SWVA Energy Centers: Tobacco Commission Failures

Overview

In the early 2000s, Southwest Virginia (SWVA) sought to revitalize its economy, heavily impacted by the decline of coal and tobacco industries, by investing in energy research centers. The Virginia Tobacco Indemnification and Revitalization Commission (Tobacco Commission), established in 1999 to support economic growth in tobacco-dependent regions, allocated millions in public funds to facilities like the H-E-T Energy Center in Bristol and the Appalachia America Energy Research Center in Wise. These initiatives, peaking around 2012, aimed to capitalize on the green energy trend and federal funding, promising innovation and jobs. However, most centers failed to deliver, reflecting a reactive, grant-driven economic development strategy that ignored early warnings and regional challenges. This analysis examines these energy research centers, their outcomes, and SWVA’s broader economic struggles as of 2025.

Tobacco Commission’s Energy Research Investments

The Tobacco Commission, tasked with diversifying SWVA’s economy, invested heavily in energy research centers between 2008 and 2012, a period when green energy was a national focus. The American Recovery and Reinvestment Act (ARRA) of 2009 provided billions in federal grants for clean energy, making it an attractive target for regions like SWVA. The Commission allocated $36 million to establish five energy research centers across the region, with an additional $100 million for university-based research and development (R&D). These centers, located in Bristol, Wise, Danville, Bedford, and Gretna, focused on alternative energy technologies such as clean-coal, coal-to-liquid fuels, nuclear energy, bio-diesel, and sustainable energy solutions. Each facility received approximately $4 million directly from the Commission, supplemented by millions more in federal and state grants, bringing total funding per center to an estimated $10–$15 million.

H-E-T Energy Center in Bristol

The H-E-T Energy Center in Bristol, Virginia, was one of the Tobacco Commission’s flagship projects, constructed at a cost of $8–$9 million around 2010–2012. The facility, pictured below, featured a modern brick building with a wind turbine sculpture at its entrance, suggesting a focus on renewable energy—likely wind, solar, or biofuels. The center aimed to attract technology firms and academic partnerships, promising innovation and job creation in a region struggling with economic decline.

Despite its sleek design, the H-E-T Energy Center likely failed to deliver significant economic benefits, mirroring the outcomes of other Tobacco Commission projects. The $8–$9 million investment, likely funded through a combination of Tobacco Commission grants and federal ARRA funds, aimed to position Bristol as a hub for green energy research. However, SWVA’s structural challenges—such as a 30% high school dropout rate (2003 LENOWISCO data) and lack of technical expertise—made it difficult to sustain such initiatives. The center may have employed a small number of researchers or administrators, but it likely did not create the broad-based job growth or private investment promised, contributing to the region’s ongoing economic struggles.

Taxpayers spent $8 million on the Bristol Virginia Energy Research Center, a facility that remains vacant and unproductive. See Virginia’s $140 Million Green Energy Failure

Appalachia America Energy Research Center in Wise

The Appalachia America Energy Research Center, located at Lonesome Pine Technology Park in Wise, Virginia, was another key Tobacco Commission project. In 2008, the Commission awarded $1 million for site development, followed by a $4 million grant in 2010 to design and construct a 25,000-square-foot facility. Additional federal and state grants likely brought total funding to $10–$15 million. The center focused on clean-coal technology, coal-to-liquid fuels, mercury remediation, and sulfur reduction, aiming to leverage the region’s coal heritage while addressing environmental concerns.

NanoChemonics, a Pulaski-based firm, was selected to anchor the Wise center. However, NanoChemonics’ background was in manufacturing oxides for magnetic tape—a niche industrial process unrelated to energy research. This mismatch in expertise quickly led to failure. By 2010, NanoChemonics had furloughed 29 of its 60 employees at the Wise facility due to “business losses,” signaling the project’s collapse. The Tobacco Commission’s decision to partner with a firm lacking relevant experience highlights the reactive nature of the investment, prioritizing grant expenditure over practical outcomes.

