June 6, 2014

EPA Regs: Coal’s Loss, Wyoming’s Win?

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Coal coming from mines like the one pictured here in Gillete, Wyo., have been a significant source of revenue in the state.

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Coal coming from mines like the one pictured here in Gillete, Wyo., have been a significant source of revenue in the state.

It didn’t take long after the Obama administration unveiled new rules Monday regulating carbon emissions from power plants for people to start naming winners and losers.

Wyoming, the nation’s largest coal-producing state, and a huge coal consumer, was immediately billed as a loser.

But the reality is more complicated than that.

Travis Deti has yet to read through all 645 pages of the Environmental Protection Agency’s proposed rule, but already knows he doesn’t like it.

“We feel it’s bad for Wyoming, and it’s certainly not good for our coal industry,” said Deti.

Deti is the assistant director of the Wyoming Mining Association. The rule anticipates states will cut back on coal-fired power in order to reduce their emissions. That means coal would drop from producing 40 percent of the nation’s electricity today to 30 percent in 2030. Deti says that would deal a huge blow to Wyoming.

“If we’re not mining that coal, that revenue is not coming into our treasury, those jobs are not sustained here at home, so it’s going to impact us,” he said.

Coal mining adds over $1 billion annually to Wyoming’s coffers and employs about 7,000 people in the state.

When asked if there was any upside to the legislation, Deti chuckled before responding, “no.”

The Big Holdout

Rob Godby is an economist at the University of Wyoming.

“You know, if there’s going to be one coal man left standing [after these new regulations], it’s probably going to be Wyoming,” said Godby who believes that Wyoming coal-fired power plants around the country will actually have to run harder as other plants are shut down, leading to a possible short-term boost in coal.

That’s because Wyoming coal is cheaper and cleaner than most of the coal mined in the United States. Cleaner because it’s low in sulphur, which is how Wyoming came to be the country’s largest coal-mining state. Pollution regulations implemented in the early 1990s made Wyoming’s low energy — but also low-sulphur — coal much more attractive. Godby says that history is relevant to the current situation.

“People don’t like change,” said the economist. “But when they have to change, they will. And oftentimes, you find out the changes aren’t as bad you originally worried they might be. And this might be one of those cases. In fact, I think it’s going to be.”

Not only does Godby think it might not be as bad as some are saying. He actually thinks the rule could be good for Wyoming’s overall energy industry, believing that, as utilities in the state cut back on coal, many will switch to cleaner-burning natural gas.

“And that’s good for the state because it creates new demand for our gas,” Godby explained.

That could make up for some of the lost revenues if Wyoming coal, as an industry, takes a hit.

But the potential benefits don’t end with gas. Godby says the state is also well-placed to take advantage of renewable resources, like wind and solar. Then there’s uranium, which could see an uptick if utilities invest in more nuclear power. And Godby says, if nothing else, Wyoming is also positioned protect it’s coal interests. He says it’s the best place in the country to develop carbon-capture technology for coal-fired power plants because coal is so cheap and abundant.

“I’m trying not to sound like a cheerleader right now, but it really is an exciting time,” said Godby. “And a lot of people who work in energy know there are a lot of potential improvements out there that can occur on the grid, in generation, in electricity use.”

A Place for Coal

Deb Theriault owns a renewable energy company in Casper. She says she appreciates everything coal brings to the state and the governor’s advocacy for it, but she hopes it doesn’t come at the expense of other energy resources.

“We put a man on the moon, we ought to be able to figure out solutions for coal,” said Theriault.

If the rule goes into effect, doing it the way it’s always been done won’t be an option. But Wyoming will get to choose whether it’s seen as an opportunity or a burden. The rule now goes to a 120 day comment period. It’s expected to be finalized next year.