Celanese: The “War on Coal” Versus Reality

By Peter Galuszka

The “War on Coal” has marched on Giles County and the propaganda is flying. Yet the problem is a bit more complicated.

The latest skirmish involves a Celanese Acetate plant that makes products for cigarette filters and other items. The largest employer in the mountainous county, Celanese opened its chemical works on Christmas Day 1939 for the plant which now employs about 550 company workers and 400 contractors.

The problem lies with its boilers. Seven are fired by coal and six more boilers and furnaces use natural gas. The coal-fired ones in particular are old and polluting. State and local government are putting up $2 million to help Celanese convert the coal-fired ones to gas-fired and keep the plant from moving overseas. Celanese itself is investing $150 million in the conversion.

The core issues involves the new federal Mercury and Air Toxics Standards (MATS) proposed by the U.S. Environmental Protection Agency last year.  This new regulations establish standards where none existed for emissions of such air toxics as mercury, arsenic, chromium, nickel and acid gases. Another rule, the Maximum Achievable Control Technology (MACT), would force emissions to be cut from industrial boilers.

Without expensive controls, coal-fired boilers are notorious for emitting such poisons that the EPA says helps kill 11,000 people prematurely each year. They are far more polluting than natural gas-fired boilers which burn more cleanly.

Another issue is that coal-fired boilers contribute more to carbon dioxide, now declared a pollutant than can lead to climate change. A study by the Massachusetts Institute of Technology shows that natural gas boilers emit roughly half of the CO2 that coal-fired ones do. Like it or not, the U.S. is under the gun to join most of the industrialized world in reducing CO2 emissions, whether or not one thinks they are man-made.

For the sake of perspective consider that back in 1939 when the Celanese plant was built, coal was in much wider use. Railroad locomotives burned it, as did neat little bungalow homes, big electric utilities, and long-forgotten blast furnaces and factories. It was the fuel of choice, especially in Giles County which is right next to some of the world’s best coalfields and connecting rail lines.

Air pollution has been a problem at the Celanese plant for years.  Earlier this year, the state Department of Environmental Quality cited Celanese Acetate for the third time in four years for failing to properly monitor emissions from its boilers that can emit such toxic pollutants as nitrous oxide, mercury, carbon dioxide, sulfur and others. The 2012 citations brought a fine of $13,122.20.

In 2008, the EPA forced Celanese to pay a fine for $60,000 for not installing a device to measure nitrogen oxide.

When the MACT rules were proposed last year, Celanese officials were deeply worried. Plant manager Todd Elliott said so in testimony on Sept. 8, 2011 before a subcommittee of the Committee on Energy and Commerce of the U.S. House of Representatives.

Elliott testified that Celanese is in a global market place and if costs become too much in one location, “we must look at other options.” The new MACT rules will force Celanese to comply with new emissions within three years. Given their consistent problems with air pollution — they are among the top polluters in the state — that would be a problem.

Elliott said: “Our engineering studies concluded that we will need to add emissions controls to our existing coal-fired boilers or convert those boilers to natural gas. Either alternative would require a very significant capital investment and time investment and would necessitate an extended plant outage while changes are implemented.”

Another problem is that the firm must wait until a natural gas line is available before it would consider converting to gas. Installing gas boilers might take a year. Sticking with coal, he said, was problematic because they can’t find sources of coal that are both low in mercury and hydrochloric acids.

Judging from such testimony, Celanese was most likely in a position to apply considerable pressure on the state to do something to help them — or they’d move. If they did, they’d take 1,000 jobs with them.

So, it came down to two choices — retrofitting coal with new emissions controls or new gas boilers. Neither is cheap. They went with natural gas because it is cleaner, has less of a carbon footprint, and at the moment, is relatively cheap as fuel. Retrofitting its seven coal-fired boilers was not really an option, cost-wise.

What’s more, a search failed to turn up any evidence that industrial facilities such as chemical or paper plants are installing new coal-fired boilers. Such boilers for use in electrical generation are a different story — some 145 are planned in China. They have the heat output to spin major megawatts regardless of the pollution issues. For smaller plants, they just don’t seem to make sense.

So, if you buy the “War on Coal” argument, consider how many other chemical processing factories are seriously considering switching to coal-fired boilers these days. My guess is that such uses went away in the 1950s or 1960s. If you find some, please post them on this blog. To be sure, coal is in a cyclical downturn but it is doubtful that coal supplied Celanese with anywhere near as much as they would for a 1,500 megawatt power plant. Besides, natural gas is a viable energy industry in Virginia. It really isn’t a choice of coal or Virginia loses — it’s one of the best logical and cost option.

