Why Did the Decline of the Coal Stop Around 1960 and Then We Increaded Its Use Again
Ane of the themes of Donald Trump's presidential entrada was bringing back coal jobs to the Midwest. As president, he has doubled downwardly on this, promising to "lift restrictions on American energy — including shale oil, natural gas and cute, clean coal."[1]
Many Republicans have blamed environmental regulations enacted during the Obama administration for the turn down of the country'due south coal industry. Republicans have pledged to bring back the industry and its jobs, primarily by neutering those regulations. I of the first deportment by the new Congress was to abolish the updated Stream Protection Rule, protecting streams near coal mines,[2] in an effort to salve the coal manufacture of "crushing" regulations.
Motivating the political focus on coal is a simple pair of facts: Coal product in the United States has declined recently after a half century of growth, and employment in the coal industry has dropped for years.
This Policy Brief explores the arguments fabricated to explain those declines. And those who are inclined to place most — or all — of the arraign on environmental regulations volition learn there are other, likely stronger, influences at work.
The country of coal in the U.S.
Taking the long view of coal in the United States, one is struck past the steady expansion of output since Earth War Ii.
Figure 1 shows U.S. coal production since 1949, separating the Westward (the region west of the Mississippi River) from the Due east (the region due east of the Mississippi). The East is the traditional home of U.S. coal whereas the Westward is primarily a post-1970 supplier.[3]
Figure 1: Tons of coal output per year, by year for Eastern U.S., Western U.Due south. and Total U.S. (1949-2015).
Source: Free energy Information. Due east and West are demarked by Mississippi River.
Although over the past sixty years output of coal more than than doubled,[4] notation that 2009 marked the start of a moderate reject in output. Also notation that the post-Globe War II boom in coal is not uniform over the country. Virtually all of the gain in output was in the Due west, with mining in the Eastward peaking in 1990 and declining slowly always since.
Figure ii: Employment in Coal Mining, National, Western U.S. and Eastern U.Due south. (FTE: Full-Time Equivalent).
Source: Free energy Information Administration. FTE is computed from productivity (tons produced per person 60 minutes), total coal output annually, and an causeless 1,900 hours per twelvemonth for a full-time equivalent employee.
Figure ii shows employment in coal mining, in both the Eastward and West. Despite slap-up expansion in coal production over the past half century, employment has steadily declined, with a few employment booms, such every bit the start decade of this century and the decade of the 1970s. Remarkably, although most of the coal comes from Westward (Effigy 1), the vast majority of jobs are in the E (Effigy 2).
What'due south upwards?
A number of explanations have been offered for the recent decline in coal production and jobs:
- Environmental regulations — the primary doubtable for some — killed coal.
- Deregulating railroads in the 1970s allowed cheap Western coal to displace more than costly Eastern coal, resulting in major job losses in the labor-intensive Eastern coal manufacture.
- The fracking revolution has driven down natural gas prices, making coal less competitive in electricity production.
- Coal mining jobs are going abroad considering of the aforementioned productivity gains that have led to fewer manufacturing jobs across the country — workers can produce more coal per hour, meaning fewer workers are needed to maintain steady coal output.
- Other reasons include fiscal markets, which may see the future of coal as risky (for a variety of reasons) and thus a poor investment.
So which of these causes is the culprit for the recent decline in coal? Nosotros take a closer wait.
Environmental Regulation?
The chief use of coal in the U.Due south. is for electricity generation, and the chief environmental law affecting coal combustion for electricity generation is the Clean Air Act of 1970, signed into law by Richard Nixon. The law imposed significant restrictions on sulfur emissions from new coal-fired power plants.
Dorsum in the 1970s, natural gas was scarce and oil was expensive. Simply demand for electricity was stiff and growing, which set off a boom in edifice coal-fired power plants, despite the Clean Air Act. This tin can be seen in Figure 3, which shows the vintage of all of the operating coal power plants in 2015. Note the large bulge in chapters additions in the 1970s and 1980s. This expansion in coal chapters translated into an expansion in coal product nationwide.
Figure three. Existing coal units by initial operating twelvemonth and retirements in 2022 (net summer capacity, GW)
Source: EIA, "Today In Energy," March 8, 2016.
The easiest fashion to come across the 1970 sulfur emissions regulations was to burn low-sulfur coal, which gear up off a dramatic expansion of low-sulfur coal mining, primarily in Wyoming. The strong demand for low-sulfur coal threatened high-sulfur coal producers, primarily in the Due east (meet Figure 1).
