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Panhandle forum outlines prospects for industry
MARTINSBURG – Coal is important to West Virginia, even to the Eastern Panhandle, members of the state and national coal lobby said at the Eastern Panhandle Coal Forum here last week.
“When you power 95 percent of the state with coal, it is important to everybody,” said Rep. Shelley Moore Capito, who spoke at the event.
Forum members pointed to a variety of current and historical benefits the Eastern Panhandle derives from coal production, including lower property taxes, lower business taxes and a reduced burden on state anti-poverty programs.
But, said several industry speakers, there remain a number of factors that are adversely impacting the state coal industry’s total production, including a generally sluggish national economy, environmental and worker safety regulations, low natural gas prices and competition from coal producers in Wyoming.
“We’re mining real remnant reserves here. We mine the easy stuff first. We’re mining in very thin seams [now],” said Chris Hamilton, vice president of the West Virginia Coal Association, the industry’s lead lobbying group. “That means higher cost and more difficult mining conditions. That’s where we’re at here in Central [Appalachia].”
Coal industry critics who attended the forum, on the other hand, accused it of being one-sided and of neglecting to discuss the environmental impacts of coal extraction and coal burning.
Hamilton said easier-to-tap seams in Wyoming have lower production costs, which is causing West Virginia coal to steadily lose market share in its traditional out-of-state markets.
“In Wyoming, they brush a little dirt off the surface and … they have 100-, 120-foot coal seams that they just scoop out of all day long,” he said. “That coal is mined very efficiently, at very low cost. It is coming further and further east. It’s capturing markets that have traditionally been held by eastern Central [Appalachian] producers.”
Hamilton said there was a lone “silver lining” for the state’s coal industry: exports to developing nations like China and India that have exploding demand and very few environmental regulations.
“The coal industry is not dead. It has just moved to China for the next decade or so,” he said. “It is primarily because of all of the growth and development on the Pacific Rim, in places like China, India and South Africa, to a lesser extent.
“These countries are consuming massive amounts of steel, concrete, construction products and power,” he said, adding that “coal is the fastest-growing base fuel for electric generation worldwide.”
Hamilton said 75 percent of the state’s coal is exported, with 27 percent moving overseas.
Nonetheless, he said, the industry is hurting.
“We’re in a statewide austerity program,” he said. “We have lost about 25 percent of our total output or productivity in the last five years, and there have been about 3,000 miners laid off.”
Fred Tucker, a representative of the United Mine Workers of America who co-chairs the forum with Hamilton, said he has seen the negative impacts of these layoffs first-hand.
“I look at the human element,” said Tucker, who spent 45 years as a miner.
He said that when he first went into the mines his father, also a coal miner, told him to remember that “if there’s no coal mines, there’s gonna be no coal miners.”
Tucker said he has seen many mines close because the coal they contained was too “dirty” – generally meaning it contained too much mercury or sulfur, which scientists have implicated in rising ocean mercury levels and acid rain.
“For people who say coal is a four-letter word, I am here to disagree with that,” he said.
Bill Raney, president of the Coal Association, told the forum that the industry’s production has declined about 5 percent a year over the last two years. Since 2008, he said, the state has lost about 36 million tons of annual coal production. Due to dramatically rising coal prices, however, the state gained $76 million in severance taxes during the same time.
“That made it invisible to the policy makers … Now it’s different,” he said, pointing out that severance taxes first began declining in 2011-2012.
Raney laid much of the blame at the feet of the Environmental Protection Agency and the Mine Safety and Health Administration.
“EPA and MSHA are really creating turmoil with the productivity and the certainty that we need in this industry to enhance expansion and creation of new operations,” he said.
Gene Trisko, a lawyer with a B.A. in economics who has produced industry-funded studies in several states over more than a decade, argued that the industry has been adversely impacted by mercury emission limits and could be tremendously impacted by regulations affecting the emission of greenhouse gasses like carbon dioxide, which climatologists overwhelmingly agree are the primary cause of global climate change.
