Of Course Coal Production is at a 30-Year Low. The Federal Government Is Doing All It Can to Crush It.

Jan 11, 2016 - 4:00pm

Senior Editor, Digital Content


A coal mound in Yolyn, W.V.

The Obama administration is winning its war on coal.

For eight years, President Barrack Obama has targeted the fossil fuel. In his infamous “skyrocket” chat with The San Francisco Chronicle’s editorial board, then presidential candidate Obama said, "If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them."

Those efforts are paying off. The coal industry is taking it on the chin.

The Energy Information Administration released numbers showing that U.S. coal production has fallen to a 30-year low. Mining jobs have taken a hit too, falling every single month of 2015.

Part of what’s been happening is the shale boom has produced plentiful amounts of natural gas in the last few years that is going to generate electricity.

It would be understandable if coal’s troubles were simply due to market forces. Businesses and consumers adjust to changing supply and demand of energy sources. This dynamic process ensures greater productivity and economic progress.

But the deck has been stacked against coal. This administration has made specific regulatory choices to push coal out of the energy mix.

EPA imposed new rules on coal-fired power plants to reduce mercury. The Supreme Court struck down the rule in 2015, because the agency ignored examining compliance costs to determin if regulation was necessary. 

But the damage was done. Utilities couldn’t wait. While the courts decided the legality of the mercury rule, coal-fired power plants were shut down, which suited EPA’s McCarthy just fine as she gloated to Bill Mahr:

“This is a rule that actually regulates toxic pollution emissions from primarily coal facilities, and we think we’re going to win because we did a great job on it,” she said.

“But even if we don’t, it was three years ago. Most of them are already in compliance, investments have been made, and we’ll catch up. And we’re still going to get at the toxic pollution from these facilities.”

Following that are EPA’s carbon regulations—the Clean Power Plan--which push more coal-fired power plants to shut down, raising energy prices and making the power grid less reliable.

At the same time her agency unleashes regulatory attack after regulatory attack on the coal industry, Administrator McCarthy has the audacity to expect lots of future investment in alternative energy, telling the Council of Foreign Relations:

Frankly, a lot of the investment that would have been made before is so old and has not been invested in that now there is an opportunity for significant investment [in alternative energy], and that is going to be, I think, in a direction which we are seeing the energy world is heading.

One certainly should expect new investments in particular energy sources when federal regulators are choosing energy winners and losers. Electricity needed to keep lights on and power offices and factories has to come from somewhere.

But when coal is given a raw deal, the public will wind up paying the price in higher energy costs and less reliability.

UPDATE: The Wall Street Journal editorial page takes up coal's "carnage" under this administration:

Investor Paul Tice recently wrote in these pages that since 2012 “27 coal-mining companies with core operations in Central Appalachia, a region roughly centered in southern West Virginia, have filed for bankruptcy protection.” We told you in November that coal production nationwide has declined by about 15% since 2008. Reasons include slowing global demand and competition from natural gas in electricity generation. But commodity prices are cyclical, while regulation is forever.

It’s hard to keep track of all the new rules billowing out of Washington and overwhelming coal producers and their customers. Market analyst James Lucier at Capital Alpha Partners says the most potent have been the Environmental Protection Agency’s Mercury and Air Toxics Standards, which have forced the retirement of plants that provide tens of thousands of megawatts of electricity. Then there’s the coal ash regulation. And the new Clean Power Plan to reduce greenhouse gas emissions at power plants.

Even after recent declines in market share, coal-fired plants still provide roughly a third or more of American electricity. So utility customers will notice the coal carnage when they see their monthly bills—or perhaps when the lights don’t go on. But for now the pain is concentrated among those who used to work in the coal fields. 

More Articles On: 

About the Author

About the Author

Sean Hackbarth
Senior Editor, Digital Content

Sean writes about public policies affecting businesses including energy, health care, and regulations. When not battling those making it harder for free enterprise to succeed, he raves about all things Wisconsin (his home state) and religiously follows the Green Bay Packers.