Industry Has Future, Regulations Stand in Way
Coal executives visiting with The Southern Illinoisan’s editorial board on Wednesday said they are confident the industry, despite the challenges facing it, will have a future in the region for decades to come.
Joshua Carter, the vice president and chief operating officer for Knight Hawk Coal, noted that his company has grown steadily during the past roughly 18 years into a sizable employer in Southern Illinois.
Knight Hawk Coal began operations in 1998 near Ava with 15 employees, he said. Today, the company, which later expanded into Perry County with a second mine, employs about 400 workers directly, as well as another 250 or so over-the-road contract truckers.
Knight Hawk Coal is, by many measures, a Southern Illinois success story. A large portion of the coal the company mines here is shipped to East Coast states, such as Florida and the Carolinas, where coal-fired power plants have been equipped with sulfur dioxide scrubbers.
But Carter and Phillip Gonet, president of the Illinois Coal Association, said during the hour-long-plus conversation that there are many regulatory and political pressures facing the coal mining industry, making it difficult to compete.
Gonet attributed the industry’s most recent decline to what he deemed “Obama’s war on coal” and new regulations issued by President Barack Obama’s Environmental Protection Agency, as well as the low natural gas prices suppressing the demand for coal.
The “Obama war on coal” mantra is a popular one in Southern Illinois, a rural region that has bled coal-mining jobs over the past 20 years and not seen those opportunities replaced, particularly not with options that come close overall in terms of salary and benefits.
It’s the economic conundrum that makes people nostalgic for the days when thousands of hard-hat-wearing Southern Illinois men made daily treks underground, lunch pail in hand, and emerged from a hard day’s work with coal-stained faces and money in their pockets.
But statistics show, specifically as it relates to Illinois coal production, that the “Obama war on coal” is a gross oversimplification of the economic woes facing the regional coal industry, specifically, and Southern Illinois’ economy generally.
According to statistics provided by Gonet, the most significant decline in Illinois mining followed implementation of the 1990 Clean Air Act passed by Congress and signed by President George H.W. Bush. About 10,000 people were employed in mining jobs that year in Illinois, he said, and the state mined about 62 million tons of coal. That was cut roughly in half by 2003, when Illinois produced 31 million tons and employed only about 3,500 workers.
But Illinois coal production began growing rather dramatically again in 2010 — during Obama’s first term in office, though this is attributed to the growth in coal-fired power plants adding scrubbers in states where a regulated energy market made it financially advantageous, allowing them to accept higher quantities of Illinois coal that is heavy in regulated sulfur, yet also more efficient to burn.
Illinois mined about 58 million tons of coal in 2014, which declined slightly in 2015, to about 56 million tons. But even as output climbed close to pre-Clean Air Act levels in 2014, the number of jobs did not rebound — and that is almost entirely attributed to, not presidential policies, but improved technologies and efficiencies changing the manpower-output ratio.
Still, Gonet points out that 1,630 coal-mining jobs have been lost in Illinois in 2015 and the first half of 2016. That means there are about 2,825 coal-mining jobs left in Illinois at this time, putting the state below 2003 employment levels when output dropped to its lowest point in recent history. Most of the state’s coal mines are in Southern Illinois and south-central Illinois.
Gonet laid this job loss at the feet of the EPA’s regulations, namely the agency’s so-called MATS, which stands for Mercury and Air Toxics Standards, and Obama’s Clean Power Plan.
“We fought it because we have the most stringent air emission standards laws in the world,” Gonet said. “We don’t need to make them any stricter. In fact, the benefit that you gain of fewer emissions is not worth the cost to do it.”
For its part, the EPA claims MATS will prevent up to 570 premature deaths in Illinois while creating up to $4.7 billion in health benefits in 2016 by limiting mercury and other toxic emissions from power plants. The Clean Power Plan, according to the EPA, is intended to reduce pollutants — sulfur dioxide and nitrogen dioxide — that contribute to soot and smog and can make people sick. Implementation of that plan was stayed by the Supreme Court in February pending a judicial review.
“We would hope a (Donald) Trump administration would pull the plug on the Clean Power Plan and the MATS rule,” Gonet said. “Our other contention is the president has overstepped his constitutional authority. We clearly do not believe that EPA has the authority under Clean Air Act to control for carbon dioxide.”
Gonet said the Illinois Coal Association doesn’t make endorsements, but he still tells everyone there’s only one candidate in the 2016 presidential race who is supportive of the industry: Donald Trump.
“We see Hillary Clinton as continuing the Obama policies,” Gonet said.
Meanwhile, in recent days a large billboard has gone up on U.S. 51 in Carbondale that includes a large photo of Trump and reads, “Don’t Let Hillary Shut Down Our Coal Mines. Vote Trump.”
It was not immediately clear to the newspaper who placed the billboard. The Illinois Coal Association was not involved, Gonet said.
Gonet said the EPA regulations issued during Obama’s presidency have led to companies closing several dozen coal-fired power plants equating to roughly 100,000 megawatts of capacity. But Gonet said in a follow up interview he could not say what portion of power plants may have been taken off line because of age, or other market forces, including increased competition from natural gas and a depressed global market for U.S. coal.
During the interview at The Southern, Carter said, “We oversupplied the market place as an industry. Supply and demand are well out of balance.” At this time, he said, “the export market is non-existent. There’s no outlet valve there.”
Gonet said he could not differentiate how much of the decline in coal output in 2015 and the first half of 2016 may be attributed to a leveling off of the industry following overproduction versus expensive EPA policies. While opposing the regulations, he did concede that other market forces also likely contributed to the industry downturn.
Further, some market experts have opined that while the EPA’s policies under the Obama administration have had an impact, the coal industry also was impacted by the risky bets some large coal companies made on global markets that didn’t pan out to the degree expected. Locally, workers and retirees have been affected by the Chapter 11 bankruptcies of Arch Coal and Peabody Energy that, as part of reorganizations, have sought to shed promises to pay worker benefits.
On the other hand, Knight Hawk Coal, while affected by domestic regulations and suppressed global markets, has built a reputation as a company that has taken the slow and steady road to expansion.
Carter said he is certain the export market will play a part in the future of coal mining in Illinois, and specifically for Knight Hawk Coal. He noted that the expansion of the Panama Canal will increase access to Asia from Gulf of Mexico and Eastern-based U.S. ports. But when and how future exports will affect Illinois mining, and to what degree, is a difficult thing to predict. “The export market is kind of finicky,” he said.
See the article here.
- On August 26, 2016