MTR economics: Limits won’t be the end of the world
As the Obama administration works out the kinks of its proposal to take “unprecedented steps” to reduce the environmental impacts of mountaintop removal, coal industry supporters are pulling out all of their old arguments: Limits on mining will turn off the lights and send the regional — some even argue national — economy plummeting even further into recession.
But now, a newly released report commissioned by the Sierra Club has some important things to say about what ending mountaintop removal would do to the nation’s energy supply and the region’s economy.
In short, the report dispels most of the myths: The nation can end mountaintop removal without sacrificing energy and jobs, and — in the long run — doing so might actually improve economies in the Appalachian coalfields.
As the report concludes:
There is no evidence that eliminating surface-mining of Central Appalachian coal will cause the lights to go out or electricity prices to significantly increase in the east. In fact:
– the demand for coal for electricity generation is likely to decrease in the
short and long run, and– there are economically attractive alternatives to burning Appalachian
mountain top/valley fill mined coal for electricity supply.
Mary Anne Hitt, deputy director of the Sierra Club’s Beyond Coal Campaign, said:
This new report highlights the benefits for Appalachia that would result from ending mountaintop removal mining and transitioning to clean energy jobs. We can have affordable electricity without mountaintop removal, and we can protect our communities, streams, forests and mountains at the same time.
The new report was prepared for the Sierra Club by the consulting firm Synapse Energy Economics Inc. It’s dated Aug. 25, 2009, but was only made public today, perhaps to coincide with the start of public hearings on one of the Obama administration proposals to more closely scrutinize mountaintop removal permits. I’ve posted a copy of the report here.
These findings are important, but alone they are not yet a slam-dunk for opponents of mountaintop removal … check out this conclusion, for example:
The net effect of restrictions on mountaintop removal on the Central Appalachian economy is uncertain, but a growing body of evidence suggests that the region’s dependence on coal for jobs has not proved a boon. Economic diversification in Central Appalachia would promote a healthier, more stable economy. Research continues to shed more light on the economic and health costs of coal mining.
But the message from this report for political, business and community leaders in the coalfields couldn’t be more clear: Coal demand is going to continue to decline as the world moves to deal with global warming, and folks in the coalfields need to get more serious about a post-coal economy.
So let’s try to break this down …
The new report takes up where the government’s Environmental Impact Statement on mountaintop removal left off, as far as examining the potential economic impacts of restrictions on strip mining and valley fills.
Importantly, a lot has changed since the Bush administration published that EIS in 2003:
… Prevailing economic conditions have changed dramatically over the course of the decade. A number of trends are affecting and will continue to affect the outlook for coal in general …
Among those trends:
– The near certainty that some sort of limits on greenhouse gas emissions will be enacted, either in a new law passed by Congress or regulations implemented by the U.S. Environmental Protection Agency.
The Sierra Club report cites — interestingly enough — a study of the Waxman-Markey climate bill prepared for the National Mining Association. Under a set of “optimistic” assumptions that minimized impacts on coal, the use of coal would decline by more than 10 to 15 percent by 2030. Under a more “pessimistic” set of assumptions, the use of coal would decline to less than 25 percent of today’s levels — that’s not a 25 percent declin, that’s a decline to less than 25 percent of today’s levels.
– Natural gas is displacing coal, especially in the southeast. Prices for gas are low, and gas plants are being run more frequently. As a U.S. Department of Energy analysis concluded:
Over the last year, the price of natural gas delivered to electric generators has fallen dramatically. Current natural gas prices now present increased potential for displacing coal-fired electricity generation with natural gase-fired generation.
– New coal-fired power plants are increasingly seen as risky investments. More than 90 plant proposals have been canceled, extensively delayed or rejected by state utility commissioners — at least in part because of concerns about impending regulation of greenhouse gases.
Next, keep in mind that the cost of fuel is only a “modest component” of the cost of electricity paid by end-users, typically less than half. And part of the government EIS that looked at this issue back in 2003 concluded that coal prices in the Appalachian region would be only 5 percent higher if valley fills were restricted to watersheds of less than 75 acres.
And what about alternatives?
