Anyone who is paying attention to government statistics, industry forecasts — and this blog — shouldn’t have been particularly surprised by the news about coal yesterday from the U.S. Department of Energy’s sneak peak at the Energy Information Administration’s 2012 Annual Energy Outlook:
Coal production in Central Appalachia may not decline as sharply over the next five years as previously projected, but the long-term forecast looks even worse, according to a new U.S. Department of Energy report.
On Monday, DOE’s Energy Information Administration increased its estimates of annual regional coal production for each of the next five years, but then projected steeper drops through the rest of the decade, with output reaching a low of 77 million tons in 2020.
Overall, production from Central Appalachia — mostly Southern West Virginia and Eastern Kentucky — is expected to drop to about 86 million tons, a decline of nearly 54 percent between 2011 and 2035.
If you’ve got any doubt about it, check out Kris Maher’s Wall Street Journal story, headlined, Coal Industry Losing Steam: U.S. Firms Face Double Threat of Cheap Natural Gas, Weak European Demand:
This year’s outlook is grim for the U.S coal industry, which after two years of rising profits has begun closing mines, signaling a new wave of production cutbacks and, possibly, another round of industry consolidation.
The country’s biggest coal producers, which begin reporting fourth-quarter results on Tuesday with St. Louis-based Peabody Energy Corp., should provide insight into how bad this year could be. Most should meet Wall Street’s earnings expectations for the last quarter of 2011 on export gains over a year ago, while tempering investor expectations for 2012, say analysts.
The two biggest threats facing U.S. coal companies are the low price of domestic natural gas, which is making thermal coal a less-attractive fuel for their utility-customers, and the shaky economic picture in Europe, which is damping exports of metallurgical coal.
Of course, there are plenty of reasons to be concerned about West Virginia’s coal industry — Things like the pervasive and irreversible impacts of mountaintop removal mining on our environment and the growing body of science that links living near mountaintop removal to serious health impacts like birth defects and cancer. There’s also the incredible toll coal-mining takes on workers, through mine disasters, one-by-one deaths, and the continuing public health disaster that is black-lung disease. And there’s the untold damage to public health from power plant emissions, and coal’s huge contributions to global warming.
And if those things aren’t enough — and for most politicians in the region, they’re not — to make folks sit down and talk about the future of coal, you would think that the serious potential for seeing Central Appalachian coal production cut by more than half before the end of this decade might get some attention.
This chart, provided by Matt Wasson of Appalachian Voices, shows trends in coal production and coal production projections from the federal government.
Indeed, I guess it does get some attention … for example, you have this almost gleeful statement from the Sierra Club:
The data paint a brighter future where coal mining, burning and coal ash disposal does not threaten thousands of communities across the United States. Coal is being replaced with cleaner energy choices. Here at the Sierra Club we are working overtime to help accelerate this trend by preventing the construction of new coal plants, retiring and replacing existing coal plants with clean energy, and keeping the large U.S. coal reserves out of world markets.
Fair enough. The Sierra Club understands the serious problems associated with coal and is working successfully to push its agenda — including not only its well-funded campaign against coal-fired power plants, but also its work doing the job of state and federal regulators by forcing coal operators to begin cleaning up their own selenium water pollution at mines across West Virginia.
But remember what AFL-CIO President Richard Trumka said recently:
People I grew up with dig the coal that lights the lights and heats the buildings all across this country today. The world we know exists because coal miners go down to the mines. But the carbon emissions from that coal, and from oil and natural gas, and agriculture and so much other human activity– causes global warming, and we have to act to cut those emissions, and act now.
Now, some people’s response is to demand that we end all coal production now—they say “End Coal.” Never mind that such a thing is simply not going to happen—there is no substitute now for metallurgical coal and if we stopped burning coal this afternoon and cut the power in the U.S. grid by 50 percent, as Mayor Bloomberg advocates, he’d be reading handwritten memos by candlelight this evening. Given that reality, it’s important to think about how that slogan is heard in places like my hometown of Nemacolin, Pennsylvania.
Nemacolin lives on coal—the coal mine my grandfather and my father went down to every day of their working lives, the power plant the mine feeds, the rail lines that carry coal to other plants. When these folks hear “End Coal,” it sounds like a threat to destroy the value of our homes, to shut our schools and churches, to drive us away from the place our parents and grandparents are buried, to take away the work that for more than a hundred years has made us who we are.
So why, in an economy without an effective safety net, would the good men and women of my hometown and a thousand places like it surrender their whole lives and sit by while others try to force them to bear the cost of change.
The truth is that in many places – and not just places where coal is mined – there is fear that the “green economy” will turn into another version of the radical inequality that now haunts our society—another economy that works for the 1% and not for the 99%.
