Log Out

Forecast troubling for Central Appalachian coal

CHARLESTON, W.Va. -- Long-term forecasts for coal production in West Virginia and the rest of Central Appalachia continue to show major declines are underway -- and still to come -- for the region's mining industry.And overall nationwide, coal's share of U.S. electrical generation is expected to continue to drop.Last month, the U.S. Department of Energy's Energy Information Administration issued its latest projections."EIA expects the coal share of total electricity generation to rise from 37.6 percent in 2012 to 39 percent in 2013 and 39.6 percent in 2014, as natural gas prices rise relative to coal prices," the agency said. "Lower than projected natural gas prices along with the industry's response to future environmental regulations could cause the coal share of total generation to fall below this forecast."But EIA has also recently projected little change in U.S. coal production in 2013. And the long-term trend, especially for Appalachian coal, is not good."Coal remains the largest energy source for electricity generation throughout the projection period, but its share of total generation declined from 42 percent in 2011 to 35 percent in 2040," EIA said."Market concerns about [greenhouse gas] emissions continue to dampen the expansion of coal-fired capacity ... even under current laws and policies," the agency said. "Low projected fuel prices for new natural gas-fired plants also affect the relative economics of coal-fired capacity, as does the continued rise in construction costs for new coal-fired power plants."As retirements far outpace new additions, total coal-fired generating capacity falls from 318 gigawatts in 2011 to 278 gigawatts in 2040."At the same time, the EIA said, "regionally, coal produced 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," the EIA said.For many years, analysts have been warning that coal's best days in Southern West Virginia could someday end, and experts say the decline being observed now isn't likely to turn around.Analysts agree that much of the best coal in Southern West Virginia has already been mined. Thinner and lower quality seams are left, meaning production and productivity are dropping. Tough competition from inexpensive natural gas and other coal basins makes matters worse. New environmental restrictions only add to coal's problems, and production is headed down regardless of air or water pollution restrictions.Overall, production from Central Appalachia -- meaning mostly Southern West Virginia and Eastern Kentucky -- is projected to be cut in half by the end of this decade, according to the latest forecasts.Central Appalachian production isn't going to disappear anytime soon, at least not according to government forecasts. And a projected increase in Northern Appalachian production, including from Northern West Virginia, could offset some of the Central Appalachian decline. But for West Virginia's southern coal counties, the projected decline is significant and could have serious economic impacts.
"There's not any surprise in this," said Bill Raney, president of the West Virginia Coal Association. "You're talking about a declining reserve anyway. We mined the low-hanging fruit a long time ago.
Three years ago, the Morgantown consultant group Downstream Strategies issued a landmark report that tried to summarize earlier EIA projects, put them in context, and draw more public and political attention to the coming coal decline."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 decade, diversification of Central Appalachian economies is now more critical than ever," authors Rory McIlmoil and Evan Hansen said in their January 2010 report. "State and local leaders should support new economic development across the region, especially in rural areas set to be most impacted by a sharp decline in the region's coal economy."But even the Downstream Strategies report was nothing new.When the EPA performed a detailed study of mountaintop-removal mining in the late 1990s and early 2000s, coal production forecasts were among the factors examined.The EPA, citing projections from the industry firm Hill and Associates, warned of regional production declines as high as 40 percent. Those declines were expected without any additional restrictions on mountaintop removal, and blamed "chiefly on a combination of depletion of reserves and competition with Western coal," according to a March 2002 EPA draft report.More recently, a June 2010 report by the Appalachian Regional Commission outlined similar findings.
"Coal mining in Appalachia is likely to continue for several decades, although mine productivity is declining as thicker, more accessible coal beds are mined out and succeeded by thinner, and less-accessible coal seams," the ARC report said.Last year, the West Virginia Center for Budget and Policy looked closely at the models Energy Department officials use to forecast future coal production trends. The center found that agency experts had modeled scenarios that include and exclude new federal limits on power plant emissions of toxic chemicals and possible future limits on greenhouse gases. And those scenarios showed similar reductions in Central Appalachian coal production, whether such EPA rules are put in place or not."The reality is that, even without greenhouse gas or mercury regulations, coal production in Central Appalachia is going to dramatically decline," said Sean O'Leary, an analyst with the center. "Repealing environmental regulations won't make the remaining coal seams in West Virginia any thicker or easier to mine, and it won't stop power plants from converting to natural gas."The center has been promoting a proposal for a small increase in coal and natural gas taxes that would go into a "future fund." Some interest on the fund would be spent on economic development, education and infrastructure improvements. Other earnings would be saved, allowing the fund to grow over time to continue helping with diversification of the state's economy.Ted Boettner, executive director of the center, said that the proposal has been well received by local officials around the state, but has not generally been embraced by statewide political leaders."There is a profound disconnect," Boettner said. "County commissioners are concerned about balancing their budgets with declining coal severance taxes and economic development authorities are concerned about diversifying their local economies. And most alarming is that the governor and many legislators are not putting the issue of coal decline and transition at the top of their legislative agenda."Reach Ken Ward Jr. at or 304-348-1702.
Show All Comments Hide All Comments

User Comments

More News