‘War on coal’: Industry predicts good times ahead?

January 29, 2013 by Ken Ward Jr.

We all remember how the mining industry waged a non-stop campaign against President Obama’s re-election, saying the administration was engaged in a “war on coal.”  At one point, a top National Mining Association official invoked a Muslim reference, claiming the U.S. Environmental Protection Agency had unleashed a “regulatory jihad” against the industry.

So you would think that, now the President Obama has been re-elected and inaugurated for a second term, the world must be coming to an end, if not for the entire economy, at least for the coal industry, right?

Well, here’s what Hal Quinn, president of the National Mining Association, said yesterday at his group’s annual media briefing on their outlook for the future:

The outlook for U.S. coal and minerals mining in 2013 is positive due to clear improvements in key sectors of the U.S. economy and the global demand for mined products, particularly in developing economies … Coal is on track to become the world’s primary energy source—surpassing oil—by 2015, according to Wood McKenzie, two years ahead of the International Energy Agency’s current estimate. Here at home, coal’s contribution to meeting electricity demand will increase by nearly 45 million tons over 2012 levels, and total domestic consumption will rise by 50 million tons due to slight improvements in the U.S. economy; cooler weather; and natural gas prices that are expected to increase by 22 percent, according to the Energy Information Administration (EIA).

Quinn continued:

Demand for coal in Europe has increased—particularly in Germany and Britain—in response to higher gas prices. Demand for coal throughout Asia for electricity and steel production contributes to a robust U.S. coal export forecast of 111 million tons in 2013.

With these improved conditions for coal production and demand in 2013, NMA expects total U.S. coal production to come in at 1.016 billion tons in 2013—slightly more optimistic than EIA’s January short-term forecast.

Longer-term, NMA expects U.S. coal to benefit from recent and planned construction of higher efficiency coal-based power plants with higher output rates and lower emissions. The remaining coal fleet will, on average, be larger, more efficient and run at higher capacity—recovering at least 100 million tons of U.S. coal production lost to retirements of older plants.

Now, all is not good. Quinn also said:

Public policy challenges continue to limit the potential of U.S. mining to provide reliable materials and affordable energy vital to our economy and way of life. Inefficient and unpredictable permitting processes thwart investments that provide high-paying jobs and added value throughout the chain of production. Regulations that needlessly limit our energy options by halting the construction in the U.S. of new advanced coal plants that can serve as the platforms for cleaner coal technologies worldwide are a failure of ambition and policy. If the U.S. wants to compete with the world’s fastest growing economies and remain in the forefront of technological innovations, we must address these critical shortcomings.

Among the regulations that NMA is concerned about? According to this piece from The Hill, the industry lobby will continue to oppose new mine safety legislation that Sen. Jay Rockefeller, D-W.Va., has said he plans to reintroduce:

Bruce Watzman, senior vice president of regulatory affairs with NMA, also said he expects congressional supporters to beat back federal mine safety legislation.

Last year’s version called for expanding subpoena powers for the federal Mine Safety and Health Administration, strengthening whistleblower protections for miners and increasing criminal penalties for flouting mine safety laws, among other provisions.

The bill is unlikely to move in the GOP-dominated House this Congress. NMA opposed the bill last year, and plans to do so this year, Watzman said.

Watzman said the trade group already is gearing to meet ambitious reductions in injuries and fatalities. He said NMA is striving to reach zero fatalities and slash injuries by 50 percent at its member organizations within five years.

“This is a journey. We’re going to have our ups and downs. … This will take time, but we think this will drive the continuous improvement we want to see,” Watzman said.

According to another report, this one from Politico, the NMA is hoping for legislation this year to try to streamline the permitting of new mining operations (though this is a move aimed not at coal permitting, but minerals):

The industry group expects to see the House reintroduce bills to “modernize” the permitting regime, including improving coordination among federal agencies, setting a 30-month limit for processing permit applications and addressing delays in federal environmental reviews.

Citizen groups, on the other hand, are working in court to try to improve the permitting process, by forcing federal regulators to actually consider the growing body of science that links living near a mountaintop removal operation to greater health risks. Separately, citizen groups are also trying to force the Interior Department to finally get around to rewriting the stream buffer zone rule — something that was supposed to have been completed long ago.

Meanwhile, the NMA is also arguing in favor of allowing older, less efficient and more polluting coal-fired power plants to keep going:

While Quinn said he was excited about a fleet of smaller, more efficient power plants coming online, he worried about EPA rules permanently shuttering or preventing upgrades at older plants.

He said such policies would be detrimental to energy supply if natural-gas prices rise, which he said was inevitable.

“That really taps out the diversity in terms of your electricity portfolio,” Quinn said.

Finally, casual readers of the write-ups about the National Mining Association’s outlook for the new year should be wary, especially if they live in the coalfields of Appalachia and see the NMA’s review as a sign that a huge coal rebound is just around the corner. The NMA’s overall projections for coal production in the coming years aren’t all that different from those issued previously by the U.S Energy Information Administration and the International Energy Agency.  As I’ve written before, don’t be confused by all of these forecasts, and keep in mind what the IEA’s long-term projections said most recently about coal:

Fossil fuels remain the principal sources of energy worldwide, though renewables grow rapidly. Demand for oil, gas and coal grows in absolute terms through 2035, but their combined share of the global energy mix falls from 81% to 75% during that period. The unlocking of unconventional resources portends a very bright future for natural gas, which nearly overtakes coal in the primary energy supply mix by 2035 …

Coal remains the backbone of generation globally, particularly outside the OECD, but its share of the mix is eroded from two‐fifths to one‐third. In the OECD, coal‐based generation declines and is overtaken by gas and renewables by 2035.

And as for Appalachian coal, remember what the EIA most recently projected:

Regionally, coal producers in both the Interior and Western regions see their shares of total U.S. coal production increase over the projection period, while Appalachia’s share declines. From 2011 to 2040, the Appalachian region’s share of total coal production (on a Btu basis) falls from 38 percent to 32 percent.

 

 

One Response to “‘War on coal’: Industry predicts good times ahead?”

  1. Dianne Bady says:

    Sad – a National Mining Ass’n official expects congressional supporters to beat back federal mine safety legislation

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