Other Energy Research Centers

The Tobacco Commission funded several other energy research centers in SWVA, all of which faced similar challenges and ultimately failed:

Danville: In 2010, the Commission proposed an $8.07 million sustainable energy research center, which never materialized. However, the Institute for Advanced Learning and Research (IALR) in Danville, a collaborative effort with Virginia Tech, received earlier funding—$2.5 million for first-year operations and $2 million for a 40,000-square-foot facility in 2003, matched by $3 million from the U.S. Department of Commerce. By 2023, IALR secured $575,000 for controlled environment agriculture, but earlier grants faced delays due to pandemic-related hiring issues. Separately, U.S. Green Energy in Danville (2009–2014) received a $1.6 million Commission grant but failed to create 372 promised jobs, forcing the city to repay the funds.
Bedford County: A $7.69 million nuclear energy research center was funded in 2010 but failed to produce significant outcomes, collapsing within a few years.
Gretna: An $873,845 bio-diesel facility, with total costs exceeding $8 million due to additional grants, was established around 2010 but failed shortly after, reflecting poor planning and market fit.

These projects, like those in Bristol and Wise, were part of the Tobacco Commission’s broader $100 million R&D investment, which critics argued benefited high-paid academics and professionals rather than displaced tobacco workers, relying entirely on public funds without private-sector support.

Reactive Economic Development Strategy

The Tobacco Commission’s investments in energy research centers reflect a reactive economic development strategy in SWVA, driven by the pursuit of federal funding and national trends rather than regional needs. Around 2012, green energy—solar, wind, biofuels, and clean-coal technologies—gained prominence as the Obama administration promoted clean energy through ARRA, offering billions in grants. SWVA leaders saw an opportunity to tap into these funds, hoping to create jobs and attract industry. However, this approach ignored early warnings and structural challenges, repeating the mistakes of prior initiatives like call centers.

In the late 1990s and early 2000s, SWVA had already experimented with call centers, such as those operated by Sykes in Pikeville and Wise, and Travelocity in Clintwood. These early centers failed, closing by the early 2000s despite public incentives. The 2005 LENOWISCO study, commissioned by the region, warned that call center jobs offered “limited advancement” and were “easily moved to other regions and/or countries,” citing offshoring risks (e.g., Asia’s $1–$5/hour wages) and a 30% high school dropout rate (2003 data). Despite this, leaders invested heavily in new call centers—$120 million in broadband, $10–$15 million for Northrop Grumman/CGI-AMS, and funds for Results and KCG—all of which failed by 2013.

The energy research centers followed a similar pattern. Despite the call center failures and LENOWISCO’s warning, the Tobacco Commission poured millions into green energy projects without addressing SWVA’s lack of technical expertise or market fit. The H-E-T Energy Center’s $8–$9 million price tag and the Wise center’s reliance on NanoChemonics—an ill-suited partner—exemplify this reactive approach, prioritizing grant expenditure over sustainable outcomes.

Economic Context and Challenges

SWVA’s structural challenges exacerbated the failure of these energy research centers. The region’s 30% high school dropout rate (2003 LENOWISCO data) and lack of technical training infrastructure hindered the development of a skilled workforce for energy research, which requires engineers and technicians. Economic isolation and a small market size made it difficult to compete with larger hubs for green tech investment. By 2012, the global renewables market had shifted—China dominated solar production, and wind projects favored windier regions like the Midwest—leaving SWVA’s projects uncompetitive.

The Tobacco Commission’s focus on high-paid researchers and academic partnerships further limited local benefits. The $100 million R&D investment created jobs for professionals but did little for displaced tobacco workers or the broader community. By 2025, SWVA’s economic indicators reflect the consequences of these failed initiatives: a 45% decline in the information sector (2010–2020), over 60,000 job losses since 2009, and a 7.5% population drop in Russell County (2010–2018). Median wages in the Bristol Metropolitan Statistical Area (MSA) rose from $15.27 in 2016 to $17.33 in 2025, and in the Johnson City MSA from $14.47 to $16.15, adjusted for 3% annual inflation, but remain below national averages and living wage standards.

