Coal production increased by 45 million short tons in 2017 in response to high demand for U.S. coal exports, according to a report by the U.S. Energy Information Administration.

The EIA sees met-coal exports staying strong through this year and next, but with market conditions returning to normal, thermal-coal exports will find it harder to compete with Australia and Indonesia, which are much closer to the Asian markets.

So the EIA’s forecast shows coal production overall to decline by 14 million short tons in 2018 and by 18 million short tons in 2019, as export demand is expected to slow and natural gas prices are expected to stay below $3/MMBtu (per 1 million British thermal units) during much of the forecast period, which contributes to less coal use for electricity generation, according to the EIA report.

EIA expects the share of U.S. total utility-scale electricity generation from natural gas to rise from 32 percent in 2017 to 33 percent in 2018 and to 34 percent in 2019 as a result of low natural gas prices.

Meanwhile, the report added that coal’s forecast generation share falls from 30 percent in 2017 to slightly lower than 30 percent in 2018 and 28 percent in 2019.

The nuclear share of generation was 20 percent in 2017 and is forecast to average 20 percent in 2018 and 19 percent in 2019, the report said.

Non-hydropower renewables provided almost 10 percent of electricity generation in 2017, and its 2018 share is expected to be similar before increasing to almost 11 percent in 2019. The generation share of hydropower was more than 7 percent in 2017 and is forecast to be slightly lower than 7 percent in both 2018 and 2019.

As aging coal-fired power plants are shut – roughly 20 of 380 have closed or are in the process of shutting since Donald Trump became president – coal’s share of the nation’s power mix has plummeted from nearly half in 2008 to roughly a third today.

Last year, coal consumption in the United States fell by 2.4 percent, falling to its lowest level in nearly four decades.

In the early weeks of 2018, national coal production continued to decline from a year ago despite the frigid winter. A weather-related increase in exports last year yielded a modest gain in jobs, but it is not considered sustainable, according to EIA forecasts.

Meanwhile, energy industry workers from across West Virginia rallied in support of the tens of thousands of hardworking men and women who contribute to the state’s oil and gas economy and for policies to maximize the benefits the industry can provide to the state during a rally in February on the State Capitol steps, organizers announced.

“West Virginia’s oil and gas industry is an economic driver, employing nearly 20,000 workers directly and supporting another 50,000 jobs across our economy,” said Anne Blankenship, executive director of the West Virginia Oil & Gas Association. “The West Virginia Energy Jobs Rally showcased the individuals who work in the industry and highlighted the policies needed to maximize the opportunities for the benefit of all state residents.”

Charlie Burd, executive director of the Independent Oil & Gas Association of West Virginia, said, “West Virginia Senate President Mitch Carmichael, House Speaker Tim Armstead, multiple legislators and industry representatives spoke at the rally in favor of pro-growth policies that will lead to a more robust state economy.”

Pipeline plans heat up

With growth of natural gas in West Virginia last year, there are a number of new pipeline projects proposed for the state.

In recent years, the shale revolution has opened access to abundant gas supplies within the state and the region, which has created the need for more infrastructure, according to industry officials.

“Marcellus and Utica gas has been a game-changer for this region,” said Scott Castleman, communications manager for TransCanada, which now owns Columbia Pipeline Group.

“We have 31,000 miles of pipeline, with 15,000 miles on the East Coast that is at capacity,” he said. “We need to increase that capacity.”

In the Huntington Tri-State region, a total of nine pipelines are proposed to come through the area. They include the Leach Xpress, Mountaineer Xpress, Buckeye Xpress and the Appalachian Storage Hub, which would consist of six pipelines originating in Pennsylvania and running adjacent to the Ohio River along West Virginia’s Ohio River border before crossing under the Ohio River and then passing by Marathon’s refinery in Catlettsburg, Kentucky, and going toward the Gulf Coast.

The proposed Mountaineer XPress, Leach XPress and Buckeye Xpress all would carry gas from West Virginia, Pennsylvania and Ohio to a pipeline interconnection site near Marathon’s Catlettsburg refinery.

