Coal Tattoo

Coal lobby’s Hamilton refuses to face the numbers

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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.

The latest EIA numbers do reflect parts of the Obama administration’s crackdown on mountaintop removal, though, as explained here:

… The impact of the EPA’s April 2010 guidelines for surface coal mining operations is represented by downward adjustments to the coal mining productivity assumptions for Central Appalachian surface mines, resulting in slightly higher estimated production costs for the region and mine type.

The assumed productivity levels for Central Appalachian surface mines are roughly 15 to 20 percent lower than those that would have been used for a case without the EPA’s new permit review guidelines. The revised productivity levels are based on the assumption that large surface mining operations will decline gradually toward the productivity levels for smaller surface mines in the region as a result of the more restrictive guidelines for overburden management at large mountaintop mining operations. No adjustments were made to the productivity assumptions for other Appalachian supply regions in response to the new EPA permit review guidelines, because few if any surface mining operations in other regions employ the mountaintop removal method.

There’s no mention of any of this in Hamilton’s op-ed. If he were writing a serious piece — an actual, real, thoughtful reply to the AP story — he would have explained the change in the EIA’s projections.

And anyway, it’s important to remember that the 2010 EIA analysis already was projecting a drop in Central Appalachian coal production from 234 million tons in 2008 to 141 million tons in 2015 and 128 million tons in 2020.

Over that time frame, the regulatory moves on mountaintop removal change the EIA’s projections for Central Appalachian from a 49 percent drop in production to a 52 percent drop in production. Does that really amount to a “war on coal”?

Maybe these projections of a Central Appalachian coal collapse are all wrong. Maybe another huge boom is just around the corner … but Hamilton and the coal lobby haven’t so far been able to point to a single forecast that says so.

From a public policy perspective, doesn’t it make more sense for our region’s political, business and government leaders to pay attention to the projections and start planning for them?