In order to salve coal-mining jobs in the Eastward, the Make clean Air Act was amended in 1977 to crave equipment on all new coal-fired power plants to physically remove sulfur from the smokestacks after combustion, reducing the attractiveness of low-sulfur coal (all coal becoming "compliance coal"). This reduced the competitive threat to Eastern mines.
Some other feature of the 1970 Make clean Air Act had more subtle and delayed furnishings. That is the exemption of existing (as of 1970) power plants from sulfur reduction rules. This "grandfathering" was done for political reasons to facilitate passage of the Human action. Just it was as well viewed as off-white and without long-term consequences since those older plants were expected to retire at the cease of their xl- or 50-year lives anyway.
But as Revesz and Lienke (2016)[5] item, this exemption provided an incentive to keep former and dirty ability plants operating rather than retire, despite the college operating costs of old plants. To protect health and welfare, this necessitated the EPA'southward imposition of more restrictions on old power plants over the years, including the acid rain provisions instituted in 1990 during the Bush administration. Boosted rules were put in place during the next iii presidential administrations to bargain with the problems caused by erstwhile plants operating long after their assumed retirement date.
Now, nigh 50 years after the 1970 Act, shuttering of old power plants has finally begun. As can be seen from Figure 3, the coal plants retired in 2022 were quite old (the oldest began operation in 1944, the year the Allies landed in Normandy). In fact, as tin can also be seen from the effigy, nearly all of the plants retired began operating more than twoscore years ago. This suggests that the decline in coal-fired electricity generation is largely the result of an aging fleet of ability plants, which may well have been retired years agone absent the Clean Air Act's grandfathering clause.
Productivity?
One reason for expansion in the West and stagnation in the Due east is productivity — innovation and other measures that atomic number 82 to fewer workers being needed to produce the same output. This is the same story we have heard in many industries over the concluding 50 years: Productivity gains accept generated job losses, fifty-fifty in healthy industries.
Figure four shows how labor productivity in coal mining, again divided into East and West, has inverse over the past 60 years. Nationally, there has been a steady gain in productivity (with two small-scale slumps), with output per worker-hour in the U.Southward. increasing fivefold. And well-nigh of these gains take been in the West.
Some other indicate to note is that productivity in the Due east is currently about three tons of coal per miner-hour. Information technology is well-nigh six times as high in the W. This is another reason that the Westward has taken then much market share in coal from the East, where employment is full-bodied.
Railroad Deregulation?
Equally Effigy 4 shows, in the late 1970s a miner in the West could produce approximately iv times every bit much coal every bit in the East, and prices reflected this productivity advantage. Merely railroad rates were high, limiting the ability of Western coal to compete with Eastern coal, despite depression prices at the mine.
Figure 4. Labor productivity in coal mining, 1949-2015
That changed in the tardily 1970s with a motility to deregulate railroad rates for coal, culminating in the Staggers Runway Act of 1980. Rail rates per ton-mile dropped precipitously after deregulation, by 50 percent (in existent terms) from 1980 to 2000.
Although the 1977 changes to the Clean Air Act helped Eastern coal compete with Western coal, the deregulation of railroad shipment of coal resulted in a vastly expanded market for Western coal, at the expense of Eastern coal.
As can be seen from Figure 1, at that place was a great expansion of Western coal starting in the mid-1970s. It's important to recollect at that place were other things happening as well, such as increases in oil prices. But the issue of lower railroad rates can be seen dramatically in the marketplace for what is at present the largest coal mine – the North Antelope-New Rochelle mine. The mine is in Wyoming and produced most x per centum of all U.South. coal in 2022 — shipping it all over the country to locations as far abroad equally Florida.
The rise of inexpensive Western coal has been one of the most significant contributors to the decline of Eastern coal and the jobs that go with it.
Natural Gas?
We have discussed the innovation in coal mining that has led to major increases in labor productivity in the product of coal, allowing the massive expansion of the U.S. coal marketplace (though with fewer employees).
Another area of technological change with different implications for coal is the revolution in oil and gas extraction over the past decade or then — hydraulic fracturing (fracking) combined with precision horizontal drilling and the exploitation of unconventional gas deposits.[half dozen] These innovations have fundamentally altered the supply and cost of natural gas in the U.S.
For several decades prior to 2008, the toll of crude oil and natural gas in the U.S. have tracked each other very closely. Only something unusual happened in 2009.
