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Update: Declines projected for Appalachian coal

Monday, January 23, 2012

Here’s the latest from the U.S. Department of Energy’s Energy Information Administration, in a preview of its 2012 Energy Outlook issued this morning:

Over the next 25 years, the projected coal share of overall electricity generation falls to 39 percent, well below the 49-percent share seen as recently as 2007, because of slow growth in electricity demand, continued competition from natural gas and renewable plants, and the need to comply with new environmental regulations.

The average minemouth price of coal increases by 1.4 percent per year in the AEO2012 Reference case, from $1.76 per million Btu in 2010 to $2.51 per million Btu in 2035 (2010 dollars). The upward trend of coal prices primarily reflects an expectation that cost savings from technological improvements in coal mining will be outweighed by increases in production costs associated with moving into reserves that are more costly to mine. The coal price outlook in the AEO2012 Reference case represents a change from the AEO2011 Reference case, where coal prices were essentially flat.

Although coal remains the leading fuel for U.S. electricity generation, its share of total generation is lower in the AEO2012 Reference case than was projected in the AEO2011 Reference case. As a consequence, while still growing in most projection years after 2015, total coal production is lower in the AEO2012 Reference case than in the AEO2011 Reference case, with the gap between the two outlooks increasing substantially over the period from 2020 to 2035.
In the AEO2012 Reference case, domestic coal production increases at an average rate of 0.3 percent per year, from 22.1 quadrillion Btu (1,084 million short tons) in 2010 to 23.5 quadrillion Btu (1,188 million short tons) in 2035. Mines in the West account for nearly all the projected increase in overall production, although even Western coal production is expected to decline somewhat between 2010 and 2015 as low natural gas prices and the retirement of a sizable amount of coal-fired generating capacity leads to a decline in overall coal consumption in the electricity sector. On a Btu basis, the share of domestic coal production originating from mines in the West increases from 47 percent in 2010 to 56 percent in 2035, and the Appalachian share declines from 39 percent to 29 percent during the same period, with most of the decline occurring by 2020. In the Interior region, coal production remains relatively stable over the projection period, with production in 2035 higher than in 2010.

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Posted in Business, Coal business, Peak coal | 3 Comments »

Coal lobby’s Hamilton refuses to face the numbers

Tuesday, October 4, 2011

My good friend Chris Hamilton, vice president of the West Virginia Coal Association, has a fascinating op-ed piece in today’s Charleston Daily Mail. Apparently, this is how the coal industry here in West Virginia plans to respond to the recent Associated Press piece discovering the impending collapse of the region’s coal production. Chris writes of AP reporter Dylan Lovan’s account:

A recent story by Associated Press reporter Dylan Lovan regarding coal production in Appalachia contained enough fact to create a headline, but the facts were lost amidst erroneous statements and distortions.

Lovan asserted that – based on a report by the U.S. Department of Energy and another “study” by a Morgantown-based anti-coal advocacy group – that coal production in the Central Appalachian region is in the midst of an irreversible decline.

Lovan further asserted that this decline is the result of the rapid depletion of quality coal reserves in the region, and that the anti-coal policies being pursued by the Obama administration through its regulatory agencies has little do to with the decline.

As senior vice president of the West Virginia Coal Association, I assure you that this assertion is wrong.

Lovan’s assessment is simplistic and amounts to little more than an acceptance of opinion – that of anti-coal extremists – as fact.

The problem is … well, the coal production projections used in the AP story are not those of a bunch of “anti-coal extremists.”  One major quote about the future of Central Appalachian coal, for example, came from Arch Coal Inc. — a company I believe is a member of the West Virginia Coal Association. As AP reported:

Arch Coal, the nation’s second-largest coal producer, told investors last year that the region’s coal “is in secular decline — faced with depleting reserves and significant regulatory hurdles.”

And the projections of steep regional production declines also mirror those in West Virginia University’s “Consensus Coal Production Forecast,” published by the folks at the university’s Bureau of Business and Economic Research — hardly a bunch of anti-coal zealots.

It’s true that the AP story quoted Rory McIlmoil, who used to be an activist working with Coal River Mountain Watch and is now a researcher with the Morgantown firm Downstream Strategies. But Rory’s must-read report from January 2010, “The Decline of Central Appalachian Coal and the Need for Economic Diversification, is based on U.S. Department of Energy estimates and projections — not just some cooked-up, anti-coal opinions, as Hamilton would have Daily Mail readers believe.

