Despite an expected minor “coal renaissance” in the next couple of years, the future is looking grim for Appalachian coal as stricter environmental regulations, economics, and even geology contribute to its decline, according to a new report.
Central Appalachia — Eastern Kentucky, Southern West Virginia, Virginia and Tennessee — has been hit hard by unfavorable economic conditions and a slew of new regulations aimed at curbing pollution and global warming which has encouraged many power plants to burn more natural gas or shut down altogether.
A report by the West Virginia-based Downstream Strategies projects that Central Appalachian coal production will fall by 31 percent — from 185 million tons in 2011 to 128 million tons in 2020. Central Appalachia actually reached its production peak of 294 million tons of coal in 1990 and almost met that again in 1997, producing 291 million tons.
The report examined a 12 state region that makes up 95 percent of the demand for Central Appalachian coal. Some power plants in those 12 states are already moving towards burning natural gas — 30 of the 137 coal-fired power plants from those states are slated for retirement by 2016.
Environmentalists and the Obama administration have been targeting the coal industry with increased regulations and litigation that are causing coal plants to be retired, switch to natural gas, or new coal plants being canceled.
A recent estimate by the American Coalition for Clean Coal Electricity showed that more than 280 coal-fired generating units will be shut down partly due to stricter Environmental Protection Agency regulations.
A report by the National Economic Research Associates found that seven major EPA regulations would hit the electrical sector with $16.7 billion per year in compliance costs, causing 887,000 job losses per year, and contributing to the shutdown of 69,000 megawatts of coal-fired power.
Appalachian mines are also being hit with more federal scrutiny as the government halted about 40 mining permits in eastern Kentucky, which cost the region about 3,600 jobs in coal mines and other businesses, according to the Kentucky Coal Association.
“This action, along with other regulatory effects from the federal government, have created an unfair atmosphere in eastern Kentucky’s coal production,” said Bill Bissett, president of the Kentucky Coal Association.
Lawsuits against coal plants brought by environmental groups also plays a role in retiring coal plants. The Sierra Club’s Beyond Coal Campaign aims to retire one-third of the more than 500 U.S. coal plants by 2020 and replace many of them with green energy power. The Sierra Club reported that 142 coal plants have been slated for retirement since 2010 — partly due to lawsuits from environmental groups, including the Sierra Club.
“The coal industry is cracking faster than the ice sheets, but it might not be fast enough,” said Sierra Club attorney Bruce Nilles in an interview.
There is also an economic component to the decline of Appalachian coal, according to the report.
Appalachian coal is the most expensive coal in the country because of higher labor costs. As coal plants in the region retire, Appalachian coal loses its customer base as power plants that are farther away opt for cheaper coal.
The report notes that scrubber technology has also played a role in the decline in Appalachian coal use because it allows power plants to use cheaper high-sulfur coal from the Illinois Basin.
Appalachia is also being losing out to western coal mines in states like Wyoming. The Energy Information Administration reported that two massive surface coal mines in Wyoming made up 20 percent of U.S. coal output — Central Appalachia mines only made up 17 percent of output in 2011.
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