On behalf of CNX Resources, we thank the Virginia Department of Energy for undertaking this important study and would like to thank the General Assembly and the Governor’s office for their leadership on the passage of HB1643 and SB1121. We appreciate the opportunity to comment.
CNX Resources is the largest natural gas producer in the Commonwealth of Virginia, with our operations stretching across Buchanan, Russell, and Tazewell counties. Within Virginia we employee approximately 70 employees and have over 400 contractors working at our sites on any given day.
It’s important to distinguish traditional coal bed methane from coal mine methane. Coal mine methane (CMM), as defined by the law, is “methane gas captured and produced from an underground gob area associated with a mined-out coal seam that would otherwise escape into the atmosphere.” The definition of coal mine methane covers mines that emit methane for safety purposes and the methane still emitting from abandoned or closed mines, which would otherwise be going to atmosphere. Whereas Coal Bed Methane (CBM) is a resource unrelated to mining degasification or safety.
CMM is not required to be captured. MSHA requires that a written ventilation plan, with specified content, be developed for each underground metal or non-metal mine. Accordingly, the venting of methane is necessarily standard industry practice.[1] As shown below in Graphic 1.1, CMM accounts for 8% of all Methane Emissions in the US. [2]
There are over 539 operating coal mines and less than 2% of underground active coal mines are capturing and using methane as of 2022, and only 13 mines with capture projects reporting to EPA’s Greenhouse Gas Reporting Program.[3],[4]
Fewer than 8 active mines are utilizing the CMM for beneficial use today due to high costs of capture and cleaning.4 One of those happens to be in Virginia at the Buchanan #1 Mine, but so much more can be done. There are still significant methane emissions across Virginia mines, even still at Buchanan. It is a necessary part of the mining activity, and ensuring the viability of these mines should be of utmost importance. Due to the large capital expenses associated with capturing methane, these efforts need to be incentivized or encourage, and if done correctly, can establish an entirely new stream of capital deployment, infrastructure build out and jobs, all while addressing an environmental concern from an otherwise wasted resource. CNX estimates that if CMM capture for beneficial was incentivized, private industry could address the >10M tons of co2e annually liberated from underground coal mines in Virginia by enabling private investors to invest over $400 million and create 400 jobs in coal communities primarily in Southwestern Virginia.
Currently, there are no federal incentives for the capture and utilization of coal mine methane, unlike the Renewable Fuel Standard for biogas, and only five (5) states currently recognize CMM for their alternative or renewable portfolio standards. For nearly two decades, Pennsylvania has designated CMM as a tier 1 energy source. Other states that include some form of mine methane in their portfolio standards include Ohio, Indiana, Utah and Colorado. Virginia, like several other states, should recognize the positive environmental attributes of this method of capturing methane emissions that would otherwise go into the atmosphere.
Historically, the Section 45K(a) (formerly Section 29)[5] provided a credit for producing fuel from a nonconventional source, measured in barrel-of-oil equivalent of qualified fuel (including methane from coal mines), the production of which is attributable to the taxpayer and is sold by the taxpayer to an unrelated person during the taxable year. The credit was enacted in 1980 by the Crude Oil Windfall Profit Tax Act in response to the energy crisis causes by the cut off of crude oil from the Middle East. The credit, which was extended and modified at different times, ultimately expired in 2007 for qualified fuels produced from coal seams.
Due to this expiration, coupled with the lower natural gas prices due to the advent of unconventional shale development, capture projects for beneficial utilization are decreasing, and in some cases those same mines are now venting to atmosphere and / or pursuing flare projects due to economic conditions as shown in Graphic 1.28.
Under California’s program, CARB, California Air Resources Board, coal mine methane does qualify as a valid source for emissions offset, however, only if that methane is destroyed via flaring[6]. It is important to note, that the methane abatement impact of flaring is limited. Despite the incentive at CARB and a handful of other carbon offset markets, today, flare projects capture only ~1.3MM tCO2e per year, or 2.5% of methane liberated from active underground coal mining in 2021. [7], [8]The increase in flaring is not having a material impact on reducing emissions to atmosphere due to the small scope, low adoption, and temporary nature of the practice. [9]
Due to the methane release occurring during and after active mining of coal, and released methane migrates to the atmosphere within a timeframe that is within life cycle analysis (LCA) boundaries.[10] [11]This is important because more and more companies, electric generators, and manufacturers are focusing on life cycle analyses and carbon intensity of feedstocks. When coupled with the global focus on methane emissions reductions, this fuel source and its low carbon attributes can help attract manufacturing and electric generation to the state. For example, CNX has announced projects with Newlight, Adam’s Fork ammonia, and the Pittsburgh International Airport where on-site consumption of low carbon intensity gas is a priority that brought investment to OH, WV, and PA respectively. These project developers want to meet their environmental and sustainability goals are looking for ways to utilize energy resources as their feedstock that can be counted toward their emissions avoidance targets – CMM can meet that demand, while utilizing a potent gas that would otherwise be vented into the atmosphere.
Each new MW of solar and wind capacity requires between 35-45 and 120-180 tons of steel respectively. 70% of steel production globally relies on coal for manufacturing. According to Ember, 27% of the climate impact of steel comes from methane. The capture and beneficial use of CMM will drastically lower the climate impact of the renewable energy supply chain and scope 3 emissions.[12],[13],[14]
The technology is available, the workforce is here and there is an appetite to capture and use this methane, which creates jobs, helps the environment, and utilizes an energy source that would otherwise be wasted – providing more energy security.
As company, CNX is committed to an Appalachian First vision to energy production. That means produce it here and use it here, first. We need to leverage this resource and strategic advantage that Virginia has to attract better paying jobs to the Coalfields region. Recognizing the positive environmental effects of capturing CMM can translate into significant capital investment for our region. However, the key to unlocking this potential is to treat CMM the same as other low carbon intensity gases, like landfill and renewable natural gas from a public policy perspective.
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