You can check out the most recent numbers from DOE’s Energy Information Administration here, and this is the bottom line from their latest analysis:

Appalachian coal production declines substantially from current levels, as coal produced from the extensively mined, higher cost reserves of Central Appalachia is supplanted by lower cost coal from other supply regions. Increasing production in the northern part of the basin, however, does help to moderate the overall production decline in Appalachia.

Keep in mind that these are projections not based on some sort of de facto Obama administration ban on new mountaintop removal permits, and certainly not on any national policy to try to reduce greenhouse gas emissions.

(more…)

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Posted in Coal business, Media coverage, Peak coal | 8 Comments »

Is it too late for Central Appalachia to prepare for the coming collapse of the coal industry?

Monday, October 3, 2011

In this Wednesday, Aug. 17, 2011, photo, coal lies in piles around a conveyor system at a mine near Meta, Ky. Coal is deeply linked to the culture and economy in Central Appalachia but the industry is facing an expected collapse in production over the next few years. (AP Photo/Ed Reinke)

While I was out for a few days last week, the folks at The Associated Press discovered what Coal Tattoo has been trying to get Central Appalachian residents and political leaders to focus on for nearly two years now.

The AP’s Dylan Lovan reported:

When business screeched to a halt at Jerry Howard’s eastern Kentucky mine engineering company two years ago, he decided to call it quits after four decades in the coal industry.

“We were sort of forced out,” Howard says of the former company, Walturn, where he was part owner.

Business owners like Howard, politicians and miners in the hilly coalfields of Central Appalachia blame the industry decline on tougher regulation from the Obama administration.

They aren’t as ready to talk about something a change in administrations cannot fix. The region’s thick, easy-to-reach seams of coal are running out, forcing many operators to shift to cheaper and more destructive mining methods that draw heavier environmental regulation.

Coal here is getting harder and costlier to dig — and the region, which includes Southern West Virginia, Virginia and Tennessee, is headed for a huge collapse in coal production.

The U.S. Department of Energy projects that in a little more than three years, the amount of coal mined here will be just half of what it was in 2008. That’s a significant loss of a signature Appalachian industry, and the jobs that come with it.

The story quoted from Rory McIlmoil, co-author of the must-read report by Downstream Strategies, “The Decline of Central Appalachian Coal and the Need for Economic Diversification“:

We are going to see declines in labor and jobs, and it’s going to happen rapidly.

But it also noted that major players in the coal industry are well aware of what’s coming:

Arch Coal, the nation’s second-largest coal producer, told investors last year that the region’s coal “is in secular decline — faced with depleting reserves and significant regulatory hurdles.”

Unfortunately, Lovan focused much of his story on repeating the complaints from the coal industry and its political allies about the Obama administration’s crackdown on mountaintop removal and proposals to curb air pollution and greenhouse emissions from coal-fired power plants — rather than putting these industry officials and the region’s business and political leaders on the spot for what their plan is for dealing with the inevitable production decline that has little if anything to do with environmental rules.

(more…)

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Posted in Coal business, Media coverage | 16 Comments »

Guest blog: Do you pay more taxes than coal?

Wednesday, February 16, 2011

This is a guest blog by Ted Boettner, executive director of the West Virginia Center on Budget and Policy, and is cross-posted from that organization’s blog:

The New York Times and the Economist both had interesting pieces last week highlighting the difficulties of federal corporate tax reform. Most interesting, however, was a chart in each article showing the effective federal corporate income tax rate by industry.  Unfortunately (or fortunately), the chart contained a major error. The effective rates in the chart are not just for the “federal” corporate income tax, but for federal, state and local taxes paid by companies.

The chart was compiled using data from about 6,000 (not 7,000) publicly traded companies by Aswath Damodaran, a Professor of Finance at the Stern School of Business at New York University. The data show that the total effective corporate tax rate is 15.3% for all companies, and 29% for companies that made a profit. It is important to keep in mind that the the top federal corporate tax rate is 35%. The effective rate was found by dividing the taxes paid by the taxable income as reported to the stockholders.

There are several reasons why companies pay so little, but one is that our federal and state corporate tax code is riddled with tax preferences and tax subsidies – what some are beginning to call “tax earmarks.”  And these tax expenditures have a lot of powerful friends. This means efforts to reform the corporate tax code – reduce the rate and close loopholes – will benefit some companies while hurting others.

