The governor of West Virginia is pitching the idea of federal coal subsidies to President Trump, in which the federal government pays power plants to buy Appalachian coal.
It's an idea that Trump is "really interested" in, said Gov. Jim Justice, who made headlines last week for switching political parties from Democrat to Republican as Trump visited the state.
Justice told Bloomberg News that the government would pay coal power plants $15 per ton of steam coal mined in his state and others in the eastern part of the country. The price per short ton of Appalachian coal ranges between $45 and $52 on the spot market.
"He's really interested. He likes the idea," Justice told the news service. "Naturally, he's trying to vet the whole process. It's a complicated idea." A federal subsidy program would require congressional approval, as well as survive the ire of some conservative groups who oppose federal subsidies.
The governor is a wealthy billionaire from his dealings in the coal industry and real estate. He pitched the idea to Trump in recent meetings with the president.
He told the president that rolling back environmental rules, which is Trump's current approach to helping coal country, is not going to be enough to help his state's coal miners.
The pressure from low-priced natural gas has been eroding the market for coal-fired electricity, although a slight jump in natural gas prices next year, projected by the Energy Department, could help coal plants be more competitive over the next two years. In addition, Trump's push for more natural gas exports is expected to drive up the price of natural gas in the coming year.
The number of gas export terminals coming online next year will drive up natural gas exports 23 percent next year, the Energy Information Administration, the Energy Department's independent analysis arm, reported Tuesday.
Those factors could be beneficial to coal without subsidies. A bipartisan bill introduced in the Congress ahead of the August recess, and expected to be taken up in a tax reform bill, seeks to provide subsidies for coal plants that invest in clean coal technology, principally carbon capture and storage, or CCS, that removes some of the greenhouse gases from a coal's plants smokestack.
Big coal utilities have not indicated if they support Justice's subsidy idea. Duke Energy, one of the largest utilities in the world, announced last month that it will build one of the largest solar power plants in Kentucky, in the heart of Appalachian coal country.
Duke Energy is engaged in a plan to reduce its coal use to build more renewables, natural gas, and nuclear energy to supply its customers.