Last week Alpha Natural Resources Inc., one of the largest coal mining companies in the United States, announced it was laying off roughly 250 workers. The company had telegraphed most of the cuts in previous weeks and said hundreds more could be on the horizon.
Such announcements have become commonplace in the nation's coal-producing communities, particularly within the Central Appalachian Basin, which has felt the brunt of the fuel's U.S. downturn in recent years. Coal mining has shed more than 7,000 workers since mid-2011 in eastern Kentucky alone.
Industry advocates are often quick to blame Obama administration rules and environmentalists for the troubles. Greens, for their part, point to the international markets and what they see as coal's inevitable decline. But the truth lies somewhere in between, relying on a complex set of factors that are largely absent from the current debate over whether there is a "war on coal."
"We're struggling," said Bill Raney, head of the West Virginia Coal Association. "We got a lot of people that are unemployed, and we don't think they should be."
Raney was one of several state coal advocates who gathered for a recent meeting with reporters at the American Coalition for Clean Coal Electricity headquarters in downtown Washington, D.C.
They were in town to press their case against Obama administration proposals to reduce greenhouse gas emissions from new and existing power plants, draft rules that would affect coal in particular.
"This is an attack on our industry. And it hasn't been a quiet attack," said Christian Palich, government affairs vice president for the Ohio Coal Association. "Coal allows us to keep the lights on. It's not just a tag line, it's the truth."
That truth, however, has been changing because of American's newfound natural gas wealth. Hydraulic fracturing technology has made it easier for energy companies to reach tough deposits in Pennsylvania, West Virginia and elsewhere.
"It is, I would say, probably a 50-50 split," said James Stevenson, director of North American coal for the research organization IHS Energy, trying to explain the impact of markets versus regulations on the coal industry. "The tipping point has really been caused by cheap gas."
In other words, Stevenson said in an interview, new regulations and market forces would probably not be having such an impact on coal if it weren't for the natural gas alternative.
Coal used to account for more than half of U.S. power production. But in 2012, low natural gas prices pulled that number down to roughly 32 percent. For the first time in recorded history, natural gas and coal were tied in fueling the country's power plants.
Higher natural gas prices recently have driven a partial recovery in coal generation. The fuel accounted for roughly 40 percent of power production for 2013, according to the U.S. Energy Information Administration.
"Existing coal [power generation] units still mostly win against gas," said Stevenson. But new and predicted regulations have encouraged older coal power plants to shut down and made it more expensive to build new coal-fired units.
MATS 'caused a huge problem'
Joe Aldina, a coal markets analyst for Wood Mackenzie Ltd., said uncertainty remains surrounding which of the proposed or existing rules affecting coal was the worst for the industry. "It's a tough call," he said.
Within the realm of regulations, the coal industry is focusing almost all its attention on fighting U.S. EPA's greenhouse gas proposals.
One of them would require carbon capture and sequestration for all new coal-fired power plants, a technology that is yet to be widely commercially available.
EPA does not foresee many coal mining jobs affected because forecasters don't expect the construction of many new coal-fired power plants.
"The Standard would effectively prohibit investment in new coal plants, given current fuel mix economics and available technology," said a new coal markets analysis from Moody's Corp.
When it comes to a proposal for existing power plans, which relies on states meeting various emissions reduction targets, EPA is predicting significant effects on coal use and, as a result, mining.
Even though the agency says coal will remain an important part of the country's generation portfolio, one scenario outlined in EPA's regulatory impact analysis has coal production dropping by 25 to 27 percent in 2020. More than 14,000 mining jobs would disappear between 2017 and 2020.
But the most harmful rule to coal mining may already be on the books.
When asked what Obama administration measure is affecting coal-fired generation the most, both Stevenson and Aldina are inclined toward the 2011 rule to control releases of mercury and other toxins from power plants -- the Mercury and Air Toxics Standards (MATS).
EPA predicted in 2011 that MATS would contribute to a 1 percent drop in coal production in 2015. The agency said Appalachia would see a 6 percent decrease and Eastern states overall a 3 percent drop.
"MATS is tough," Raney said. "That's caused a huge problem."
An August report from the Government Accountability Office said more coal-fired power plants are headed for retirement than analysts predicted in 2012. GAO said about 13 percent of the coal fleet has shut down or will retire by 2025, largely because of MATS.
Analysts see retirements stabilizing following the effect of MATS. The remaining power plants will be newer, more efficient and cleaner.
"For the most part, this decade is fairly stable," Stevenson said. "It's not really about 2030 that we start seeing an acceleration in the decline."
In December, EIA said coal would produce roughly 32 percent of the nation's electricity by 2040. The share for natural gas will be higher, about 35 percent.
Still, efforts to reduce greenhouse gas emissions could dampen those numbers, EIA said. EPA's analysis of the impacts of CO2 controls on existing power plants says coal will produce 30 percent of the nation's power by 2030.
