This op-ed originally appeared in The Casper Star Tribune
Byers: Coal is down but not out
By: Dan Byers
Upon hearing that a major newspaper printed his obituary in 1897, Mark Twain uttered his famous line that the news of his death had been greatly exaggerated. Take just a cursory look at coal industry headlines these days, and one can’t help but be reminded of Twain’s legendary quote.
A recent article in Bloomberg News —“Bust Hits America’s Cowboy Coal Basin After 40 Years of Boom”— provides a good example of this sentiment as it relates to Wyoming and Montana. The story describes the unquestionably difficult times that have fallen on the Powder River Basin, as bankruptcies, lost jobs and declining tax revenues fill the headlines, and a steep drop in early 2016 production levels paints a bleak picture for the region going forward.
But as with the rumors of Twain on his deathbed, it’s important to understand that while coal is certainly down, it is far from out, particularly if pending EPA regulations on power plants get struck down in the courts.
As the Star-Tribune has reported, the good news in the short term is that leading producers are emerging from bankruptcy healthier. Market demand is also returning. After a slow start to the year (due in large part to a mild winter combined with final implementation of a 2012 EPA regulation that forced closure of approximately 20 percent of the nation’s coal-fired electricity generation), PRB coal production has actually picked up significantly since earlier this spring. Recent data show that weekly production levels are now nearly 50 percent above their April lows, and only modestly below 2015 levels.
There are also facts not to miss over the longer term. In August, the Energy Information Administration released its Annual Energy Outlook, which includes detailed forecasts of coal production for the next 25 years. EIA projects that, without EPA’s Clean Power Plan regulations, recent declines in western U.S. coal production stabilize over the next decade and even mount a modest comeback in the latter part of the 2020s. However, if EPA’s sweeping attempt to remake the U.S. electricity system is successful, the downward trend will extend as far as the eye can see. Fortunately, the Supreme Court blocked EPA’s efforts until the judicial branch completes review of the unprecedented legal challenge against the rule brought by a coalition of more than 160 entities, including 27 states and a host of business, labor and consumer groups. The U.S. Chamber is helping to lead this fight, and the D.C. Circuit Court of Appeals heard oral arguments on our challenge on Sept. 27.
But regardless of what happens in the U.S., countries around the globe continue to build new coal plants at a rapid pace. In fact, for every gigawatt of coal-fired capacity projected to be shut down as a result of the CPP, more than 40 new gigawatts are planned elsewhere in the world. Asia in particular has an insatiable appetite for coal, and if government doesn’t interfere, PRB producers are well situated to feed that appetite through increased coal exports.
Why does the U.S. Chamber of Commerce care about coal and the health of Powder River Basin? We represent not only energy producers but businesses all across the country that depend on affordable and reliable energy for a competitive edge in the global marketplace.
It is no coincidence that coal states pay less for electricity (for example, rates in coal-free California are about double those in Wyoming, which are the third-lowest in the country), and PRB coal is a major source of power throughout the country, fueling power plants in major industrial states. In fact, despite the tough times, the PRB will still produce nearly 40 percent of the nation’s coal in 2016, and power one of every seven homes and businesses in the country. Think for a moment where we would be without the PRB and its resources. It isn’t pretty.
It is also important to recognize that the coal plants of today are dramatically cleaner than those of yesteryear, having achieved emissions reductions of more than 90 percent thanks to technological advances and responsible regulations. Unfortunately, the “keep it in the ground” approach of today’s environmental activists aims to eliminate fossil fuels entirely, making every American pay more for their energy.
That would be bad for Wyoming and for the entire country, and it would indeed make the bleak future of coal predicted by some a reality.
Unless and until that happens, however, we should heed Twain’s lesson and be wary of premature obituaries.
Dan Byers is senior director for policy at the Institute for 21st Century Energy.