Coal Tattoo

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.


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.


… 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.