While the United States has seen tremendous growth in natural gas and oil production and renewable energy ouput and investment over the past few years, many politicians, pundits, and everyday Americans have expressed concern over the decline of coal.
Information from the Energy Information Administration (EIA) shows that coal represents the lion’s share of retired energy capacity in recent years, while forms of energy such as natural gas, wind, and solar power are on the uptick. What does this mean for these coal-rich towns? Jon Kamp and Kris Maher of The Wall Street Journal reported at length about the shutdown of coal plants, writing that,
“The shutdowns can cost communities both high-paying jobs and significant sources of tax revenue. Natural gas-fired plants have quickly mushroomed up across the U.S. to replace the retiring coal generators, but those plants need far fewer workers – one for every five that worked at a coal plant..”
The article goes further in depth, exploring the impact that these retirements have had on communities that relied heavily on the operation of these coal plants. The plants are, in many cases, not only the top taxpayer in their communities but the top employer, as well. Towns such as Cassville, Wisconsin lost over half its revenue from these retirements. Residents of municipalities that have their plants retired may see their residential property taxes increase as a result, and they may face increased competition for fewer jobs in the same area, resulting in potentially perpetual cyclical unemployment for the area. In some cases, municipalities have contemplated raising their property taxes by as much as 500 percent to help compensate for these losses.
Many of these municipalities already float high unemployment rates as is and the industry as a whole has experienced a continual decline in overall employment. The exact reasons as to why so many of the plants are shutting down are subject to debate. According to the EIA, coal power consumption has dipped considerably in recent years. However, there are other factors for this decline besides that of regulation.
The availability of cheap, readily available natural gas is a major factor. The EIA also reported that, for the first time, natural gas output has finally overtaken coal production due in part to the abundance of cheap shale, thus putting downward pressure on prices. According to Reuters, many industry spokespeople and insiders have voiced the idea that coal will not be the primary energy generator of the U.S. in the future. According to those industry voices, coal might be reduced to a minority or an eventual non-factor when it comes to aggregate U.S. energy production. Additionally, the increasing popularity of wind and solar technology, coupled with state renewable energy incentives and environmental laws, mean that coal’s prospects are cloudy.
Even though the energy market is notoriously volatile, the continual closing of coal plants around the country is unlikely to stop. There have been projects to redevelop areas where plants were retired, but many municipalities, particularly in the wake of an often-dramatic loss of revenue, are unable to compensate for long. The continued rise of solar and wind energy may bring new jobs to these affected areas as well, but consumers in Appalachia and other coal-rich towns are much more heavily exposed than some others, as these plants are often what anchor their communities.
“New database provides monthly inventory and status of U.S. electric generating plants” (Tim Shear, Energy Information Administration)
“Coal’s Decline Spreads Far Beyond Appalachia” (Jon Kamp, Kris Maher, Wall Street Journal)
“Trump’s Plan Won’t Reverse Coal’s Decline” (Ben Casselman, FiveThirtyEight)
“Trump declares end to ‘war on coal,’ but utilities aren’t listening” (Valerie Volcovici, Nichola Groom, Scott DiSavino, Reuters)