The new report cites a study commissioned by the Appalachian Regional Commission which found that “an ambitious package of energy-efficiency policies implemented throughout Appalachia in 2010 could result in significant energy savings,” an estimated 11 percent in 2020 and 24 percent in 2030. And it likewise cited the energy plan by West Virginia Gov. Joe Manchin’s Division of Energy, which found West Virginia could “become 30 percent more energy efficient in all sectors by 2030″ and that “renewable resources, including wind along the eastern mountain ridges, low-impact small hydroelectric and forest residue biomass, are likewise underdeveloped.”
And how about underground mining?
While conceded that these impacts are difficult to estimate, the Sierra Club report projects that “mining using underground methods has the potential to replace some of the coal currently mined” using mountaintop removal. Among other things, the report cites comments from Patriot Coal executives (previously covered in Coal Tattoo here) about their ability to switch reserves to underground methods — and the fact that in West Virginia, 2007 estimates reserves recoverable by underground mining were 15.4 billion short tons, while surface mine reserves were only 2.3 billion short tons.
But for folks worried about their good-paying jobs at a surface mine, the report doesn’t offer completely clear answers about where an end to mountaintop removal would take them and their families.
For example, it says:
The practice of mountaintop/valley fill mining has economic costs to socity, such as increased mortality and morbidity of miners and surrounding communities, reduced property values associated with mining activities, and extensive damage to natural resources.
Its economic benefits include jobs, low electricity rates and tax revenue.
But:
The question of whether eliminating mountaintop/valley fill mining in Central Appalachia would have net positive or net negative impacts to society as a whole has not been adequately addressed.
The report tries to play up the potential for more underground mining, but if you read closely, this shift is far from certain:
For one, deep mining will continue to be a source of employment in the region and may expand, to the extent that Central Appalachian deep mined coal remains competitive (given its lower transportation costs and higher quality). Indeed, a shift to deep mining has the potential to bring an increase in employment, because, per ton of production, deep mining employs more miners than surface mining.
And, the report points out the recent research by Michael Hendryx at West Virginia University, who provided a groundbreaking analysis that showed mining costs Appalachian communities more in premature deaths than it provides in economic benefits. And the Sierra Club report emphasizes:
History shows that the transition from deep to surface mining devastated the region economically, and that the prosperity of mining companies has not gone hand in hand with the economic welfare of coal mine workers.
Regardless of mountaintop/valley fill mining regulation, jobs from coal mining have been declining, even as coal production has increased or stagnated.
Moreover:
… Carbon regulations are likely to further reduce the competitiveness of coal, resulting in a further decrease [in] coal mining employment, and any impacts from mountaintop/valley fill mining restrictions are likely to be far overwhelmed by impacts resulting from reductions in the demand for coal due to carbon regulations and lower natural gas prices.
The Sierra Club report touts all sorts of great-sounding stuff: Economic diversification, eliminating boom-bust cycles of extractive industries, clean and renewable energy as a future economic path for the coalfields.
But the report does not chart a path for how places like Logan County, W.Va., or Harlan County, Ky., can attain those things. It’s clearly aimed more at a national audience — at folks like those inside the Obama White House, who might not like mountaintop removal, but worry about what ending it would do to the nation’s energy supply — and less at coalfield residents who might not like mountaintop removal, but still worry about local economic impacts of shutting down such mines.
The report is also all-too-quick to summarily dismiss the idea that carbon capture and sequestration could work, writing it off with one clause:
It is reasonable to expect that these reductions in allowed CO2 emissions will lead to reduced burning of coal, the most carbon intensive fuel, absent development of carbon capture and sequestration technology as a “silver bullet” that could allow the continued burning of coal at or near current levels.
Still, maybe the report will inject a healthy bit of sanity into the mountaintop removal debate, put a stop to the political grandstanding, and bring some well-intentioned folks from all sides together to start figuring out how to chart that path.
12 comments
For once, the Sierra Club comes through with the right answer. Of course, you would have to get users like the TVA to begin to think about what they will do with their mountains of ash.