“Because of the Supreme Court decision in 2007 that said EPA had authority to make a finding that greenhouse gasses pose risk to health and welfare, CO2 is now a regulated pollutant,” he told the forum. “And EPA is claiming its authority … to regulate CO2 emissions from existing sources through state guidelines.”
Trisko predicts that if the limit is set at the low end of the alternatives being considered – 1,200 pounds of CO2 emitted per megawatt-hour of electricity generated – the result would would be a 100-gigawatt reduction in the coal fleet’s generation by 2020, a reduction of about one-third over 2009 levels.
“We could stand to lose 60 percent of coal generation by 2020, if this proposal goes through,” Trisko said, adding he said he thinks stringent regulations will cause job losses between 400,000 and 500,000 nationally, with about a third of that coming from direct job losses.
He also argued that CO2 regulations, if they do not allow coal plants to emit more CO2 than natural gas plants, will unfairly advantage the natural gas industry over the coal industry.
“It just so happens that a natural gas combined cycle plant can meet that limit without adding any controls, but for a coal plant to meet that, it has to apply carbon capture and storage technology,” Trisko said. “CCS is not commercially demonstrated at the utility scale in the United States.”
Trisko pointed to an EPA finding that implementing CCS with current technology would increase coal-generated electricity prices by 80 percent.
The finding actually comes from the Department of Energy, and indicates that coal generated at pulverized coal facilities would increase 80 percent. It also added that the added cost at more advanced coal gasification plants would be 30 percent.
CCS is technology that captures CO2 emissions and stores them in some way that prevents the gases from escaping into the atmosphere.
Trisko noted that President Barack Obama had recently sent an official memo to the EPA asking them to rewrite the regulations to give coal plants a less stringent limit than that imposed on natural gas facilities. “The thinking is that the EPA may set separate requirements for coal and natural gas, but we may not like the numbers,” he said.
“It is incumbent on all states to be discussing with EPA the need for state authority and discretion and flexibility in the design of these guidelines,” he told the forum. “This is not the place for allowing a large-scale climate change plan.”
Trisko said that unilateral efforts made by the United States to impose CO2 emission reductions would not be effective at combatting global climate change. He pointed out that greenhouse gas emissions have been declining in the U.S. for several years, while they have been growing at an exponential rate in developing nations like India and China.
“China burns 3 billion tons of coal a year. We are lucky if we can produce a billion tons a year,” he said. “They will continue to build capacity.”
He pointed out that the trend in the United States is the opposite, saying that “since 2005 we’re down 23 percent.”
“There is no prospect that those countries will enter into a binding agreement at the United Nations to limit their emissions, because, to them, climate change is not a high priority. It is not even a priority,” he said.
According to World Bank statistics, however, per capita CO2 emissions in India and China are still only a fraction of per capita emissions in the United States. The United States emitted 17.3 metric tons of CO2 per person in 2009, while China emitted 5.8 metric tons and India emitted 1.7 metric tons.
Trisko said the effect of rising energy prices on on low-income West Virginia families could be catastrophic. He points out that 61 percent of families in the state have a gross income of less than $50,000, and points to a study he undertook that found that families at that level spend 21 percent of their income on utilities and gasoline, double the amount they spent a decade ago.
“Something else has got to give,” he said. “It is going to be child care. It is going to be education. It is going to be rent, housing, nutrition.”
When Trisko presented the results of his study to the U.S. House Committee on Oversight and Government Reform in February, however, he indicated that increased costs were mostly attributable to rising gasoline prices.
“Higher gasoline prices account for three-fourths of the increased cost
of energy for consumers since 2001,” he told the committee.
Patience Wait, a local activist who regularly opposes utility companies, told the forum that she found their presentation one-sided.
“I’m really impressed that we’ve managed to get through these two hours without any mention of the health impacts, without any mention of how many streams in West Virginia have been destroyed, how many people’s water supplies have been destroyed by coal,” she told Hamilton.
“You’re the first one who has actually mentioned climate change, and you dismiss it because you say no one else is concerned about it,” she said to Trisko.