Additional Incentives at Federal, State Level Could Add to Industry Job Creation, Growth
LEBANON, VA – MAY 6, 2025 — The Virginia Coalfield Economic Development Authority (VCEDA) and the coal and natural gas industries in Southwest Virginia continue to play a critical role in the region’s economic growth and diversification, according to a recent study released by Chmura Economics & Analytics, a Richmond, VA-based firm.
The study, “Economic Impact of Coal and Natural Gas Industries and VCEDA in Southwest Virginia” highlights the contributions of all three to the economy and found that combined, they created $13.48 billion in economic impact including direct, indirect and induced measures and supported a combined total of 51,245 jobs in the region.
The Virginia Coalfield Economic Development Authority (VCEDA) was created in 1988 by the General Assembly of Virginia to enhance and diversify the economic base of Southwest Virginia’s coal-producing region. This authority encompasses the counties of Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, and Wise, as well as the city of Norton. VCEDA uses a portion of taxes, called severance taxes, paid by the coal and natural gas industries in the region, to help the region’s economy and its diversification into other industries.
“As the region’s economy continues to transition and also because the majority of VCEDA’s funding is derived from the coal and natural gas industries, we felt that it was important to have an updated analysis of the current role of the coal and natural gas industries and VCEDA in the region’s economy,” said VCEDA Executive Director/General Counsel Jonathan Belcher. “In particular, we were interested in an objective analysis of the economic role of the natural gas industry in the region, which had never formally been studied to our knowledge. This is important information as economic development plans and policies are made both now and in the future.”
Key findings in the Chmura report included:
- The total 2024 economic impact (direct, indirect, and induced) of VCEDA-assisted businesses (including new and expanding businesses) in Southwest Virginia stood at $11.2 billion and supported 45,045 jobs. Looking at the direct impact only, Chmura estimated that, in 2024, VCEDA-assisted businesses generated $8.4 billion in total gross revenues and 28,036 jobs.
- The total annual economic impact (direct, indirect, and induced) of the coal industry in Southwest Virginia is estimated at $1.8 billion, which supported 5,085 jobs in 2024.
- The total annual economic impact (direct, indirect, and induced) of the natural gas industry in Southwest Virginia was $481.7 million, supporting 1,115 jobs in 2024.
- VCEDA made considerable contributions to reducing unemployment in Southwest Virginia. Based on the latest 2024 data, the unemployment rate in the region was 3.9 percent, just 1.0 percentage point away from the state average of 2.9 percent. Without the jobs attracted to the region by VCEDA, the region’s unemployment rate would rise to 15.8 percent.
- Without the jobs brought to the region by VCEDA’s projects, more families in Southwest Virginia would need to utilize government assistance programs such as unemployment insurance, supplemental nutrition assistance program (SNAP) and temporary assistance for needy families (TANF). VCEDA-assisted jobs saved the state government an average of $4.2 million per year from reduced government payments. Total savings were estimated at $151.6 million from 1989 to 2024.
In reviewing the report, U.S. Ninth District Rep. Morgan Griffith suggested that additional tax incentives at the federal level could help not only the region, but also the nation to accomplish goals of unleashing American energy independence. Griffith is the co-sponsor of HR 1881, Methane Reduction and Economic Growth Act.
“Thanks to technological breakthroughs and innovative solutions, the United States is a leading global producer of clean coal and clean natural gas,” Griffith said. “With vast resources of both, Southwest Virginia can play a significant role in accomplishing President Trump’s goals of unleashing American energy independence. Additional tax incentives to encourage environmental mitigation and efficient fossil fuel utilization may help us reach those goals more quickly. I believe the Virginia Coalfield Economic Development Authority (VCEDA) will continue to be a critical partner in tapping into Southwest Virginia’s coal and natural gas resources for the betterment of the region and the country.”
The Chmura study found that VCEDA attracted jobs in a wide range of advanced manufacturing and professional and business industries — 12,838 of all VCEDA-assisted jobs were in manufacturing and 8,448 were in professional and business services. Tourism industries also grew with the support from VCEDA, generating many jobs in the trade and leisure sectors.“Those efforts helped diversify the regional economy,” the study found.
In addition to the economic impact generated by VCEDA in terms of total revenue and jobs, Chmura also analyzed the effect of VCEDA in enhancing economic diversity, reducing unemployment and lowering payments from government assistance programs in the VCEDA region.
Chmura’s analysis indicated VCEDA has significantly contributed to diversifying the regional economy since 1990.In looking at the coal industry, the study found “the coal industry has a significant economic impact in Southwest Virginia and the state of Virginia. Outside coal production, the ongoing operations of the coal industry will support other businesses in the region and state.”