The study findings reminds me of something I wrote back in May. I’m glad to see agreement with the common sense of a “dirty hillbilly blogger”
http://www.wvablue.com/diary/4498/the-economic-case-against-mountaintop-removal-coal-mining
[…] Blogs @ The Charleston Gazette - » MTR economics: Limits won’t be the end of the world blogs.wvgazette.com/coaltattoo/2009/10/13/mtr-economics-limits-wont-be-the-end-of-the-world – view page – cached As the Obama administration works out the kinks of its proposal to take “unprecedented steps” to reduce the environmental impacts of mountaintop removal, coal industry supporters are pulling… (Read more)As the Obama administration works out the kinks of its proposal to take “unprecedented steps” to reduce the environmental impacts of mountaintop removal, coal industry supporters are pulling out all of their old arguments: Limits on mining will turn off the lights and send the regional — some even argue national — economy plummeting even further into recession. (Read less) — From the page […]
It might be interesting to see what an industry backed study would show.
A couple of days ago, Florida Senator Lindsey Graham joined with Massachusetts Senator John Kerry supporting legislation setting up a cap-and-trade architecture to begin the process of reducing atmospheric carbon emissions.
Today, Ken Ward is pointing to a growing role for natural gas in the southeast — which includes Senator Graham’s Florida constituents. Also, Florida has lots of low-lying inhabited land that can’t handle much of a sea level rise from melting ice caps, etc.
Also, natural gas companies are advertising on the Internet — “twice as clean as coal!”
Change is a-coming — eyes wide open!
And just today, idiot blogger Tom Rodd moved Lindsey Graham from South Carolina to Florida! Best mistake yet, Tom!
The Sierra Club report is hardly an economic analysis–actually it would get no better than a D grade in a basic macroeconomic class. It does not dispel anything–facts or myths. It is not even clear what the report is attempting to analyze. For the most part it cobbles together ancedotal information without any context or hard data or analysis. Here are a few excerpts of the report that highlight its shortcomings:
* The net effect of restrictions on mountaintop removal in Central Appalachia is uncertain . . . (p. 3)
* Quanitfying the impact of prohibiting mountaintop/valley fill mining in Central Appalachia on the price of coal and wholesale power prices is beyond the scope and capability of a limted assessment like this. (p.9)
* The impact on the price of coal from putting an end to Central Appalachian mountaintop/valley fill mining is difficult to estimate . . .(p. 13).
The report does not address in any specificty impacts on jobs in the region despite flirting with the issue. Instead it opines that coal from other regions will replace Central App. coal (hardly comforting for Central App miners) and suggests that a shift to deep mining “has the potential’ to bring an increase in employement because per ton of production, deep mining employs more miners. One problem with this view–the reason surface mining employs less than underground mining is because it is more productive. So if coal in general is going to be less competitive–which is the underlying thesis of the Sierra Club report–then how will more expensive Central App deep mined coal be competitive in the marketplace? Perhaps the answer lies with the study’s assertion that it really doesn’t matter because the decrease in coal mining employment from restrictions on surface mining are likely to be far overwhelmed by the negative impacts on coal demand due to carbon regulation under climate legislation (pp 21-22). That being the case, how will all of those other jobs in other sectors be created under a scenario of higher energy prices—assembling in Central App. wind turbines made in China is no substitute for the high-wage coal jobs (twice as high as the avg. manufacturing job in the region) or the other jobs related to coal.
Either way, the report strikes the reader as more of an advocacy white paper for the Sierra Club–not an analysis. And with the big promo on natural gas at the beginning, the report looks more like Cheasepeake Energy advertisment–they should ask for their money back. Final note on the reports touting the lower natural gas prices–even Aubrey McClendon has stated that the $3-$4 natural gas prices of recent vintage are not sustainable and must reach the $8 range. At a recent oil and gas conference in Denver on Monday, Arthur Berman, a Texas geologist compared the recent optimisitc projections on shale gas to the sub-prime mortgage meltdown—perhaps all hat and no cattle–the shale fields aren’t as profitable and likely don’t contain as much recoverable gas as advertised.