"While coal is on track for a long-term secular decline regardless of the EPA's proposed carbon rule, the extent of the contraction will largely depend on whether it becomes effective and how it's implemented by the states," Moody's said.
Mining, safety crackdown
This summer, Alpha CEO Kevin Crutchfield said changes in the coal markets and Appalachia's downturn were mostly permanent. But he added, "Don't count us out yet."
More recently, Murray Energy Corp. CEO Robert Murray said more bankruptcies were likely in the industry. And Crutchfield told Bloomberg there could be few large coal mines left in the United States after the downturn.
The reasons the United States has been shedding thousands of coal mining jobs over the past several years, particularly in Appalachia, go well beyond natural gas and policies surrounding power plants. Analysts point to the coal mining markets themselves.
In the 1980s, coal mines employed more than 100,000 workers, according to the Bureau of Labor Statistics. But business cycles and automation have affected coal mine employment over the years.
The number of coal mine employees was about 86,000 when President Obama took office, said BLS. It almost reached 90,000 employees in 2011 but now stands at around 79,000.
"Things are about as bad as they can get," Stevenson said. "Arguably, they are better than they were 12 months ago."
Despite the bad numbers overall, some coal mining areas have seen upswings in production. The Clean Air Act Amendments of 1990 made it tougher for utilities to burn the Illinois Basin's high-sulfur coal. But new emission control technologies mean mines there are once again competitive with Central Appalachia.
While Central Appalachia production went down from 196.5 million short tons in 2009 to 147.8 million short tons in 2012, Illinois Basin production rose from 102 million short tons in 2009 to more than 127 million short tons in 2012.
The situation in Kentucky is illustrative of the competition between basins. While employment in the state's eastern coal fields has been on the decline for decades, jobs at western mines have long been fewer but also relatively stable (Greenwire, April 23).
Even though production increased slightly in Indiana, also part of the Illinois basin, between 2009 and 2012, Rep. Larry Bucshon (R) today asked President Obama and EPA officials to visit a mine there, and learn about the potential plight of miners under new rules.
Geology is another factor in Appalachia, with generations of workers having exhausted many of the easy deposits of the region's high-quality coal. Stevenson said mountaintop removal helped make Appalachian mining cheaper.
But litigation from environmental groups and an Obama administration crackdown on mountaintop mining, plus new safety standards following the 2010 Upper Big Branch mine explosion in West Virginia, have crippled Appalachia's cost-competitiveness.
"It now costs about roughly double to mine a ton of coal in the east relative to what it did 10 years ago," Stevenson said. "It's much more expensive to get a permit now, there's more focus on safety."
Exports have helped buttress Appalachian producers. But the higher expected demand for steel-making coal did not materialize in time to prevent new layoffs. And Europe's appetite for coal-fired power will only be temporary.
"Appalachia has some of the world's top-quality metallurgical coals. We believe there will be demand for those both domestically and internationally," Aldina said. "On the [power plant] coal side, it's more challenged."
Even though production has also dropped in the Powder River Basin of Wyoming and Montana, the nation's top coal-producing area has been more resilient compared to Central Appalachia. PRB coal is cheap to mine, low in pollutants and closer to newer coal-hungry markets in Asia.
Opponents of proposed coal terminals in Oregon and Washington state have joined some analysts in questioning the predicted robustness of Pacific coal demand.
But Aldina said, "When you look abroad and you look at China, India, Indonesia, Vietnam, you see a pretty strong demand for coal. We think the demand would be there for Powder River Basin coal if you could get it out of the country."
He added, "If you get out a few years and you look at the medium and long term, there is still pretty robust demand for energy, there is robust demand for steel."
Focus on climate
Despite the numerous factors affecting U.S. coal production, mining companies and their allies will likely continue focusing on the proposed rules to address CO2 emissions.
The Supreme Court already gave its blessing to EPA's Cross-State Air Pollution Rule. MATS has also survived federal court challenges. And there is nothing the industry can do to affect the weather, an important factor in power demand.
Climate proposals for existing and new power plants are something companies are hoping they can still change. Plus, they see the CO2 plans as being particularly anti-coal, even compared with other rules.
Pennsylvania Coal Alliance CEO John Pippy described the greenhouse gas proposals as "less about a reduction in CO2 and more about a shift in energy policy."
Bill Bissett, president of the Kentucky Coal Association, said he sees conditions stabilizing in Appalachia, as forecasters have predicted. "We do see a cautious optimism right now in eastern Kentucky," he said.
"We're not ready to call it a trend, but we are more optimistic than we have been." With the new rules, "this could all be damaged again."
Want to read more stories like this?
E&E is the leading source for comprehensive, daily coverage of environmental and energy politics and policy.
Click here to start a free trial to E&E -- the best way to track policy and markets.