Equally the price of oil began to recover from the Great Recession, the price of gas continued to drop. In April 2012, oil was selling for $103 per barrel, while the price of gas was $11 per barrel-energy-equivalent, and coal was delivered at an average toll of $13 per barrel-free energy-equivalent.[seven]
Prices have fluctuated since then, but gas has connected to be plentiful and inexpensive. This has had 2 effects on coal. One is that inexpensive gas displaces coal in existing ability systems. Secondly, cheap gas increases the incentives to finally retire former coal-fired plants from the 1940s and 1950s. Figure 5 shows the expansion of natural gas in electricity generation, in parallel with the turn down of coal. The effigy too shows the expansion of renewables such every bit wind and solar, likewise at the expense of coal.
Figure 5. Annual share of total US electricity generated by source (1950 – 2016)
Source: Energy Information Administration
Conclusions
Coal has served the country well. It fueled dramatic increases in electricity demand in the 1950s and 1960s. Information technology was in that location for us when oil prices skyrocketed in the 1970s.
But nothing is as constant as change. In the 1970s business most pollution took centre stage and coal adapted — for many information technology was still the cheapest culling. In the 1980s the move to deregulate railroads shifted the competitive balance regionally, every bit Western coal (with high labor productivity) took market share from Eastern coal (with lower labor productivity).
In the first decade of the new millennium, productivity gains — this fourth dimension in natural gas — generated a fundamental shift in which coal was no longer clearly the cheapest fossil fuel. At the same time, solar and wind have made meaning inroads into electricity generation, again providing a competitive threat to coal. Productivity gains, in coal, gas, and other free energy sources, have been a chief force of change.
This buildup of pressures has finally resulted in the retirement of very onetime coal-fired generating units that were built before most Americans were born. Ironically, many of these retirements would probably have occurred long agone except for the Clean Air Act's preferential treatment of quondam coal plants.
In that location are ii questions nosotros asked at the kickoff of this brief: What happened to the coal manufacture? And what happened to coal jobs? The coal industry expanded dramatically from 1950 to 2010 and has declined moderately for the past few years, for the very clear and logical reasons articulated hither.
What happened to coal jobs is even simpler. It is the aforementioned thing that happened throughout much of the state — productivity gains led to fewer workers needed to produce the same output.
An additional force injure coal employment — regional competition between the East and the Westward. The labor-lean West has taken significant market share from the labor-intensive East. The consequence is that far fewer miners are needed.
Some policies accept been proposed to bring back coal jobs. One is to cut environmental regulations, both on coal and natural gas production. But think about that motion — it volition probably advance the decline of coal, as natural gas makes further inroads into the market.
Eliminating regulation can have many consequences. Weakening regulation on railroads in the 1970s and 1980s resulted in job losses in Eastern coal.
What is articulate from this discussion is that ecology regulations did not impale coal. Progress is the culprit.
[1] Oral communication past Donald J. Trump to Conservative Political Action Conference, February 24, 2017.
[2] The Stream Protection Rule of Dec 2022 was an update of an earlier rule, implemented as role of the 1977 Surface Mining Control and Reclamation Human activity (SMCRA). The Congressional Review Deed authorizes Congress by vote to cancel regulations less than half-dozen months erstwhile. President Trump signed into law the cancellation of the Stream Protection Dominion on Feb 17, 2017.
[iii] The Westward primarily consists of coal deposits from New United mexican states and Arizona, as far northward as Montana and as far east as Texas. The Due east primarily consists of coal deposits in the Midwest and Appalachia, from Ohio and Pennsylvania down to Alabama.
[4] Coal output in both concrete and value terms more doubled 1949-2011. According to the EIA, the toll of coal at the mine was $36.14/ton in 1949 and $32.56 in 2011, in constant, inflation-adapted 2005$.
[5]Richard L. Revesz and Jack Lienke,Struggling for Air: Power Plants and the 'State of war on Coal' (Oxford University Printing, New York, 2016).
[6] A contempo analysis of the local consequences of fracking is Bartik, Currie, Greenstone and Knittel, "The Local Economic and Welfare Consequences of Hydraulic Fracturing," Working Paper w23060, National Bureau of Economic Research, Cambridge, Mass. (2017).
[vii] The price of oil is a spot price for Westward Texas Intermediate; gas, as well a spot toll, is Henry Hub; coal is the boilerplate toll of coal delivered to electric utilities.
Source: https://siepr.stanford.edu/publications/policy-brief/what-killing-us-coal-industry
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