Again you mention that Patriot said it could shift some resources to underground, but everytime it is mentioned someone (as I am doing now) points out the flaw in the way you present it. You cannot mine most of the surface seams by going underground. The seams are small and nobody will work in them. The seams are close together and you’d have to be able to put very long roof bolts in to hold the roof up. I work at a surface mine and to mine our coal underground you’d need roof bolts that are over 15 foot long. A lot of coal would be wasted because you can’t get every seam like you can with surface mining. Patriot can shift some of their resources underground, but not profitably and we would all pay for it on our electric bills.
I just don’t see why you all can’t leave us alone and let us have our jobs. We don’t attack the other industries. You’ll end up feeding us because there’s no other jobs here. I hope someday all of your jobs are considered evil and we can all harass you. I hope you all have to worry about feeding your family and yourself. I hope you all have to worry about losing your home because unreasonable people don’t understand your job. If we lose our jobs because of you, I hope you’re next so we won’t be paying for you with our taxes and we all suffer together.
“I just don’t see why you all can’t leave us alone and let us have our jobs.”
Daniel, the reason is that we feel that there are some activities whose impacts are so negative that no one should be able to make a living by doing them, and that surface mining is one of those–especially when coal has so many OTHER negative human & environmental impacts. We feel that one person’s “right” to a particular job does not trump someone else’s right to live safely and peacefully in his/her home, breathe clean air, and drink clean water.
I want to state clearly that MTR is wrong. It hurts Appalachia. It hurts lots of Appalachians. It is the most poignant example of environmental injustice in the US today. The strength of coal interests in the region are so powerful and entrenched that the very fibers of democratic society have been tragically corrupted. Thousands and thousands of Appalachians literally have no voice in decisions about their lives and land. That alone should impel every Appalachian to work for change.
MTR is the most destructive way to get our dirtiest fuel. It is a violation of our trust with the land. It reminds you of the horrible environmental destruction we associated with Eastern Europe and the Soviet Union during the Cold War. It is not mining, it is wholesale rearrangement of the land for the sake of cheap energy. When something is cheap as dirt, it gets treated like dirt. When was the last time anyone thought twice about the cost of electricty when buying a new TV? We are a wealthy, powerful, capable country blindly forsaking the future for short-term gains and telling ourselves, “We have no other choice.”
The problems with coal do not end with the mining. The air pollution kills tens of thousands a year, damages forests and crops, pollutes waterways, generates health care costs in the tens of billions. When air pollution controls are installed at plants, the plants are left with toxic waste that goes largely unregulated. Lots of it goes into rivers. There is the ash. Power plants are the largest source of hazardous waste in the country. Each plant with hundreds of acres of toxic ash.
And finally, the problem of CO2. We get energy from coal by turning it into CO2. There is no way around that. For every ton of coal we take out of the ground, we no are faced with putting 3 tons of CO2 back in. Much easier said, “Clean Coal”, than actually done. The biggest irony of all: it will take huge amounts of energy requiring huge amounts of coal to put CO2 underground. At some point, rational folks will ask themselves, “There must be a different way.”
FactsFirst has written an excellent comment. The Sierra Club white paper is lame. Everyone that thinks about switching jobs to underground mining should read what FactsFirst has written about productivity. He’s right. There may be more jobs, but it won’t be a 1-1 trade off.
Sierra Club should have noted that coal actually contributes much less to the Appalachian economy than is generally understood. There is a kind of mythology surrounding coal in Appalachia. There aren’t that many surface mining jobs–less than $1 billion a year in wages. As long as this type of mining occurs, it is very hard for other economies to get started in Appalachia. It is very hard to take advantage of the scenery, the climate, the relative adjacency to urban centers, of a unique and rich Appalachian culture. Coal mining comes with lots of costs–as much better described in other studies highlighted here on Tattoo. Health costs, infrastructure costs, costs to water quality, constant high levels of poverty, legacy environmental damage and the desperate boom-bust cycles typical of the extraction industries.
Daniel also makes an important point in his post. Patriot says they can switch to other coal resources (underground sources) if needed to match current output. They say this, by the way, to reassure investors and customers. It does not mean they can turn surface mines into underground operations.
