HAZARD —For the first time in more than 34 years, according to the Energy Information Administration, America is getting less than 40 percent of its energy from coal, and with the loss of around 150 coal jobs in Perry County in the last few months the future of coal in Eastern Kentucky seems to be uncertain.
According to the Kentucky Coal Association, however, the future for coal may not be as bad as it seems.
Coal has been in the news a lot this past year, from new EPA regulations to a hold up of permits on surface mines. And many coal burning power plants are either converting to natural gas or installing expensive scrubbers to meet new regulations.
According to the Bill Bissett, president of the Kentucky Coal Association, combining these new regulations and a very mild winter has made coal in less demand right now than originally expected. Bissett said that there are organic and artificial factors that affect the coal industry, and right now Eastern Kentucky is in a perfect storm of both.
“By organic factors I mean 60 degree weather in January and February, which decrease the need for electricity for heating, thus also decreasing the need for coal to generate electricity,” he explained, adding that the market for coal to make steel has also been destabilized in Europe and other areas, further decreasing demand.
Bissett described the artificial changes as changes in policy and legislation that could be the cause of more long-term effects on the industry. He said while it is easy to say that next winter could be harsher and need for electricity greater, policies are not nearly as fluid and easy to wait out.
“I think we can absorb a lot of the damage from the organic changes, but not the artificial changes which include unfair government scrutiny of our Eastern Kentucky coal field,” he said, adding that companies in Eastern Kentucky are also experience difficulty in obtaining permits, while companies in Western Kentucky aren’t facing those same issues.
“Like in all industries there is always going to be a degree of risk in market fluctuations, but when you have a federal government also destabilizing your market it is near impossible to plan for that,” he remarked.
However, among all of the bad news for the industry, Bissett said that one major factor could be the international market for coal in countries that are continuing to grow in manufacturing. China has already estimated that they will need to use over 1 billion tons of coal mined from other countries with in the next 30 years.
Another reason that coal may not be counted out just yet is with the move toward natural gas, as the reliability of the flow may not be meet expectations, he added.
“There has been a move to position themselves as being a clean energy source, but there are other factors that need to be considered, especially reliability,” said Bissett. “You cannot put a pile of natural gas next to your natural gas fired power plant. You can put a pile of coal. Being dependent on a pipe line and a natural gas flow changes the dimension of reliability for consumers.”
A recent report by Mountain Association for Community Economic Development (MACED) claims that coal production could be down 70 percent by the end of the decade if the international market does not take off and alternative forms of electricity production are more widely implemented. In their report they claim that using the current coal severance to help set up a fund to diversify employment in the region will help to keep money and jobs in the region if there is in fact a steep decline in coal production.
MACED president Justin Maxson said that the conversation started by the debate over coal severance funding for the University of Pikeville is one that may help to diversify the region. Bissett said that this same conversation has been had concerning the support jobs within the coal industry.
Currently many of these diversified jobs in the coal industry such as clerical and office work are being done in other areas and not in the region where the coal is being mined. Bissett said while it would be ideal to have processing and support work done in the same area as the coal is coming from, that is often not the case and he is unsure how to get them to be brought here.
Maxson suggests using the current coal severance to reinvest in the region.
“If recent trends and official projections hold, the region’s economy will experience new economic challenges from the decline of coal jobs on top of the considerable problems it already faces,” said Maxson. “Now is the time to get serious about involving eastern Kentuckians in creating a plan for the future. We need creative and careful approaches that will work over the long-term.”