The chart above displays effective tax rates for select industries. According to WorkForce West Virginia, these industries are some of West Virginia’s largest employers, such as Kroger, WV United Health, AEP, Consolidated Coal, Chesapeake Energy, Mylan, Dupont, and Wal-Mart.

As you can see, profitable coal companies (20 out of 25 were profitable: see here) have a smaller effective tax rate than any of the other dominant industries in West Virginia. In fact, of the 100 industries examined by Damodaran, the coal industry had the 7th lowest effective rate. The natural gas industry, which has been getting a lot of attention lately, also had a below average effective rate.

While some have argued that the state already taxes coal too much, it appears the industry doesn’t pay nearly as much as other companies or as much as most households

According to a 2008 Congressional Budget Office (CBO) report, the total household effective “federal” tax rate in 2005 was 20.5%. (Here are the effective taxes rates by category:  individual income tax 9.0%, social insurance (Medicare, Social Security) was 7.6%, corporate income 3.1%, and excise was 0.8%.)

The Institute on Taxation and Economic Policy (ITEP) finds that state and local taxes are about 9 percent of a household’s income.

While you and I may be paying close to 25-30 percent of our income in taxes, the coal industry is paying far less. It is time to for them to pay their fair share and help chart a course to the future.

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Posted in Coal business, Corporate welfare | 7 Comments »

Oh, Sen. Manchin … about those coal subsidies …

Wednesday, February 16, 2011

We had some fun two weeks ago asking the question, Does Sen. Manchin really think coal doesn’t get ‘a penny of subsidies’?

Well, now it seems that President Obama is interested in making it so. As my buddy Peter Gartrell reported for Platts:

The coal industry stands to lose nearly $2.6 billion in federal tax incentives over the next decade as part of the Obama administration’s proposed fiscal 2012 budget released Monday.

The administration’s proposal is identical to coal incentives cut in its budget last year. The White House is aiming to meet a G-20 climate change agreement from 2009 in which member countries pledged to phase out fossil fuel subsidies.

Repealing the tax provisions would “foster the development of a clean-energy economy and reduce our dependence on fossil fuels that contribute to climate change,” the administration said in its budget message. The tax incentives equal less than 1% of the coal industry’s revenue over the next 10 years, according to White House projections.

(more…)

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Posted in Climate policy, Coal business, Congress, Corporate welfare | 4 Comments »

Powder River Basin not a ‘coal producing region’?

Friday, February 11, 2011

Now, I’m certainly no expert on western coal or on the process the government uses to lease all of that publicly owned coal in Wyoming’s Powder River Basin to the handful of companies that operate huge surface mines there.

But this announcement by the group WildEarth Guardians sure caught my eye:

The U.S. Bureau of Land Management today announced that the largest coal producing region in the United States is not a coal production region.

Huh?

I thought the Powder River Basin was the largest coal-producing region in the U.S., churning out nearly half of the nation’s production. How could the government classify it as not being a coal production region? Why would they do that?

Well, thanks to Coal Tattoo reader Andy Wildenberg for calling this Associated Press story on the issue to my attention in his comment on last week’s Friday Roundup. A longer version of the AP story explains:

The U.S. Bureau of Land Management has denied a petition by environmental groups to change its process for selling access to the nation’s most productive coal deposits.

Since 1990, the government has allowed the coal industry to nominate deposits it wishes to mine in the Powder River Basin in northeast Wyoming and southeast Montana. Such deposits typically are located next to existing strip mines in the basin.

At auction, the leases seldom attract more than one bidder apiece — the company that already has been mining next to the leases.

In 2009, the groups WildEarth Guardians and the Sierra Club asked the BLM to change the policy so the BLM alone would decide which coal reserves to sell.

Such a change would help create more competition for the leases while improving oversight of coal’s contribution to climate change, the groups said.

(more…)

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Posted in Coal business, Legal actions | 17 Comments »

Will the new Alpha talk sense on global warming?

Tuesday, February 1, 2011

One of the things the national media kind of loved about Massey Energy CEO Don Blankenship was how outspoken Blankenship was about global warming. By calling it a hoax or a myth or whatever his latest was, Blankenship played right into the narrative that coal is a dinosaur of an industry that won’t recognize the established science and need for action on greenhouse gases.

Some in the coal industry do take that view. But as Coal Tattoo readers know, not everyone does — American Electric Power and the United Mine Workers, for example, have embraced the need for action.

What about Massey’s new owners over at Alpha Natural Resources?

