The title of this entry is inspired on the 1997 song “But the memory remains” by the American heavy metal band, Metallica. The lyrics talk about a celebrity who is going mad as her fame fades into obscurity. Yet, the song is really more than that, it is about the pain that suddenly hits us when we fail to see the changes happening around us. Some people in North Carolina are experiencing this kind of pain over a natural disaster that no-body saw coming and which ultimately exposed the opacity of the entire political process designed to protect the very interests of those it represents.
In February, 2014 there was an environmental disaster unprecedented in the history of North Carolina–and comparable to other great catastrophes in the history of the United States. The way things unfolded may sound familiar: someone falls asleep (as in, neglects his responsibility), a pipe breaks, some toxic material spills in the river, the spill reveals the corruption of individuals and the involvement of political institutions in protecting the interests of the powerful. In the end, it is nature, the poor, the uneducated, the homeless, and the vulnerable who suffer and pay for the mistakes born in the arrogance of the rich and the influential. Think along the lines of the (very excellent) 2006 film by Bong Joon-ho, “The Host”.
Bong Joon-ho is a genius in portraying deep social struggles and fundamental psychological dilemmas of humanity in a familiar reality defined by impossibility. Inspired in an environmental catastrophe—a local article about a deformed fish with an S-shaped spine caught in the Han River, Bong Joon-ho harshly criticizes social and political institutions and their favoritism for the rich and the powerful over the poor and the vulnerable.
“The Host” is about a monster that grows in the Han River after an American military pathologist orders his Korean assistant to dump 200 bottles of formaldehyde down the drain leading into the River. The monster in the Han River is really an analogy for the costs to society from the abuse of political power and the consequences of individual’s lustful admiration for their own ego.
In the movie, after the monster has caused much damage, the government announces the plan to release a chemical called the Agent Yellow into the river, hoping it will kill the creature. “Agent Yellow” is an untested chemical substance with potentially hazardous health and environmental effects for the entire population. The citizens gather and protest against the government’s actions. Nevertheless, the government releases Agent Yellow—spraying it over the protesters and the monster. Even then, the monster does not die. Ultimately, the monster is killed by the main characters of the movie in an immensely involved team effort. The movie unveils the corruption of the government and its involvement in the covering of the American military’s mistakes. It is the poor, the uneducated, the homeless, and the vulnerable who suffer and pay for the mistakes born in the arrogance of the powerful.
Back to North Carolina, 2014. That February, estimated 39,000 tons of coal ash spilled into the Dan River. Coal ash is a highly toxic byproduct of the industrial process behind energy generation at coal-fired power plants. Currently, coal ash is stored in waste ponds. There are 32 such sites in 14 locations across NC.
The February spill was the third largest spill of coal ash in the history of the U.S., fouling 70 miles of the Dan River and flowing all the way into Virginia. The ponds from which the ash spilled were managed by Duke Energy–a powerful energy company. In view of the evident managerial neglect, NC legislators approved the formation of a regulatory group, the NC Coal Ash Management Commission (CAMC), to oversee the cleanup of coal ash pits across the state. The whole coal ash regulation story involved a series of suits and counter-suits and trials and court decisions that are unclear to me, and will therefore refrain from even summarizing the legal procedures that made the formation of the CAMC a theatrical issue. However, I will share with you the pieces I know and understand.
The CAMC was assigned the responsibility of categorizing the waste impoundments by risk level in order to prioritize their cleanup; it was also in charge of revising Duke Energy’s plans for disposing of the coal ash in every site. The main objective of the commission was to protect the communities and environments in NC that were threatened by potential contact with the hazardous waste product at stake.
In 2015, the EPA ruled (conveniently for any party responsible to pay for the handling of the stuff) that coal ash was NOT a hazardous material and could therefore be treated as standard residential waste. In other words, this ruling gave the legal green-light for storing coal ash in landfills and impoundments. Coal ash needed not to be handled in any special manner; allowing Duke Energy to pursue cheaper alternative disposal plans.
Duke Energy had to either remove or reuse coal ash; and to fulfill its legal obligation, it could pursue one of three alternative plans. In rough terms, Duke Energy could acquire land to open landfills where to store the coal ash; it could rehabilitate or improve the existing coal ash ponds by installing expensive and technologically superior liners that would keep the soil surface isolated from the coal ash for hundreds of years; or it could transform the coal ash pools into recycling facilities that would turn the industrial waste into a valuable material.
The CAMC was assigned the task of evaluating Duke Energy’s final proposal and weighting it against other alternatives plans with the intention of only approving a plan that would yield the most benefits to North Carolina’s communities and environments. In economics jargon, the CAMC needed to know which of the possible actions available to Duke Energy would maximize the expected net present social value.