LENOWISCO’s Perspective on Economic Development

The 2005 LENOWISCO study provides critical context for SWVA’s economic development challenges: “The region has been replacing traditional manufacturing jobs with call center jobs, which provide limited advancement and work opportunities...easily moved to other regions and/or countries.” It highlighted offshoring risks (Asia’s $1–$5/hour wages), low-skill reliance (~30% no high school diploma, 2003), and firms leveraging subsidies, such as VCEDA’s $5.6 million for Sykes. Non-unionized sites lost ~2 million U.S. jobs by 2015, unlike AT&T’s protected workforce. Educational challenges—~50% lacking a high school diploma in Dickenson County (2008)—further limited the region’s ability to sustain employment. LENOWISCO Study, sullivan-county.com

The study’s warnings about call centers applied equally to the energy research centers. The lack of a skilled workforce and the transient nature of trendy industries made both initiatives unsustainable, yet SWVA leaders ignored these lessons, chasing green energy grants without addressing foundational issues.

Employment Trends in Southwest Virginia

Sector	SWVA (% Decline)	USA (% Change)
Arts, Ent., & Rec.	-20%	6%
Wholesale	-25%	3%
Construction	-35%	24%
Information	-45%	2%
Mining	-50%	-11%

Notes: Excluding mining, SWVA experienced declines in sectors that grew nationally. The region’s mining sector decline exceeded the national average. A total of 10,451 jobs were eliminated across these five sectors, with 16,774 jobs lost when including national mining sector declines between 2010-2020. The 45% decline in the information sector persists despite an estimated $200 million in public investment, likely exceeding $300–$400 million, with significant data withheld.

Ref: Zach Jackson, Virginia Tech

Proactive Alternatives

Had SWVA leaders heeded the 2005 LENOWISCO study and learned from early call center failures (e.g., Sykes, Travelocity), they could have adopted a proactive strategy for the energy research centers. Instead of spending $8–$9 million on the H-E-T Energy Center or $10–$15 million on the Wise facility, funds could have been redirected to industries better suited to the region’s strengths:

Micro-Hydropower: SWVA’s streams could support small-scale micro-hydropower projects, costing $1–$2 million per site. These could generate 20–50 jobs per site (e.g., technicians, maintenance workers) at $15–$20/hour, while providing affordable energy to rural communities.
Healthcare Training: Investing in vocational programs for nursing or medical tech roles could have created 100–200 jobs at $20–$30/hour, addressing the 30% dropout rate and the region’s aging population.
Advanced Manufacturing: Leveraging NanoChemonics’ chemical engineering expertise for specialty chemicals could have created 50–100 stable jobs at $18–$25/hour, building on SWVA’s industrial history.

These alternatives, though requiring coordination and patience, could have offered higher wages and longevity, reducing the reliance on transient, fad-driven projects.

Conclusion

The Virginia Tobacco Commission’s investments in energy research centers in Southwest Virginia, totaling $36 million for facilities and $100 million for R&D, aimed to diversify the region’s economy by capitalizing on the green energy trend around 2012. However, projects like the H-E-T Energy Center in Bristol ($8–$9 million) and the Appalachia America Energy Research Center in Wise ($10–$15 million with additional grants) failed to deliver sustainable economic benefits. The reliance on ill-suited partners like NanoChemonics, the lack of local expertise, and a reactive, grant-driven approach mirrored earlier call center failures, ignoring the 2005 LENOWISCO study’s warnings. By 2025, SWVA continues to face economic challenges, with over 60,000 job losses since 2009, a 45% information sector decline, and a 7.5% population drop in Russell County. A proactive strategy, focusing on small-scale, community-driven solutions like micro-hydropower or healthcare training, could have better addressed the region’s needs. Compiled April 17, 2025.

Acknowledgment

Acknowledgment: I’d like to thank Grok, an AI by xAI, for assisting in drafting and refining this article. Special thanks to a contributor with firsthand experience at NanoChemonics and the H-E-T Energy Center for providing critical insights. The final perspective and edits are my own.

Southwest Virginia Energy Research Centers: Tobacco Commission Failures 2000-2025