Well, one alert Coal Tattoo reader pointed out to me that Alpha was or is a member of the group Coalition for Emissions Reductions Projects, which has been somewhat positive in support of cap-and-trade legislation. In one letter to lawmakers last year, the CERP group praised provisions of a bill being worked on by Sens. John Kerry and Joe Lieberman:

We appreciate your efforts to craft an environmentally rigorous and practical domestic offsets program that relies on the power of the market to drive emission reductions where they can be achieved at the greatest efficiency and least cost. We commend you for providing for science-based offset program rules and methodologies that will ensure that offsets are measurable, additional, verifiable, and enforceable, while minimizing the transaction costs involved in developing offset projects.

But I was also reminded that Alpha joined with Massey and others in the industry in filing a legal challenge to the EPA’s finding that climate changes endangers public health.

In buying up Massey and turning itself into an even bigger coal giant, will Alpha Natural Resources embrace the future? Stay tuned …

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Posted in Climate policy, Coal business | 6 Comments »

UMWA President Cecil Robert: ‘Erasing the Massey name from America’s coal industry’ a positive step

Monday, January 31, 2011

Here’s the statement just released by United Mine Workers President Cecil Roberts on the buyout of Massey Energy by Alpha Natural Resources:

We believe there will be several things that come from the purchase of Massey Energy by Alpha Natural Resources.

First, while by no means perfect, Alpha’s overall safety record is better than Massey’s. Alpha’s got quite a job on its hands to turn the former Massey mines around from Massey’s safety-last culture. But if they are successful, the miners at the former Massey mines will be at less risk than they have been.

Secondly, erasing the Massey name from America’s coal industry is a positive step, no matter who is responsible for it. Massey had come to represent all that was wrong with the coal industry, whether it be safety and health issues, environmental issues or simple respect for its workers, their families and the communities where they live.

While Alpha inherits those problems from Massey, one hopes that Alpha recognizes that sorry record and has a plan in place to move swiftly toward resolving many of those issues.

And lastly, we represent about 1,500 active Alpha employees and thousands of retirees. We have open lines of communication with the company. When measured by the standard set by the previous leadership at Massey, this represents a significant improvement.

It should come as no surprise to Alpha that we strongly believe both the company and the workers would be better off with a larger union presence at the company moving forward, and we are working toward that goal. As we do, we invite Alpha management to work with us in securing a safer, more secure future for its workers, their families and all the company’s stakeholders.

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Posted in Coal business, Labor | No Comments »

Alpha touts ‘compelling’ benefits of Massey buy

Monday, January 31, 2011

Officials from Alpha Natural Resources just finished up a nearly 90-minute conference call in which they promoted their purchase of Massey Energy to industry stock analysts.

You can check out an audio replay of the event online, and they also have a slide show that includes some facts and figures about the transaction here. Among the highlights:

– The combined Alpha-Massey company will rank 2nd in many measures of U.S. coal producers — including production, coal reserves and earnings — behind only Peabody Energy. The combined company will hold 5.1 billion tons of reserves.

– Alpha plans to keep its existing management team and board of directors in place, but may offer a position as some sort of consultant or adviser to Baxter Phillips, a longtime Massey executive who took over as CEO when Don Blankenship retired last month.

– The transaction creates a combined company valued at about $15 billion. Approvals are still needed from the Federal Trade Commission and the shareholders of both companies.

– Once finalized, the merger creates a giant among companies that produce steel-making coal, with 40 million tons of annual production and $1.7 billion tons of reserves.

(more…)

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Posted in Coal business | 7 Comments »

Massey update: More on the Alpha buyout

Sunday, January 30, 2011

Back in early December, when Massey CEO Don Blankenship announced his, er, retirement, from the company, United Mine Workers President Cecil Roberts offered this hope for what the change in Massey’s leadership might mean for the company, its workers, and the communities where it operates:

This also represents an opportunity for the coal industry in West Virginia and across the country to take a step away from the negative image that has cast a pall over our industry, created in large part because of the actions of Don Blankenship and Massey Energy while he has been at the company’s helm. Let us take this opportunity to move forward in a reasonable, rational way as we work to overcome the many difficult issues that confront our industry.

So, what now, given the other shoe that dropped with Saturday’s announcement that Massey — free from Blankenship’s control and reported opposition to such a deal — has agreed to a buyout by Alpha Natural Resources?

