MORGANTOWN – Two recent reports from WVU’s Bureau of Business and Economic Research highlight the continued decline of coal demand and production, but also the still-significant impact coal has on the state economy.
The first report is a regional look: An Overview of Coal and the Economy in Appalachia looks at coal production form northeast Pennsylvania down into Alabama. It was a fourth-quarter 2020 update written at the request of the Appalachian Regional Commission.
The COVID pandemic, BBER says, further weighed down the steady decline seen since 2005. Appalachian coal production fell by 65% during the 2005-2020 time span, compared to 54% nationally. Recently, low natural gas prices helped accelerate the decline.
The report looks at three Appalachian coal basins: northern, Pennsylvania, eastern Ohio and northern West Virginia; central, southern West Virginia eastern Kentucky and northeast Tennessee; and southern, a bit of south-central Tennessee and northern Alabama.
The biggest losses fall in the central basin, BBER says, tied to lower worker productivity stemming in part from harder-to-reach seams that are more expensive to extract.
“Our forecast calls for continued erosion in coal output in Appalachia over the long run. This results largely from the fact that natural gas and other fuels are expected to continue to account for a growing share of electricity generation domestically and many countries abroad,” the report says.
“However, assuming that the COVID-19 pandemic wanes in 2021, we expect production losses to be much more gradual over the coming 20 years compared with what was observed over the past decade or so. We expect future losses to be most severe in Central Appalachia.”
Among other items in the report, it notes that loss of jobs for prime working age residents has led to a higher share of people of retirement age in Appalachia. Also, poor health and comparatively high mortality rates represents a significant challenge in the Appalachian mining communities. “Further, mortality is highest in the mining counties of Central Appalachia, having increased noticeably in recent years.”
West Virginia coal
The next report, The Economic Impact of Coal and Coal-fired Power Generation in West Virginia, came out just before the end of the 2021 legislative session, commissioned by the West Virginia Coal Association.
Among its highlights: Mining generated about $9.1 billion in total economic activity in 2019, supported 27,000 jobs and $2.1 billion in wages, and generated about $514 million in tax revenue.
Coal-fired power plants generated about $4.8 billion in economic activity (including the purchase of domestic coal), supported 6,600 jobs and $725 million in wages, and generated more than $97 million in taxes.
These numbers combine direct, indirect and induced impacts, the report says.
West Virginia has eight coal-fired plants, including two in Monongalia County – Longview and Fort Martin – and one in Marion, the Grant Town plant. A third Mon plant, Morgantown Energy Associates, also operated in 2019.
BBER estimates the total economic impact of the Mon plants at $1.1 billion, with 1,611 job (direct, indirect and induced) and $163.8 million in wages. The Grant Town plant generated $53.2 million in total economic impact, 80 jobs and $7.5 million in wages.
After the reports were issued, President Biden announced his plans to reduce carbon emissions by 50% by 2030 compared to 2005 levels, and to reach net-zero emissions by 2050.
Some opinions
The Dominion Post asked Coal Association President Chris Hamilton how this might affect coal’s future.
“His announced plans have the potential of derailing most of the plans that either are involved with or rely on fossil fuel energy,” he said.
Coal and natural gas account for a huge portion of the working budget and industrial job base of the state, and he thinks Biden’s goals are “a little too aggressive. … It equates to a forced conversion of our power and electrical systems.”
Hamilton knows Biden wants to send out money to retrain coal workers and help coal communities. But, “I do not believe his plan accounts for our state’s future electrical generation needs. That’s the big question I have.”
West Virginia lacks the hydro and nuclear resources available to other states, he agreed, and wind and solar may still not be sufficient by 2030 or 2050. “I guess it leaves us importing power from other sources outside of West Virginia.”
West Virginia exported coal around the world in 2020 – the top four markets being India, Ukraine, Brazil and Netherlands according to BBER – and India and China continue to increase their coal-fired portfolios.
This shows a fallacy in Biden’s plans, Hamilton said. “That begs the question why we would want to ratchet down our emissions to such extreme levels and force hundred of thousands of people out of work and into other training and education opportunities for such little impact on world emissions.”
On the BBER report itself, he said, “It clearly points out the significance of West Virginia coal to our economy and to our state. The eight coal plants we have – they are huge contributors to our statewide and local economies.
“We believe its in the state’s best interest to keep these plants operating throughout their normal life cycles,” he said. Accelerating the transition to renewables could lead to higher utility bills and compromise the grid and the secure delivery of household power that we’re accustomed to.
The Dominion Post also talked to BBER’e Eric Bowen, who authored the Appalachian report and co-authored the Coal Association report, about the possible impacts of the Biden plan.
Because the details haven’t been released, Bowen said, its potential effects aren’t clear yet. “I think it’s relatively safe to say that any kind of plan that aims to reduce carbon and to deal with climate change is likely to affect coal-fired power. … It will negatively affect coal production but to what degree it’s hard to say.”
He pointed to the steady decline in production and coal’s already diminishing share of the nation’s power portfolio. Biden said he has plan to help suffering coal communities and displaced coal workers, and Bowen said he’d like to see those details as well.
The effects on the other carbon fuel – natural gas – also remain to be seen, Bowen said. The are few natural gas-fired plants in operation or in production in the state – the new Longview plant being one.
Bowen pointed out what others have said – the best way to bring value to the state’s natural gas resources are to develop downstream manufacturing – plastics and chemicals. So far, the cracker plant in Beaver County, Pa., represents the one significant step in that direction.
“Something like that I think, would open up a lot more significant downstream natural gas development.”
Tweet David Beard @dbeardtdp Email dbeard@dominionpost.com
