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January 22, 2026 - A panel of West Virginia lawmakers has approved legislation that could cost the state millions to extend its history of severance tax relief for the struggling coal industry.
The West Virginia Energy, Industry and Mining Committee on Monday approved the industry-backed [Senate Bill 76], which would exempt coal sold for generating electricity to in-state power plants from the state’s severance tax.
SB 76 would exempt steam coal, also known as thermal coal, sold to coal-fired electric generating facilities in West Virginia from state severance tax. The bill is nearly identical to legislation introduced last year, that a Department of Revenue fiscal note projected would cost the state more than $57 million through General Revenue Fund losses in the first three fiscal years after implementation.
SB 76 also follows the Legislature’s approval in 2019 of a steam coal production severance tax rate reduction the Department of Revenue estimated would cost $64.1 million annually.
The proposed legislation, which the Energy, Industry and Mining panel advanced to the Senate Finance Committee to consider, comes as the state faces a future of projected budget shortfalls that threatens the state’s ability to provide key services.
Gov. Patrick Morrisey’s administration projected annual budget shortfalls growing from $204.1 million to $411.7 million from fiscal years 2028 through 2031 in its [fiscal year 2027 budget report](https://budget.wv.gov/executivebudget/Documents/Volume).
Nearly identical bill projected to lose $27M in FY27
The nearly identical SB 66 from last year would have resulted in General Revenue Fund losses of roughly $4.2 million in fiscal year 2025, $26 million in fiscal year 2026 and $27 million in fiscal year 2027 and subsequent fiscal years, according to a fiscal note submitted by Department of Revenue Deputy Secretary Mark Muchow.
About 40% of steam coal derived from the coal severance tax is sold to West Virginia coal-fired electric generated facilities, and the remaining 60% is either sold to other states or countries, according to the fiscal note.
SB 66 stalled in the Energy, Industry and Mining Committee last year after it was introduced by committee member Rupie Phillips, R-Logan, a coal mining industry veteran who is one of the Legislature’s most vocal opponents of renewable energy.
Phillips claimed the bill, whose stated purpose is to “encourage and incentivize the sale of” steam coal to coal-fired plants, would lead to cheaper electricity for West Virginians. But West Virginia electricity prices have risen sharply amid the state’s highest-in-the-nation reliance on coal-fired power.
Under SB 76, there would be a 0.35% severance tax on coal benefiting counties and municipalities not covered by the legislation’s exemption.
Committee counsel indicated a requested fiscal note was not yet ready for SB 76 but could be by the time the Senate Finance Committee takes up the bill if it chooses to do so.
Coal’s long-term decline amid cheaper alternatives
Coal plants increasingly lose money and make electricity ratepayers lose money.
Cheaper, cleaner energy sources have emerged in the 21st century, causing net coal generation to plummet 68% from 2005 to 2024, according to U.S. Energy Information Administration data.
Technological advances and fuel costs have rendered aging coal-fired plants increasingly uneconomic and subject to volatile price fluctuations, and building new plants has been cost-prohibitive.
The U.S. is roughly 12 years removed from its last large (greater than 100 megawatts) coal-fired plant coming online in 2013, according to the EIA. In February 2025, the EIA projected planned retirements of U.S. coal-fired electric generating capacity would increase this year, with 4.7% of the total U.S. coal fleet that was in operation at the end of 2024 slated for retirement by electric generators.
West Virginia ratepayers faced a 90% climb in average residential electricity retail prices from 2005 to 2020, per EIA data. Only Michigan had a greater increase by percentage.
Energy Innovation LLC, a San Francisco-based climate policy firm, found in a 2023 report that 99% of the existing U.S. coal fleet was more expensive to run than it would be to replace it with new solar or wind.
Replacing coal plants with local wind and solar would save enough to finance nearly 150 gigawatts of four-hour battery storage, more than 60% of the coal fleet’s capacity, and generate $589 billion in new investment across the U.S., Energy Innovation predicted.
The Energy, Industry and Mining Committee voted to advance SB 76 Monday afternoon after hearing an impassioned endorsement of it from [West Virginia Coal Association](https://www.wvcoal.com) President Chris Hamilton.
Hamilton asserted SB 76 would result in higher coal consumption, savings among mine operations that could be invested in the future of mines, and higher coal-fired plant capacity factors — a measure of how often a plant runs at full capacity.
Coal-fired plant capacity factors in West Virginia and throughout the country have dropped significantly amid the industry’s long-term decline, reflecting what energy experts say has been an increasingly uneconomic outlook for coal-fired power.
WV Coal Association head: SB 76 offers relief amid tariffs
But Hamilton expressed industry concerns to the Energy, Industry and Mining Committee that go beyond the industry’s market-driven decline over time.
Hamilton reported that the price of metallurgical coal used for steelmaking has fallen about 40% over the last seven to eight months amid what he called “tariff trade wars that are going on internationally between the United States and foreign destinations.”