If the CAMC was to responsibly and objectively evaluate the plans presented by Duke Energy, it had to first carefully study and understand the Costs and Benefits of coal ash and the Costs and Benefits associated with all the possible methods of managing it. CAMC needed an environmental economist in their team–badly.
Under the direction of my professor, Roger von Haefen, I worked for the CAMC last summer (between May and August 2015) in the design of a cost-benefit analysis to assess whether, to the eyes of a “Benevolent Social Dictator”, institutionalizing the recycling of coal ash in North Carolina was in fact the most cost-effective option to handle the crisis.
Coal ash, like other byproducts of electricity generation–like gypsum–can be recycled and turned into something valuable. In fact, there exists a market for it in other states–though these markets are generally thin and politically targeted by environmentalist groups. Coal ash is sometimes used to substitute Portland cement in the production of concrete (using coal ash can reduce the cost of concrete by up to 25%). In South Carolina for example, coal ash is being recycled and turned into concrete to build roads. Other states, like California (!), go as far as requiring the use of coal ash in the construction of highways because of its perceived performance benefits. Outside of the U.S., coal ash is also used as an alternative to clay in the production of bricks.
There are other recorded and sizable benefits associated with reusing coal ash (although, to me these benefits look more like foregone costs). However, there are also important difficulties with recycling the coal ash; mainly, that it has a high concentration of carbon. Burning out the excess carbon requires specialized and expensive infrastructure; therefore, making it a less attractive alternative to Duke Energy–who had to incur all the disposal costs (although arguably, it would be even less attractive to NC energy users, as the costs would be passed on to them through higher energy bills).
Nevertheless, time was a major factor in determining which plan would yield the most benefits to society: that is, the joint benefits to Duke Energy and to communities and environments that are harmed–in one way or another–by the inefficient management of coal ash. If it was going to take Duke Energy 10 to 15 years to restore current sites or to clean them up and relocate the material into landfills, maybe it was worth the shot to contemplate recycling as a lucrative and socially and environmentally beneficial manner of dealing with the byproduct.
As you can imagine, the project was ambitious. It required a lot of research and thorough understanding of chemistry, ecology, engineering, and industrial business models. The commissioners that hired me for the preparation of a report on the beneficial uses of coal ash in North Carolina had devoted impressive amounts of time and energy into the research of all these fields. They had already prepared a 50-page preliminary report and had fairly clear understanding of the foundations of the Cost-Benefit analysis we were going to help them conduct.
Here, I must pause and share with you an important disclaimer. I can only be sincere.
When I was working for the CAMC, I was forbidden to disclose any information or share content of conversations or e-mails exchanged with the commissioners to anyone. This was rather frustrating, because, as you may be able to tell already, I love drama, I love to share conspiracy theories, and I find the political aspects of economic decisions, the more flavorful bite in my field of work.
However, secrecy is no longer a problem. In January of this year, the NC Supreme Court ruled the creation of the commission unconstitutional. The rationale of the Supreme Court is that a commission carrying executive branch functions should not be appointed by the legislature but by the executive branch. Officially, the CAMC was shut down in March by NC governor Patrick McCrory–who worked for Duke Energy 28 years. (Coincidence?)
Now that the CAMC doesn’t exist, I take it that I can exercise my non-American, non-right of free speech. Now I am legally free to publicly disclose what I thought of the CAMC when I donated it my labor and what I think of the dissolution of the CAMC.
Sometimes we find thoughts we wished had occurred to us, but just didn’t. So, I’ll just repeat what Robert F. Kennedy Jr., a noted environmentalist and president of the Waterkeeper Alliance, said in a press conference about the coal ash disaster:
“Whenever you see large scale environmental injury like this, you’ll see the corruption of individuals, the capture of the agencies that are supposed to protect us from pollution, the disappearance of transparency in government and often times, ultimately, the corruption of the entire political process from top to bottom”. Kennedy also reminded the press that “An environmental crime is real crime”. (The 2006 film, “The Host” discussed above is an excellent illustration of this observation.)
Was the government downplaying the scale of the consequences from the negligence of Duke Energy? Were state agencies tacitly protecting Duke Energy? Was this really the unveiling of a corrupt relationship between the state and a politically and economically powerful private company? To say the least, there were some discrepancies between what private parties and what the NC DENR found regarding the pollution caused by the coal ash spill.
There is a Colombian saying that goes more or less like this: “the fish dies through its mouth” (“el pez muere por la boca”). It means you die for using your mouth. In other words, talk too much and you will find yourself in a place you don’t want to be. At this point, the dilemma I face is the following: If I were a fish in the Dan River, would I rather die because of coal ash poisoning or because of my politically inappropriate comments?
I don’t know really. It’s a tough call. But I hope to have raised your interest and curiosity and skepticism about the economics of environmental policy and the politics of environmental law. For now, this fish will stop exercising its non-American non-right of free speech… just in case.