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Wyoming’s coal industry faces uncertain future

New study examines threats to state’s coal-dependent economy.

 

Wyoming depends on coal. In February, a team led by University of Wyoming economist Robert Godby released a study that demonstrates just how much. They found that revenues from Wyoming’s 400 million annual tons of coal production pay for over 11 percent of the state’s educational and government costs, and that coal accounts for around 14 percent of its economy, and 6 percent of its overall employment.

“The purpose of this study was to get an objective view of our coal economy, and find its biggest threats for the state to be watching,” Godby says.

When Godby began the state-funded study in spring of 2014, that economy had been on a 6-year-long decline, for several reasons.  A rise in demand for cheaper natural gas and renewables coincided with increasing coal production costs, due to the fact that coal companies have had to scrape deeper into Wyoming’s coal-rich Powder River Basin. Nationwide, electricity demand has slumped since the 2008 recession. Increased train congestion from the Bakken oil fields has slowed down coal transport. And finally, a trend of worldwide health and environmental regulations has curbed both international export and U.S. production.

The greatest threat of the bunch was the increasing cost of coal mining. That factor alone, Godby predicted, could cut Wyoming’s coal production by 20 percent by 2030, resulting in lost jobs and fewer dollars in Wyoming’s economy, but also resulting in increased revenues for Wyoming’s schools and government thanks to higher coal prices.

An open-pit coal mine in Wyoming. Photograph courtesy of BLM.

Then in June 2014, a few months into the study, the EPA issued its Clean Power Plan proposal, which would require, by 2030, a 30 percent reduction in national carbon dioxide emissions from 2005 levels. Under the plan, each state would have a specific target. Wyoming, the highest CO2 emitter per-capita in the nation, would have to reduce its output by 19 percent from 2012 levels.   

“Coal releases the most greenhouse gas, so the obvious way to reduce greenhouse gas is to reduce coal,” Godby says. With utilities in the other 49 states buying 93 percent of Wyoming’s coal, those nation-wide emissions cuts would have a major impact on the state, which produces over 40 percent of the country’s coal. A lack of viable coal export terminals would curb Wyoming’s ability to sell that coal further afield—not to mention that the trends in increased regulation and decreased demand for coal extend beyond U.S. borders.

The study predicts EPA’s plan could cause Wyoming coal production to fall by 20-45 percent by 2030, resulting in up to 10 percent unemployment in some parts of the state.

The same regulations that knock coal could benefit another of Wyoming’s powerhouse industries: natural gas. Even renewables like wind, of which Wyoming has plenty, might profit from increased demand. But these successes would not be enough to offset the massive losses to Wyoming’s economy. Natural gas would make up for about 40 percent of the coal industry’s dearth, and renewables would employ only a small fraction of the people. “A major wind farm employs maybe 250 people,” Godby says.  “Coal mines can employ 6,000 people.”

The EPA’s proposed rule allows for flexibility in how states approach the carbon reduction goals. While cutting coal use nation-wide seems like a no-brainer, Wyoming is hoping other states give coal a chance, instead looking to greater power efficiency.

Wyoming itself, where utilities are roughly 90 percent coal-powered, is looking to clean coal and carbon capture technology. “There have been tremendous steps in clean coal technology recently,” says Loyd Drain, director of Wyoming Infrastructure Authority, which funded the study. “We think the federal government should partner with the industry and incentivize the development of (that) technology.” But Godby’s report did not evaluate the possible role of clean coal technology in mitigating the plan’s effects. “(That technology) is not current enough,” he says.

Hoping for an easier solution, a dozen states, including Wyoming and four other coal-producers, are suing the EPA over its new plan. Their case will appear in the D.C. Circuit Court of Appeals later this month.

Meanwhile, as coal declines, Wyoming looks to other components of its economy. The state has one of the largest agricultural economies in the country, raising much of the nation’s beef and grain. But agricultural jobs and output are predicted to take a hit from climate change as Wyoming faces future drought. EPA’s new plan, even as it dials back coal’s contribution to the state’s economy, could, to some extent, mitigate some of climate change’s impacts on other sectors. “It’s not just agriculture, but tourism, and more,” Godby says. “We didn’t even try to figure climate change into the study. We’re still in the early stages of understanding climate change and what it will affect.”

Kindra McQuillan is an editorial intern with High Country News.