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Federal energy regulators are predicting more coal power plant retirements than have yet been announced due to onerous environmental regulations and low natural gas prices.
Scheduled retirements are currently concentrated among smaller, more inefficient coal plants, noted the Energy Information Administration on Friday. By 2016, larger plants that provide significantly more power will begin shutting down.
“Projected retirements of coal-fired generating capacity in [EIA’s annual Energy Outlook report] include retirements above and beyond those reported to EIA as planned by power plant owners and operators,” the agency noted.
A key factor in those retirements is a new Environmental Protection Agency regulation on emissions of toxins from coal-fired power plants. Known as the Mercury and Air Toxics Standards (MATS) rule, it is expected to dramatically increase financial pressure on the coal sector.
“In [EIA’s] projections, 90 percent of the coal-fired capacity retirements occur by 2016, coinciding with the first year of enforcement for the Mercury and Air Toxics Standards,” the agency noted.
The effects on the American power sector will be significant, EIA noted, since projected retirements will hit larger plants that produce significantly more electricity than those that were retired over the last three years.
“Units that retired in 2010, 2011, or 2012 were small … and inefficient,” EIA said. “In contrast, units scheduled for retirement over the next 10 years are larger and more efficient.”
EIA released its data as financial analysts predicted a continued decline in employment in the coal mining sector. The industry has shed jobs as coal power has declined as a share of U.S. electricity generation: from more than 50 percent in 2000 to 37 percent in 2010.
“From their near-term peak of 93,700 in the fourth quarter of 2011, average coal mine employment has dropped 17.1 percent at the end of 2013,” industry analysts at SNL Energy reported on Friday.
The industry acknowledges the role that low natural gas prices have played in the decline of the coal sector, but insists that EPA regulations, especially the MATS rule, are the primary culprits.
“The immediate impact of the EPA’s Mercury and Air Toxics Standards, [National Mining Association spokesman Luke] Popovich said, has been shown to have a much larger effect on coal production and employment than natural gas competition alone,” SNL reported.
“Even more regulations expected to heavily curtail coal’s competitiveness in the marketplace are coming in the form of greenhouse gas restrictions,” SNL noted. “Popovich said the result will be a loss of high-paying jobs in the coal industry.”
The EPA and the Obama White House have denied that the real objective of new regulations on carbon and mercury emission is to shut down coal plants.
However, internal communications recently released in response to a Freedom of Information Act request showed top EPA officials collaborating with anti-coal environmentalist groups such as the Sierra Club and the Natural Resource Defense Council.
EPA officials, the emails showed, helped those groups gather petition signatures in support of regulations that critics say impose huge costs on coal-fired power plants and amount to a de facto moratorium on the construction of such plants.
The emails also showed environmentalist groups advising EPA on where to schedule public hearings on new regulations. Legislators from coal-producing states criticized the agency for holding those hearings far from the nation’s most coal-intensive regions.
Those regions will see a dramatic decline in employment as a result of those regulations, Popovich said.
“There’s a gross inconsistency, in our view, of this administration’s insistence that it wants to create high-wage jobs and more of them, and the reality that their policies are having on the employment marketplace,” Popovich told SNL.
“You’re essentially condemning a lot of unemployed people to a much lower standard of living since in these [coal-producing] regions there are no readily available jobs that can offer salaries that compete with a coal mine,” he added.
“It’s a pretty dark picture, particularly in that region.”
Coal workers recognize the political factors underlying the bleak outlook for the sector in states that rely heavily on it.
“My human resource guy, before we shut down, told us our future in coal, working underground, would depend on the 2012 presidential election,” said Ethan McGrew, a second-generation coal miner who was laid off after Consol Energy shut down a Clay County, W.V., mine in December 2012.
McGrew blames the Obama administration for the financial troubles plaguing the coal industry—and his family.
“My dad was a coal miner and he lost his job back in 2008,” McGrew told SNL. “He lost his job in the first presidential election, the second election came around, and I ended up losing my job.”