Whitesburg KY

What is coal’s future in our Appalachia?

For whatever reason, Trump has been obsessed with the fortunes of Appalachian coal mines which has resulted in a series of proposals intended to bail out a foundering fossil-fuel industry. In taking these action, Trump incorrectly blamed the industry’s problems on overregulation and, because of this, the president is scrapping the Clean Power Plan, rolling back the regulation on the disposal of coal ash, and rolling back the standard on mercury emissions. All of which does not advance the fortunes of coal but further pollutes our air and streams thereby impacting the future health of our children.

The U.S. Energy Information Administration (EIA), the statistical agency within the Energy Department, just released its annual energy outlook that forecasts a 21 percent decline in coal production over the next 20 years. In addition, it indicated that U.S. coal consumption in 2018 was at its lowest level in 39 years. Unfortunately for coal, there were more coal-fired plants closed in Trump’s first two years in office than in the entirety of Obama’s first term.

Let me be clear, this is not because of anything Trump has done but simply because of what he can’t do: bring back coal to Appalachia.

Despite Trump’s claims, the main challenge for Appalachian coal is not regulation. It’s technology and competition.

From a technology standpoint there is one major area impacting coal and that is fracking which has made natural gas a much cheaper alternative fuel than coal. The EIA estimates that hydraulic fracturing (the opening of natural gas fields by injecting high-pressure water into gas reservoirs) has displaced coal in many parts of the country and the world. Since 2008, U.S. coal production has dropped nearly 40 percent, from almost 1.2 billion tons to about 728 million tons in 2016. The share of electricity fueled by coal fell to 32 percent in 2016, slightly behind the 33 percent for natural gas. Productivity gains in fracking have been faster than many analysts expected, making natural gas even more competitive and, because of this, natural gas has grown at coal’s expense because it has lower costs and lower greenhouse gas emissions.

In its heyday, coal mining accounted for nearly 400,000 jobs. In the early 1950s when my father was mining coal, the total mine jobs was about 388,000. By 1979, that had dropped to 227,000, and in 2015, the total, nationwide, was about 75,000. In 2005 eastern Kentucky had about 13,000 coal miners but by 2015 it had dropped to around 6,000 coal miners. The last figures I saw for 2017 showed approximately 4,000 coal miners in eastern Kentucky. I would expect that number of miners to eventually stabilize at between 2,000 and 3,000 miners.

Although the competitive nature of natural gas explains the most recent job losses, these declines also reflect the inroads of cheaper western coal into the Appalachia markets. Strip mining of western coal is much more efficient than traditional Appalachian deep mining, which is dangerous and unhealthy. One estimate I saw was that a typical worker in the western coalfields in the early 2000s could mine 19 tons of coal an hour compared with about four tons an hour for Appalachia miners.

Scott Pruitt, the recent administrator of the Environmental Protection Agency, said that Trump’s policy of deregulation has increased coal employment by nearly 50,000 jobs. In stating this figure, Pruitt wrongly attributed job increases in oil and gas generation to coal. The number of added coal jobs, economist estimate, was closer to 1,000. Most economists feel the combined effect of cheaper strip-mined western coal and greater supplies of natural gas has devastated, and will continue to devastate, the Appalachia coal industry.

From a competition standpoint, Appalachian coal miners are not only competing against the western coal miners but both are competing against cheap Australian coal, which is closer to the Asia-Pacific customers.

At one time, Appalachia was the historic heart of coal production and during the 1930s, the industry employed as much as 75 percent of the male workforce in some Appalachian counties. Fifty years ago, 95 percent of America’s coal was produced east of the Mississippi River. Now Appalachia’s mining towns are among the poorest in the nation. Their total dependence on coal has resulted in a lack of economic diversity, making them susceptible to coal’s boom-and-bust cycles.

Currently the largest portion of Appalachia’s workers, about 14 percent, do not labor in mining, but in the food, lodging, and entertainment industries, according to a 2010 report by the Appalachian Regional Commission. I don’t have any figure on employment in the medical profession which I suspect is much higher than 14 percent since the Appalachian region contains an elderly population and disabled coal miners, many with black lung. Today, just 1 percent of jobs in Appalachia are related to mining while Wyoming is by far the nation’s leading coal producer.

The main consumer of coal in the Asia-Pacific region is China and for several years it has been building out its electrical grid at a breakneck pace. And since coal is an abundant natural resource in China, it has been a preferred fuel. For several years, China was constructing the equivalent of a small to mid-size coal-fired power plant every week to 10 days. However, the situation in China has changed due to increased air pollution and Beijing is now shutting down all of its major coal-fired power plants while nearly 2,000 small coal mines are slated to be closed nationwide by the end of this year. Why?

Well, crippling air pollution kills at least 1 million people in China prematurely each year, an appalling situation that has required action from government officials. Consequently, solar and wind farms in China have been built at a staggering rate to combat pollution, cutting into the market share for coal, and leading to declining coal consumption over the past year.

I would expect the coal demand from China will continue to slow which will cut further into the demand for U.S. coal. Even with the downturn in demand for coal, I would also expect there will continue to be some coal required from the Appalachian region, which will continue to create a demand for miners.

Unfortunately, that demand for coal will also continue to decline until it stabilizes at the much lower base level of about an estimated twenty million tons for eastern Kentucky. Where that base demand will exactly be, I am uncertain, but I would fully expect it to be less than what it is today.

To counteract this continuing decline for coal demand in the Appalachia region, we need to continue to foster a diversity of businesses and job opportunities.

J.T. Oney, of Mayking, served more than 40 years with the Department of Defense in various military, intelligence, and security organizations. He retired from DoD in 2000 and taught for 11 years at a small college in Virginia. Now retired, he is an Adjunct Professor at Southeast Kentucky Community and Technical College and is the author of nineteen books.

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