Specifically, the study pointed to the coal industry’s reliance on transportation to ship its coal to final market; and its utilization of machinery, equipment and electricity in its production process. Regional businesses in those sectors benefit from the coal industry through indirect impact. Additionally, the study noted, when coal industry employees spend their wages, local consumer-related services, such as retail stores, restaurants and hospitals, see an increase in revenue (induced impact).
The study noted that in 2024, the total economic output of all industries in Southwest Virginia was $18 billion. Coal’s share of that was $1.8 billion.
“As a result, the coal industry contributed 9.9 percent of the regional output and 5.6 percent of regional employment, indicating that the productivity of the coal industry is significantly higher than the regional average,” the study noted. “These percentages further indicate that the coal industry is one of the most important industries in Southwest Virginia.”
It also noted that in addition to creating jobs and injecting billions of dollars into the state and regional economies, the coal industry also produces tax revenue for the localities in Southwest Virginia and for the state. Specifically, the study noted, the coal industry contributed $37 million in tax to local governments and agencies in Southwest Virginia in 2024, $29 million to the Virginia state government and $43.4 million to the federal government. Additionally, data from the Virginia Department of Energy showed that in 2023 and 2024, the state coal industry paid $2 million in fees to the state, averaging $1 million per year.
The study indicated more than 75 percent of Virginia coal is metallurgical, which is used for steel production and only a small portion of Virginia’s coal production is used for power generation.
In Southwest Virginia, the coal industry pays a higher wage than the overall regional average. In 2024, the annual average regional wage was $45,926, while the average wage for the regional coal industry was $101,268.
In looking at the natural gas industry, the Chmura study noted the industry contributed $18.2 million in taxes to local governments and agencies in Southwest Virginia in 2024; $5.8 million to the Virginia state government; and $12.7 million to the federal government.
A large portion of the state’s natural gas production, the study noted, is from coalbed methane gas, as well as from coal mine methane gas. In 2023, more than four-fifths of Virginia’s natural gas production was from coalbed wells. Data from the U.S. Department of Energy indicated there were 7,971 active natural gas wells in Virginia as of 2023. The latest production data showed Virginia produced 83.4 billion cubic feet of natural gas in 2023.
The study noted more than 60 percent of Virginia’s natural gas industry labor force is located in Southwest Virginia with nearly 90 percent of all natural gas extraction employment in Southwest Virginia.
The ongoing operations of the natural gas industry support other businesses in Southwest Virginia and the state. Chmura estimated that the total annual impact in the state reached $772.4 million, supporting 2,368 jobs in 2024.
Similar to the coal industry in Southwest Virginia, the regional salaries for the natural gas industry are significantly higher than the average regional salaries. In 2024, the average regional wage of Southwest Virginia’s natural gas industry was $111,131.
A Waste Gas Capture Initiative (WGCI) study completed in October 2024 suggested incentivizing coal mine methane (CMM) capture could create as many as 238 new jobs and contribute as much as $19 million to Virginia’s GDP within five years. Within 20 years, WGCI projected that could grow to 395 jobs and contribute as much as $176.7 million to the state’s GDP. At the same time, it noted, CMM capture projects would reduce 10M metric tons of CO2 emissions annually.
“This economic ecosystem with coal, natural gas and VCEDA are a unique asset to Southwest Virginia,” Belcher said. “With encouragement from federal policymakers and additional tax credits tied to rural coal communities like Southwest Virginia, jobs can be sustained and grown stimulating the economy even further and replicating to various parts of Appalachia.”
A full copy of the Chmura report may be viewed at 2025-Chmura-Study-Economic-Impact-of-Coal-and-Natural-Gas-Industries-and-VCEDA-in-Southwest-Virginia.pdf. The full WGCI analysis can be viewed at https://wastegascapture.com/redefining-climate-and-economic-opportunities-in-appalachian-coalfield-communities/.
About Virginia Coalfield Economic Development Authority and Southwest Virginia’s e-Region: The Virginia Coalfield Economic Development Authority, created by the Virginia General Assembly in 1988 to enhance and diversify the region’s economy and help create jobs, markets Southwest Virginia’s e-Region and its focus on electronic information technology, energy, education, emerging technologies, and entrepreneurship. VCEDA is a unique economic development organization that manages funds for economic development projects from a percentage of the coal and natural gas severance taxes paid by coal and natural gas companies that operate in the region. Located in southwestern Virginia, the region includes Buchanan, Dickenson, Lee, Russell, Scott, Tazewell, and Wise counties and the City of Norton. www.vceda.us or www.e-Region.org.