Ok everybody in the past Ken has asked me not to rant and to add something of more importance to this blog. Well I need answers if you are going to sway me. Remember I am a surface miner and I have lost my job once already because of this issue in 1999. My first question would be (I am not ranting Ken). If the use of coal was stopped on Jan. 1, 2010 or in the near future what would we use for our household energy? Aren’t there issues with natural gas and oil drilling? What type job would I be able to get in place of my mining job that would support my way of life and that of my family? Are you all willing to change your lives as well? How many jobs would be here in Southern West Virginia. Would I have to move away from my elderly mother and father? Would the jobs support our small towns and schools? I do know that in 1999 many of our laid off friends were trained to do other trades and the State I think payed for the training. Would that same program be in place if mining ends? In the eyes of a coal miner we see lights out if coal ends and we see towns empty. Our lives have been our jobs, families, friends and we have carried many free loaders on out shoulders along the way. So just telling us it is all green just isn’t going to turn our heads or change our minds. You and the government will have to answer these and many more questions before we decide to champion your cause. Right now we just here all the talk about what needs to happen but we see no plan to support those left outside perfect world. Who doesnt want a perfect world for our childern and grand children. So help us see what you see and show us the plan so we
can roll it around and see if we can brake it. Here is a curve Ken. Is it true that there is one State that would keep the Nationwide Permit 21 as stated in the Corp. hearing in Charleston. I understand everyother State could lose it. How did I do?
Steve,
Well … you said your first question would be … and then I counted eight questions … so I’m not sure where to start.
But I would say first that you must have only recently started reading Coal Tattoo … either that, or you’re just trolling instead of reading. I say that because I’m not sure of anywhere in the media except Coal Tattoo where the very issues you raise — what will or can become of the coalfields as mountaintop removal is more closely regulated and carbon dioxide limits make coal less attractive to utilities.
In fact, in the very post you’re commenting on, I raised the exact same point, in a little different context and manner:
“But the message from this report for political, business and community leaders in the coalfields couldn’t be more clear: Coal demand is going to continue to decline as the world moves to deal with global warming, and folks in the coalfields need to get more serious about a post-coal economy.”
But you also set up a straw-man when you say:
“If the use of coal was stopped on Jan. 1, 2010 or in the near future what would we use for our household energy?”
I am not aware of ANYONE who is proposing that. Nobody. So what are you talking about? It’s pointless to try to have a discussion with you if you want to start off like that … asking me to defend an argument that neither I — nor any other readers on Coal Tattoo — have made.
If you are honestly interested in a discussion of the questions you raised (as opposed to just interested in ranting and complaining about efforts to force the coal industry and our society to account for the hidden costs of coal), then I’d encourage you to read the posts listed in the “Green jobs” category on Coal Tattoo, here:
http://blogs.wvgazette.com/coaltattoo/category/green-jobs/
One great alternative that is discussed there is putting coal miners to work cleaning up abandoned mine sites,
http://blogs.wvgazette.com/coaltattoo/2009/07/13/one-way-to-create-green-jobs-in-the-coalfields/
Here’s another post where I talked about those issues:
http://blogs.wvgazette.com/coaltattoo/2009/06/19/coal-and-a-better-west-virginia/
And another:
http://blogs.wvgazette.com/coaltattoo/2009/06/12/green-jobs-for-the-coalfields-did-obama-bury-the-lead/
And another:
http://blogs.wvgazette.com/coaltattoo/2009/06/05/mountaintop-removal-epa-eggs-and-baskets/
And another:
http://blogs.wvgazette.com/coaltattoo/2009/05/08/obama-aml-plan-what-happened-to-the-green-jobs/
I could go on … but let me say instead that, as I’ve written on Coal Tattoo several times, I cringe when I hear environmentalists say that eliminating mountaintop removal and otherwise cutting back on coal will be easy economically, as if there is some green jobs switch we can flick to save our coalfield communities. No way it’s going to be that easy.
But the world is changing, whether coal miners and coalfield politicians like it or not … seems like a better solution than everybody fighting each other would be to get together and find solutions for the future.
Ken.
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