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Is the US Coal Industry Drawing its Last Few Breaths?

By Energy Digital | Sun, 16 December 2012 00:00 | 1

After the reelection of President Barack Obama, big coal has come under the threat of imminent extinction in the United States. With the Environmental Protection Agency's new rules under the current administration, coal plants face stricter pollution rules, making many facilities unprofitable and forced to shut down altogether. Some companies, like Mitt Romney-endorsing Murray Energy, laid off hundreds of workers days after the results of November's presidential election, knowing full well that they would not be able to survive a second term under President Obama. But are politics really to blame?

First things first: the US coal industry is indeed in decline—the country is burning far less coal to generate electricity than it did five years ago. Secondly, due to the EPA's new regulations targeting pollution, it is true that many utilities are retiring coal plants rather than installing expensive new scrubbers. As a result, jobs will be lost. It is not true, however, that the Obama administration is wholly responsible for the decline of coal, despite Romney's accusations of the administration's “war on coal.”

ALL HAIL SHALE

Coal's biggest enemy isn't the EPA, a political party or Green Peace. It's the country's recent influx of cheap natural gas—a trend that no administration has the power of reversing. Between 20 to 25 percent of the country's coal-fired plants, 59 to 77 gigawatts, are set to retire by 2016, according to the latest report from the Brattle Group, a consulting firm. But that trend, the firm notes, has largely been driven by market forces:

“This 2012 reassessment indicates that somewhat more retirements are likely (about 25 GW) than we foresaw in late 2010. However, that change is primarily due to changing market conditions, not environmental rule revisions, which have trended towards more lenient requirements and schedules.”

Related Article: China's Coal Mines Near Uranium Deposits, Raising Pollution Fears

Natural gas is booming. Thanks to refined drilling technologies that allow companies to extract more gas from shale rock, the US is even set to become the world's biggest producer of oil within just five years, according to recent data from the International Energy Agency (IEA).

Structural Decline

In other states like West Virginia, other factors are at play. Mining jobs have dwindled for 40 years in the king-of-coal state, thanks to competition from Wyoming's vast Powder River Basin and the advent of mountaintop-removal mining, requiring fewer miners to go underground. What's more, coal is also running out, Ken Ward Jr. recently reported:

“Analysts agree that much of the best coal in Southern West Virginia has already been mined. Thinner and lower-quality seams are left, meaning production and productivity are dropping. Tough competition from inexpensive natural gas and other coal basins makes matters worse. New environmental restrictions only add to coal’s problems, and production is headed down regardless of air or water pollution restrictions.”

The Green Economy

To a lesser extent, wind turbines and solar farms are popping up across the country, creating far more jobs than the coal industry could abandon. Green Goods and Services Jobs (“GGS jobs”) in the US in 2010 amounted to 3.1 million, according to the green jobs report from the Bureau of Labor and Statistics (BLS).

Related Article: Trading Places: The Intertwined Fortunes of Coal and Natural Gas

In analyzing the BLS' report along with other reports on employment, the Economic Policy Institute (EPI) released a study that suggested that green industries have shown faster job growth than the overall economy. According to the findings, “for every percentage-point increase in an industry's green intensity (the share of employment in green jobs), annual employment growth was 0.034 percentage points higher,” and states with higher “green intensity” have survived economic turmoil better than those without it.

That's good news for anyone looking for work, especially since those reports also indicated that those jobs are even accessible to workers lacking formal college education.

Is coal dead?

In the US, undoubtedly, but globally? Not at all.

Despite a weakening presence in the US, coal is surging worldwide, with nearly 1,200 new coal plants on the drawing board, according to the World Resources Institute. In Europe and Asia, US coal exports have reached a two decade high. According to an analysis by the Associated Press, coal exports topped 107 million tons of fuel worth almost $16 billion last year—the highest level since 1991.

“There’s no question that our supplies of coal are adequate. The question is, how do we find new markets for coal to keep the share of electricity generation strong?” said Luke Popovich with the National Mining Association. “While its use is relatively declining here, it is absolutely soaring in most other places.”

In short: the US coal industry's woes go far beyond Obama's policies. Although it is possible that the Obama administration could do even more to tighten carbon-dioxide emission restrictions, that hasn't happened yet. The current market is taking care of it itself and utilities are increasingly ditching coal in favor of cheaper, cleaner natural gas.

By. Carin Hall

Leave a comment

  • SA Kiteman on December 17 2012 said:
    Cheap NG should be the savior of coal.

    4(CH4) + 3C = H2(CH2)7

    NG + coal = gasoline

    Lets make it here rather than buy it from overseas.

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