“We’re in a situation where our met\[allurgical\] coal portfolio primarily is being really dinged right now internationally. The tariffs and all are having an impact on us,” Hamilton said. “They’re affecting our delivered cost of coal.”
The Trump administration has overseen significantly lower U.S. coal exports amid its heavy reliance on tariffs, with especially serious economic implications in West Virginia.
The EIA in October announced that U.S. coal exports declined 11% from the first half of 2025 to the first half of 2024 because of reduced exports to China. U.S. exports to China dropped after China imposed a 15% additional tariff on imports of U.S. coal in February and a 34% reciprocal tariff on imports from the U.S. in April, the EIA said.
Those tariffs were retaliation against broad tariffs set by President Donald Trump.
China was the world’s top exporter in 2024 of metallurgical coal, which is coal used for steel production. West Virginia is the top metallurgical coal-producing state in the U.S., exporting 67% of the metallurgical coal produced in the state in 2023, according to EIA data.
Coal mining employment declined by 1,000 workers, or 2.4%, to 40,300 from January to August 2025 nationwide, according to preliminary Bureau of Labor Statistics data. Hundreds of West Virginia coal industry layoffs were reported last year.
Hamilton estimated there are a little more than 13,000 coal miners in West Virginia and some 60,000 in-state workers in coal industry-related positions.
“This could help tremendously,” Hamilton said of SB 76, adding that he believes Trump has helped the coal industry, despite his administration’s tariffs, through issuing industry-friendly executive orders and promoting lifespan extensions at aging coal plants.
Hamilton predicted that under SB 76, West Virginia coal-fired plant consumption of coal mined in the state would increase over 50% to beyond 20 million tons “within the next couple of years.”
“There’d be no excuse or reason why we won’t reach that total,” Hamilton said.
Joining Phillips as sponsors of SB 76 are three other Energy, Industry and Mining Committee members: Chair Chris Rose, R-Monongalia, Health and Human Resources Committee Chair Brian Helton, R-Fayette, who also chairs the Health and Human Resources Committee, and Agriculture Committee Chair Craig Hart, R-Mingo.
Some skepticism persists over Frontieras coal project
The Energy, Industry and Mining Committee’s approval of SB 76 came the same day as Frontieras North America, a hydrocarbon technology company, announced it had closed on 183 acres of riverfront property in Mason County, where it has planned to build an $850 million facility that transforms coal into fuels, fertilizers and industrial carbon products.
The company says the site will be the first commercial-scale deployment of that transformation process.
“West Virginia gave us every reason to build here — natural resources, world-class logistics, and a government that understands the importance of industrial growth,” Matthew McKean, CEO and cofounder of Frontieras North America, said in a statement, adding that the Mason County site was chosen over competing locations in Texas and Wyoming due in part to rich regional coal supply and logistical advantages. “This is exactly the kind of environment where breakthrough energy projects should be built.”
Frontieras North America did not respond to a request for comment.
The 183-acre property has more than 1 mile of river frontage on the Ohio River, Frontieras North America said in a statement, pledging the property will be developed for barge transport of coal feedstock and outbound refined products.
Frontieras North America has business and mailing addresses in Scottsdale, Arizona, and Houston, respectively, according to a company filing with the U.S. Securities and Exchange Commission.
Morrisey welcomed Frontieras North America’s announcement in a statement, saying the company’s planned investment “demonstrates that West Virginia’s workforce and business climate can attract world-class companies and investments.”
But even though Frontieras North America says the project is expected to create at least 2,000 construction jobs and more than 200 full-time positions in Mason County and surrounding areas, some skepticism over the long-gestating project persists.
Frontieras North America first announced Mason County as the site for its project in April 2022, when it gave a jobs projection of up to 500 employees and targeted a 2023 fourth-quarter date for finishing construction and commissioning the plant.
The company’s coal transformation process is unproven, and West Virginia has a long history of announced projects that haven’t come to fruition, including two touted by then-Gov. Jim Justice: the Virgin Hyperloop high-speed transportation project and mass China Energy Investment Corp. shale gas and chemical manufacturing development.
“By now, West Virginians should be skeptical about announcements like the governor’s about Frontieras,” said Sean O’Leary, senior researcher at pro-renewable energy nonprofit think tank [\Ohio River Valley Institute.
O’Leary cited, in part, a long-stalled coal gasification facility in Mingo County planned by New York City-based TransGas Development Systems LLC and scuttled Appalachian Shale Cracker Enterprise LLC ethylene cracker plant plans in Wood County.
“Time and again, since the start of the Appalachian natural gas boom, our region has been tantalized by the promise of a new and immense petrochemical industry that would use natural gas and coal as feedstocks to produce plastics and clean fuels,” O’Leary said. “It’s a madness that seduces elected leaders and one from which we must hope they recover before they squander more taxpayer dollars on economic nonstarters.”
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