As for whether Celanese put the muscle on Gov. Robert F. McDonnell, that’s another issue and a valid one worth exploration.

As for MATS, you have to ask yourself if we’ve gone far enough in protecting the health and environment of Virginians and everyone else. I’m sure some will say this is all too much. But those very same types of people said the reforms that President Richard M. Nixon sought and won in the late 1960s and early 1970s were too much, too.

As for me, I remember the before and the after.

12 Responses to Celanese: The “War on Coal” Versus Reality

  1. There are a number of other examples around Virginia where large companies are converting or planning to covert boilers from coal or oil, but not my place to bring up their names. The Boiler MACT (Maximum Achievable Control Technology) air pollution regs which are slso pending all but steer companies toward natural gas, which gets a virtual “get of of jail free” status from EPA. I suspect the threat to those jobs (I had an uncle who worked at that plant) from the conversion costs was real.

  2. Breckingridge,
    In my haste I left out MACT and confused it in Elliott’s testimony. I have fixed the post now.

  3. Great digging, Peter. Bacon’s Rebellion was definitely “the firstest with the mostest,” to borrow a phrase from Nathan Bedford Forrest, on this story.

  4. I second that. Good Job Peter!

    and this is an important point:

    ” Elliott testified that Celanese is in a global market place and if costs become too much in one location, “we must look at other options.”

    there are about 1000 jobs here…in a region desperate for jobs, and they could go overseas …

    what to do…..

  5. Remarkable. McDonnell kept 1,000 jobs in Giles County for $2M? That’s $2,000 per job. Let’s say they earn $40,000 on average per year. That’s $40M of salary in a year. At 5% state income tax on the top $23,000 earned, that’s $1.15M in state income taxes per year. And that’s just the revenue side. Imagine the costs of 1,000 unemployed people in Giles County.

    And … that doesn’t include the construction jobs or the 22 new permanent jobs.

    Holy smokes! Well done, governor!

  6. I cannot resist here. So, other taxpayers pay their taxes which, in turn, go to keep others employed?

    NoVa should like that deal a lot, eh?

    :-)

    • It’s a good business deal for the Commonwealth and for NoVa. People with jobs keep jobs. I am guessing that there is little alternative in Giles County. Would I rather that the state move agencies out of Richmond and into depressed areas of the state. Of course. However, this is the next best thing.

  7. was reading about the data centers in NYC and how the “smarter” companies like Google are locating their data centers in the country far from hurricane threats.

    Perhaps Va has some rural land suitable ….. I wonder what the State would have to do infrastructure-wise to make it tempting?

    • Yes, Google, et al is doing just that. Of course, the data centers employ a few hundred (at best), while the software development groups hire thousands or tens of thousands.

      Focus where the software is being written, not where the data centers are being built.

  8. In a knowledge-based economy – software can be written anywhere.

    which I agree – means it can be written overseas

    but it also means it can be written in SW Virginia if we have
    people with proper background and training which all goes back to education – at 10K per kid per year. Hugely expensive when compared to the 2K that McDonnell spent to keep jobs.

    That Celanese Plant, BTW, is dang near in West Va.

    • ” … if we have people with proper background and training …”

      Not so quick. A kid grows up in rural Virginia. He’s obviously brilliant. He gets great grades as he graduates from high school. Even though he grew up in Blacksburg he goes to Princeton for his BSEE. Then, onto Berkeley for his MS and PhD. He stays in Northern California and would go on to be the President of SUN, CEO of Novell and CEO of Google.

      He is now the 136th richest man in the world.

      As far as I know, he never ventures back to Blacksburg, Va.

      The man’s name? Eric Schmidt.

      Jim Bacon and Richard Florida are right. Simply educating people in one place is not enough to assure the success of that place. People are mobile. You need a place where they can prosper and where they want to live.

  9. you gotta get them educated in k-12 first before they will be “mobile”.

    great grades in schools that are not 21st century competitive won’t get you far.

    and you and Jim’s observation of “family” has a kernel of truth to it in terms of getting kids to strive for better than their family’s current status quo. that’s tough but no tougher than the kids of farmers in the 19th century when public schools first came into existence.

    we have to reinvent our attitudes towards education in Va and the US.

    We did not fall behind – we failed to keep up.

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