Well, Cecil Roberts and the mine workers have so far declined to comment on the news. And we’ll have to wait until early tomorrow morning to hear much more than the press release quotes from Alpha and Massey executives. A conference call with industry stock analysts is scheduled for 8 a.m. and will be broadcast to the rest of us via the Web.

But who is Alpha Natural Resources, and what exactly will this huge transaction mean for the companies involved, their workers, their communities and the crucial issues facing the coal industry and coalfield families who work for, live near, or care about the future of the region?

It’s far too soon to offer a clear answer, but let’s talk about a few things that we do know.

First, how about the UMWA? Well, union spokesman Phil Smith did note last night that the mine workers represent hourly employees at two Alpha operations in southwestern Virginia and at two very large underground mining complexes in western Pennsylvania. Those two western Pa. operations — Cumberland and Emerald — are both longwall mines that together produced nearly 11 million tons of coal with 1,300 employees in 2010. And those two mines were both added to Alpha fairly recently, in its 2009 purchase of Foundation Coal.

But like Richmond, Va.-based Massey, Alpha Natural Resources is mostly a non-union company. Company executives brag in their most recent report to shareholders  that 87 percent of its production comes from “union free” operations. As of Dec. 31, 2009, 79 percent of Alpha employees were “union free,” the company said.  They warned in that SEC filing:

Any further unionization of our subsidiaries employees, or the employees of 3rd party contractors who mine coal for us, could adversely affect the stability of our production and reduce our profitability.


(more…)

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Posted in Coal business | 11 Comments »

As UBB investigation drags on, more details leak out and Massey Energy sale rumors continue

Monday, January 17, 2011

As the Obama administration’s departments of Labor and Justice collaborate to hide from the public details of what might have caused the Upper Big  Branch Mine Disaster,  some bits and pieces continue to tumble out.

My buddy Howard Berkes over at NPR had a piece late Friday afternoon with a few more tidbits about an issue we’ve covered several times here on Coal Tattoo and in the Gazette:

Legally required water systems at Massey Energy’s Upper Big Branch coal mine in West Virginia were not functioning properly before the April 5 explosion that killed 29 mineworkers, according to multiple sources familiar with the disaster investigation.

… The malfunctioning systems include:

— The fire suppression system on the shearer. Sources say it didn’t work. Massey Energy admits that one of two valves on the system was missing, and a hose was “manually plugged.”

— A water-spraying arm or boom at the shearer was disconnected, according to sources. Massey says it was broken off.

— Sprayers on the shearer itself were missing or clogged. Some looked like they had had nails driven into them. Tests conducted on the shearer sprayer system before Christmas indicate little or no water sprayed the shearer as it cut into six inches of sandstone in the coal seam, and likely kicked off sparks and churned up coal dust.

We reported on the water spray issue back in November and again earlier this month.  As Berkes points out in his piece:

The sprayers help keep coal dust down so it won’t clog the lungs of miners or float in the air. When coal dust is floating, it is highly explosive. The sprayers also help cool and extinguish sparks when the shearer cuts into hard rock. The shearer also contains a water-based fire suppression system.

(more…)

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Posted in Business, Coal business, Upper Big Branch Disaster | 3 Comments »

Washington Post: “Coal is a dead man walkin’”

Monday, January 3, 2011

A Dec. 22, 2010 photo shows the Portland generating plant on River Rd., just south of Portland, Pa., on the Delaware River. The federal Environmental Protection Agency will schedule a public hearing early in the coming year to discuss whether the plant should be forced to reduce its emissions. (AP Photo/TheRecord, Leslie Barbaro)

There’s been a fair amount of buzz so far in the new year about a Saturday Washington Post article, Coal’s burnout:  Have investors moved on to cleaner energy sources?

The nut graphs:

The headline news for the coal industry in 2010 was what didn’t happen: Construction did not begin on a single new coal-fired power plant in the United States for the second straight year.

This in a nation where a fleet of coal-fired plants generates nearly half the electricity used.

But a combination of low natural gas prices, shale gas discoveries, the economic slowdown and litigation by environmental groups has stopped – at least for now – groundbreaking on new ones.

“Coal is a dead man walkin’,” says Kevin Parker, global head of asset management and a member of the executive committee at Deutsche Bank. “Banks won’t finance them. Insurance companies won’t insure them. The EPA is coming after them. . . . And the economics to make it clean don’t work.”