And the response from coalfield politicians is typified by the coal comments made by West Virginia Gov. Earl Ray Tomblin in his State of the State address earlier this month:
As long as I am Governor I will continue to fight this administrations war on coal! A few months ago, a federal court agreed with our lawsuit and ruled that the federal EPA had in fact overstepped its authority. I will keep fighting until Washington recognizes that one of the keys to America’s future is the use and promotion of our natural resources. It is a fight from which I will not shrink, and one that I fully expect to win!
Never mind that most experts have not pointed to the Obama administration’s crackdown on mountaintop removal mining as a major factor for the expected decline in Central Appalachian coal production, or that Gov. Tomblin is working to encourage more of one of coal’s biggest enemies in this supposed war with his efforts to promote drilling for natural gas in the Marcellus Shale. Continuing this kind of anti-Obama rhetoric simply allows the region’s political leaders to cover up the fact that they don’t have a plan for dealing with the impact of the coming coal production collapse.
Fortunately, there are people out there who are trying to talk and work on these issues, like the good folks at Appalachian Transition and the West Virginia Center for Budget and Policy, and like Rory McIlmoil and the rest of the team at Downstream Strategies, who have been trying to warn policymakers about these coal forecasts. Even some folks in the local media are starting to get the idea. As Rory told me yesterday:
The report we published on the pending decline in Central Appalachian coal was meant to bring public attention to drastic shifts that were happening in eastern energy markets, and which will have a significant impact on energy prices and coal-related jobs. Our 2010 report used EIA’s projections, and since the publication of that report, those projections have come true. Central Appalachian production is on the decline. The new projections show an even more drastic decline in coal production for the region over the next decade than what we reported on in 2010. Therefore, the new projections support to an even greater extent the overall message put forth in our report: that Central Appalachia needs strong policies aimed at diversifying the regional economy and energy portfolio.
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Re: Rich Trumpka’s following remark: “When these folks hear “End Coal,” it sounds like a threat to destroy the value of our homes, to shut our schools and churches, to drive us away from the place our parents and grandparents are buried, to take away the work that for more than a hundred years has made us who we are.” These are nearly the same arguments that people opposing mountaintop removal have been making for more than a decade. We can add, destroying people’s health to the mix. It’s way past time for discussion about a just transition. And Ken’s right, few, if any politicians want to face a future when coal is no longer driving the economy. In some cases, coal may be close to driving the economy into the ground if concerns about water pollution are not addressed aggressively. No companies are going to locate in a region that doesn’t have potable water; and citizens living in those regions won’t survive long there either. In my opinion, we are already at a place of diminishing returns–and most regular people have not benefited as much as the out of state companies and their preferred candidates who carry their water.
It’s really at issue at the margin of this larger picture, but I do wonder if enough is being done to secure the future of coal reclamation funds for the older Appalachian coalfields. One potential source of transitional employment (although hardly an economic or psychological replacement) is cleaning up the various kinds of human and environmental messes left by more than a century of coal mining. But with BLM possibly in the process of absorbing OSMRE, I have to wonder if the funds now set aside for reclamation might be in danger.
Change in inevitable, readers might review the Sustainable Mountain report listed below. Until coal can be used without negative impact on this planets ecosystems (human and other animals) its use will diminish appropriately.
The use of coal is not going to stop.
WVa gov., etc. need to look into bio-crops, etc. for job creation. Purpose grown rotation biofuel crops are now used in place of fossil fuels. The US Department of Defense has it’s own green fuel mandate. It’s a part of our nations energy security.
Coal companies are fighting hard to stop change, but without any near term ‘clean coal’ prospects and record low prices for cleaner burning natural gas coals use must level off. Methane capture is still an area
where coal producing regions might find a modest source of revenue.
RIO-20 Sustainable Mountain Development Telluride Institute Aspen International Mountain Foundation
http://www.fs.fed.us/psw/cirmount/postings/pdf/SUSTAINABLE_MOUNTAIN_DEVELOPMENT.pdf
Principal Researcher: Rebecca J. Wallace
Rebecca J. Wallace, Karinjo DeVore
Aspen International Mountain Foundation
Pamela Lifton-Zoline, John Lifton-Zoline
The Telluride Institute
Sierra Club hosted a meeting in Albright recently to focus on the future of the First Energy coal-fired power plant there. Our concern was to lay out the limited future scenarios for that plant, and to encourage citizens to think about the future after changes happen at the plant. It was pretty tough to get past the “nostalgia” level of liking the status quo – even though it is crystal clear that change is imminent.
While the focus here seems to be on actual tonnage of coal mined I suspect the drop in miners per ton of coal produced has dropped even more; think of it in terms of increased mining efficiency that’s built into the system. In my mind this is the true story. Arguing that the loss of coal production equates to loss in economic gain misses the point that a larger portion of coal mining profits are now going to the shareholders and not to the actual people mining the coal and to their local communities.