant near sea level would be much less expensive than one built in Wyoming using PRB coal.

Coal-to-motor-fuel technology: We are all aware that oil has been become very expensive. Diesel fuel was once sold at a discount to other grades of gasoline, but that has changed. This problem has been exacerbated since no new refining capacity has been added in the United States over the past couple of decades. Technology has been in place for over 50 years in South Africa to transform from coal to diesel. As motor fuels remain at near record high levels, there is increasing interest in utilizing this type of technology in the United States.

So what are we doing in Wyoming to attract these dollars to the state? At this point in time virtually nothing. Other states are actively gearing up to attract these new industries and enhance the coal industry in their states. In order to protect revenue income to the State of Wyoming for years down the road, it is important to begin to address these upcoming issues.

House Bill 272 begins this process. It has been argued that this is a giveaway to an industry that will likely come to Wyoming anyway. However, this is an industry that has virtually no presence in the state at this point in time. Further, it is critically important to remember that while coal liquefaction or beneficiation plants will be an important economic development component, the big dollars from a royalty, tax and fee perspective, lie in the coal resource.

Now is the time to encourage these plants to come to Wyoming.

Marion Loomis is executive director of the Wyoming Mining Association.