(more…)

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Posted in Business, Coal business, Media coverage | 19 Comments »

AP report: Old-style coal plants expanding

Tuesday, August 17, 2010

In this photo taken Wednesday, April 28, 2010, Jon LaCour, manager of the Wygen III coal-fired plant, looks over pollution control equipment built onto the recently completed $247 million plant in Wyodak, Wyo. Utilities across the country are building dozens of old style coal plants that will cement the industry’s standing as the largest industrial source of climate changing gases for decades. (AP Photo/Matthew Brown)

Here’s a story just out by Matthew Brown of The Associated Press:

WYODAK, Wyo. (AP) — Utilities across the country are building dozens of old-style coal plants that will cement the industry’s standing as the largest industrial source of climate-changing gases for years to come.

An Associated Press examination of U.S. Department of Energy records and information provided by utilities and trade groups shows that more than 30 traditional coal plants have been built since 2008 or are under construction.

The construction wave stretches from Arizona to Illinois and South Carolina to Washington, and comes despite growing public wariness over the high environmental and social costs of fossil fuels, demonstrated by tragic mine disasters in West Virginia, the Gulf oil spill and wars in the Middle East.

The expansion, the industry’s largest in two decades, represents an acknowledgment that highly touted “clean coal” technology is still a long ways from becoming a reality and underscores a renewed confidence among utilities that proposals to regulate carbon emissions will fail. The Senate last month scrapped the leading bill to curb carbon emissions following opposition from Republicans and coal-state Democrats.

“Building a coal-fired power plant today is betting that we are not going to put a serious financial cost on emitting carbon dioxide,” said Severin Borenstein, director of the Energy Institute at the University of California-Berkeley. “That may be true, but unless most of the scientists are way off the mark, that’s pretty bad public policy.”

In this photo taken Wednesday, April 28, 2010, Marty Snell with Black Hills Power monitors a bank of computer screens used to track operations of the Wygen III power plant in Wyodak, Wyo. Utilities across the country are building dozens of old style coal plants that will cement the industry’s standing as the largest industrial source of climate changing gases for decades. (AP Photo/Matthew Brown)


(more…)

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Posted in Air pollution, Business, CCS, Climate policy, Coal business, Coal pollution, Media coverage | 16 Comments »

New Montana coal railroad being challenged

Thursday, July 29, 2010

One of the common complaints from coal industry folks here in Appalachia is that regulators and environmentalists come after them, but leave the huge surface mines of the west alone.

We saw recently this isn’t necessarily true, when a coalition of groups filed a petition seeking to for the U.S. EPA to put in place new air quality standards for coal mines, in large part because of dust from western coal operations.

Yesterday, there was another example, with this Associated Press story:

A conservation group has asked the federal Surface Transportation Board to reconsider its approval of a proposed $550 million railroad that would open new areas of Montana’s Powder River Basin to coal mining.

The Northern Plains Resource Council said in its request Monday that the board’s 2007 approval of the Tongue River Railroad failed to take into account how burning coal contributes to climate change.

The group wants a new environmental study of the rail line. Its petition to reopen the case is the latest in a string of legal maneuverings by environmentalists seeking to stall Gov. Brian Schweitzer’s push for a major expansion of coal mining in the state.

(more…)

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Posted in Climate policy, Coal business | No Comments »

Rockefeller defends tax breaks for big coal

Tuesday, February 2, 2010

rockefellerpoints.JPG

Buried among all the other coverage of President Obama’s budget proposal there have been a couple of pieces (see here and here) about the administration’s efforts to slow government subsidies for fossil fuels that contribute to global warming.

The White House explained the proposal — which would save the government $2.3 billion in coal tax breaks over a 10-year period — this way:

As we work to create a clean energy economy, it is counterproductive to spend taxpayer dollars on incentives that run counter to this national priority.  To further this goal, the Budget eliminates tax preferences and funding for programs that provide inefficient fossil fuel subsidies, which impede investment in clean energy sources and undermine efforts to deal with the threat of climate change.  We are eliminating 12 tax breaks for oil, gas, and coal companies, closing loopholes that will raise $36 billion over the next decade.  Moreover, this leadership in eliminating subsidies will also encourage prompter action by the major emerging economies to phase out their subsidies, which are in the hundreds of billions of dollars annually.

