Falling coal market blamed for hundreds of layoffs in Wyoming
Arch Coal and Peabody Energy separately announced cuts April 1 at their mines in the Powder River Basin region. Both companies said they were laying off approximately 15 percent of their workforces at the mines, totaling 230 from Peabody and 235 from Arch, according to statements issued separately.
“Coal is under assault on a number of fronts,” Charles Ebinger, a senior fellow with the Brookings Institute’s Energy Security and Climate Initiative, told AMI Newswire.
Ebinger said that stricter emissions rules and a glut of international coal on the market, combined with the growing availability of cheap natural gas, have made it hard for many coal producers in the U.S. The news, he said, comes even as a new report from the Sierra Club notes that since 2010, nearly 500 gigawatts of coal power capacity has been built, most of that in India and China.
“I think [coal] is pretty dead in the United States, sadly,” Ebinger sad. “But internationally, the coal market is alive and well.”
The Powder River Basin has come to rely primarily on exporting coal, Ebinger notes, given that the rising cost of rail freight has left domestic shipment of coal as cost-effective as shipping it to ports in the Pacific Northwest. The price of coal on the international market, however, has recently reached “35 -to 40-year lows," Ebinger said.
According to reports from the Energy Information Administration (EIA), commodity prices for Powder River Basin coal had fallen to $9.35 per ton for the week beginning April 1. EIA numbers showed coal from this region was selling for less than a quarter of the price of coal from other regions for the same week.
The Wyoming layoffs come only a month after similar cuts were announced in Ohio and West Virginia. In January, the United Mine Workers of America (UMWA) said it expected Murray Energy Corporation to lay off nearly 600 workers from mines throughout the northern part of West Virginia and southern Ohio.
Despite the layoffs, Arch Coal said in a statement it expects the mines to continue service as an “essential energy source for the domestic and global power generation sector for decades to come.”
Both Arch and Peabody also attribute the closure of a number of power plants in the U.S. in anticipation of new emissions rules from the Obama Administration. Though implementation of the Mercury and Air Toxics Standards (MATS) are currently held up by the U.S. Supreme Court, Ebinger has said many plants have already voluntarily switched fuel sources, most to natural gas, in anticipation of the high cost of meeting the new EPA emissions requirements while burning coal.
In the past, the unique composition of the coal from the Powder River Basin earned it the nickname “clean coal,” according to one 1999 analysis by the United States Geological Survey (USGS), as coal from the region produced lower sulfur dioxide and nitrogen oxide emissions than other types of coal in the U.S.
In a statement, Sen. Mike Enzi (R-Wyoming) called on voters to fight the president’s “economic assault” on Wyoming.
“These job losses are nobody’s gain,” Enzi said. “People need to see beyond politics and realize this impacts real people and communities in very stark ways.”
Coal’s role as an electricity-generating fuel source has fallen in recent years, from 44 percent in 2011, to 37 percent last year, according to a study done by the ESCI in March 2015. The EIA estimates that shares will fall to 32 percent by 2040.
In the meantime, Ebinger said controlling emissions globally will require more than limiting the use of coal. Making carbon capture technologies affordable, he said, holds the real key for emissions goals set out in the Paris Climate Agreement, reached in December 2015, particularly as countries such as India undertake what he calls an “ambitious” movement to increase coal output from 600 million tons to 1.5 billion tons in a “very short time frame.”
“If we burn that coal directly without [carbon capture technology], we’re going to create an environmental disaster,” Ebinger said. “And that’s not just the U.S., because we’re phasing out coal, but the world has to find a way to do this.”