Of course, this proposal is meeting immediate opposition in the nation’s coalfields, as evidenced by this story in the Lexington Herald-Leader,  in which Kentucky officials “worry will mean heavy job losses in economically poor but coal-rich regions of Appalachia.” (more…)

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Posted in Climate policy, Coal business, Congress, Politics | 14 Comments »

Must-read report: The decline of Central Appalachian coal

Tuesday, January 19, 2010

coalfog_chip.jpg

Gazette photo by Chip Ellis

Given the numerous challenges working against any substantial recovery of the region’s coal industry, and that production is projected to decline significantly in the coming decades, diversification of Central Appalachian economies is now more critical than ever. State and local leaders should support new economic development across the region, especially in the rural areas set to be the most impacted by a sharp decline in the region’s coal economy.

That’s the take-home message from a major new report issued today by the Morgantown consulting group Downstream Strategies. The report is called, “The Decline of Central Appalachian Coal and the Need for Economic Diversification.”

It’s must-read material for anyone who cares about the future of the Appalachian coalfields, and especially for elected officials who keep hoping that the next coal boom is just around the corner.

evanhansen.jpgrory.jpgAuthors Rory McIlmoil and Evan Hansen  make the case that a host of factors — competition from other coal-producing regions, rising interest in natural gas and renewable energy, and the depletion of Central Appalachia’s best reserves — has prompted a decline in regional coal production that is unlikely to be reversed. In fact, they report:

After strong and increased production through the mid-1990s, regional production last peaked in 1997 at 290 million tons. Even as national production continued to grow, by 2008, Central Appalachian production has fallen 20 percent to 235 million tons.

Recent projections indicate that — despite substantial coal reserves — annual production may decline another 46 percent by 2020, and 58 percent by 2035, to 99 million tons.

And, importantly, that’s without considering the potential impacts of climate change legislation or new restrictions on mountaintop removal coal mining. Both of those policies are likely to further squeeze the region’s coal industry, the report says, making it all the more important to begin planning for such events:

Should substantial declines occur as projected, coal-producing counties will face significant losses in employment and tax revenue, and state government will collect fewer taxes from the coal industry. State policy-makers across the Central Appalachian region should therefore begin taking the necessary steps to ensure that new jobs and sources of revenue will be available in the counties likely to experience the greatest impact from the decline.

The report adds:

While there are numerous options available, the development of the region’s renewable energy resources and a strong focus on energy efficiency offer immediate and significant opportunities to begin diversifying the economy.

In a news release, Rory said:

Coal has contributed significantly to local and state economies in Central Appalachia, but production has fallen substantially over the last 12 years as other coal basins and sources of fuel have become more competitive. This trend is expected to continue as mining costs increase due to the depletion of the lowest cost coal reserves, and as new environmental regulations are implemented. As this happens, local and state economies will need new sources of jobs and revenue to replace coal mining jobs and taxes.

And Evan added:

Given that coal production is projected to decline significantly in the coming decades, diversification of Central Appalachian economies is now more critical than ever. State leaders should use this legislative session to increase support for new economic development across the region, especially in the rural areas set to be the most impacted by a sharp decline in the region’s coal economy.

We’ve talked a lot on Coal Tattoo about the concept of “peak coal,” and  about what greenhouse gas limits and new restrictions on valley fills would mean for the coal industry and the region as a whole. We’ve discussed options for “green jobs” in the coalfields, including an op-ed Evan co-wrote about an abandoned mine cleanup project that Downstream Strategies was working on as one example, and Rory’s project in his former job promoting the Coal River Wind Project (and Evan’s report on the economic benefits of it).

(more…)

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Posted in Alternative energy, Business, Coal business, Coal pollution, Green jobs | 82 Comments »

Sen. Byrd: “Coal Must Embrace the Future”

Thursday, December 3, 2009

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This is the full text of a statement today by Sen. Robert C. Byrd, D-W.Va. — And audio is available by clicking in this button:

For more than 100 years, coal has been the backbone of the Appalachian economy. Even today, the economies of more than 20 states depend to some degree on the mining of coal. About half of all the electricity generated in America and about one quarter of all the energy consumed globally is generated by coal.

Change is no stranger to the coal industry.  Think of the huge changes which came with the onset of the Machine Age in the late 1800’s.  Mechanization has increased coal production and revenues, but also has eliminated jobs, hurting the economies of coal communities. In 1979, there were 62,500 coal miners in the Mountain State. Today there are about 22,000. In recent years, West Virginia has seen record high coal production and record low coal employment.

And change is undeniably upon the coal industry again.  The increased use of mountaintop removal mining means that fewer miners are needed to meet company production goals. Meanwhile the Central Appalachian coal seams that remain to be mined are becoming thinner and more costly to mine. Mountaintop removal mining, a declining national demand for energy, rising mining costs and erratic spot market prices all add up to fewer jobs in the coal fields.

These are real problems. They affect real people. And West Virginia’s elected officials are rightly concerned about jobs and the economic impact on local communities.  I share those concerns.  But the time has come to have an open and honest dialogue about coal’s future in West Virginia.

Let’s speak the truth. The most important factor in maintaining coal-related jobs is demand for coal. Scapegoating and stoking fear among workers over the permitting process is counter-productive.

Coal companies want a large stockpile of permits in their back pockets because that implies stability to potential investors. But when coal industry representatives stir up public anger toward federal regulatory agencies, it can damage the state’s ability to work with those agencies to West Virginia’s benefit. This, in turn, may create the perception of ineffectiveness within the industry, which can drive potential investors away.

Let’s speak a little more truth here. No deliberate effort to do away with the coal industry could ever succeed in Washington because there is no available alternative energy supply that could immediately supplant the use of coal for base load power generation in America. That is a stubborn fact that vexes some in the environmental community, but it is reality.

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Posted in Coal business, Coal pollution, History, Mountaintop Removal | 49 Comments »

Massey helps bring Boy Scouts center to W.Va.

Wednesday, November 18, 2009

blankenshipap.jpgGazette business editor Eric Eyre has the story today that a 10,600-acre site beside the New River Gorge National River in Fayette County will become the permanent home of the Boy Scouts of America’s National Jamboree.

The Boy Scouts of America press release doesn’t mention this,  but Massey Energy Co. said today that it worked with the Boy Scouts to transfer mineral and surface property rights to the land that was acquired for the new Scouting site. Additionally, Massey Energy pledged a $500,000 contribution to support construction of the project.

The Massey press release says both of the company’s actions “were integral to moving the project forward.”

Massey Energy President Don Blankenship said:

The Boy Scouts of America will always have a home in West Virginia. We are pleased to contribute to the economic development of Southern West Virginia and the personal development of thousands of Scouts from across the nation.

And Jack Furst, a Boy Scouts executive board member and project leader, said:

This project is a once-in-a-lifetime opportunity for the Boy Scouts of America and West Virginia. We are so pleased to have partnered with Massey Energy to turn the vision into a reality.

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Posted in Coal business | 7 Comments »

Senate shocker: Coal operator believes in global warming

Thursday, October 29, 2009

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As I mentioned yesterday, it’s coal day at the Senate Committee on Environment and Public Works. Folks from the coal industry are testifying about the Senate climate change bill.

Mike Carey, president of the Ohio Coal Association, said what you would expect:

Without a doubt, this legislation which the committee is considering will devastate our communities, bankrupt our region, cause energy costs to soar across the country, and according to the EPA have almost no impact on global temperatures since China, India and the rest of the developing world will continue to increase their emissions.

But then there was Preston Chiaro, (above) chief executive for energy and minerals at Rio Tinto,  a huge worldwide coal company and the second largest coal producer in the United States, who told lawmakers:

Unmanaged climate change is a threat to our assets, our shareholders, and our employees, and also to civil society and political institutions in many of the countries in which we operate and across the globe.

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Posted in CCS, Climate policy, Coal business, Congress | 20 Comments »

WVU’s Clements won’t talk about Bob Murray donation

Wednesday, September 16, 2009

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Some Coal Tattoo readers had questions following my post last week about West Virginia University (my alma mater) naming a chair in its mining engineering department for controversial coal operator Bob Murray in exchange for a $1 million donation to the school.

Does WVU want students to learn the kinds of mine safety practices by Murray’s company that led to the deaths of six miners and three rescuers — and prompted more than $1 million in safety fines and calls for a criminal investigation — at the Crandall Canyon disaster in August 2007?

Or maybe WVU thinks Murray set a good example for students when he tried to use his friendship with Republican U.S. Sen. Mitch McConnell of Kentucky  to get federal mine safety inspectors to back off enforcing the law at one of Murray’s mines?

Perhaps WVU especially thinks that students could learn from watching Murray’s nationally televised tirades against labor unions, government inspectors and the media  while families of his workers waited for word on whether those Crandall Canyon miners were dead or alive?

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Posted in Coal business, Mine Safety | 10 Comments »

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