Recent trends in coal production

The coal industry in the United States and in Appalachia has undergone a severe downturn over the past decade as demand for coal has fallen across the United States.

Total coal production in the United States fell from about 1.1 billion short tons in 2005 to approximately 897 million short tons in 2015, a drop of almost 21 percent. The large majority of this decline came in Appalachia, where coal production dropped by 176 million tons, a drop of almost 45 percent.

The Appalachian Regional Commission (ARC) recently announced a new request for proposals (RFP) for funding POWER (Partnerships for Opportunity and Workforce and Economic Revitalization) Initiative for fiscal year 2018.

POWER is a congressionally funded initiative that targets federal resources to help coal-impacted communities and regions by cultivating economic diversity, enhancing job training and re-employment opportunities, creating jobs in existing or new industries, and attracting new sources of investment.

The focus of ARC’s POWER Initiative for fiscal year 2018 will remain on investments that are regional, strategic and transformational and that maximize the economic revitalization of coal-impacted communities and regions, officials said.

Priority areas for ARC investments for this initiative include developing a competitive workforce, enhancing access to and use of broadband services, fostering entrepreneurial activities and developing industry clusters, and align with ARC’s Strategic Investment Goals.

To date, ARC has awarded $94 million through the POWER Initiative to help coal-impacted communities in 250 Appalachian counties diversify and grow their economies.

These 114 investments are projected to create or retain almost 8,800 jobs, leverage an additional $210 million in investment, and prepare thousands of workers and students with globally competitive skills and opportunities in the region’s manufacturing, technology, entrepreneurship, agriculture and other emerging sectors, ARC officials said.

A new research series from ARC, “An Economic Analysis of the Appalachian Coal Industry Ecosystem,” emphasizes the need for diversified investment in coal-impacted communities.

The reports examine major trends in the region’s coal economy over the past decade and explore some of the current and potential impacts these shifts can have on five elements of the coal ecosystem: production and employment, supply chain industries, rail transportation, electric power generation and human capital.

The research – presented in five reports – is the first comprehensive assessment of current and potential effects the changing coal industry can have on the Appalachian region. It explores some of the current and future economic effects of declining coal production on various components of Appalachia’s CIE, including supply chain industries, electric power generation and transportation, as well as funding implications for K-12 education.

The findings of the reports suggest that as effects from declining coal production ripple through the components of the CIE, the impacts will extend far beyond the communities where coal is produced – touching communities throughout Appalachia.

“This research illustrates, with hard data, what many Appalachians in coal communities already know – coal miners, transportation systems and community resources all take an economic hit when the region’s coal economy changes,” said ARC federal co-chairman Earl F. Gohl. “This study can help provide the foundation for identifying opportunities and strategies for building a more resilient regional economy.”

The five reports in this study include an “Overview of the Coal Economy in Appalachia.” It notes that coal production in the Appalachian region fell nearly 45 percent between 2005 and 2015, more than double the rate of the national decline during the same period.

“This report outlines how regional coal production losses intersect with regional data on employment and unemployment, population and labor force, income and poverty, and education and health in Appalachia’s sub-regions,” Gohl said.

County-level CIE Supply Chain Analysis examines the impact of the decline in coal production on supply chain industries at the county level across Appalachia. This report offers and uses a typology to classify counties based on their dependence on the CIE, recent employment changes due to reduced coal production and their risk for further impacts due to any future declines in the coal industry.

Transportation Implications of Coal describes the direct economic relationship between the coal and railroad industries in Appalachia. The report finds that between 2015 and 2016, changing electric generation strategies – including accelerated coal-powered plant retirements – combined with a downturn in coal demand contributed to losses of nearly 2,000 full-time jobs and $150 million in income across Appalachia’s railroad sector.

The Economic Impacts and Risks Associated with Electric Power Generation in Appalachia provides a detailed examination of the economic impacts of changes in electric power generation in Appalachia between 2005 and 2015. It finds that while coal represented around 74 percent of total electric generation in Appalachia in 2005, that percentage dropped to 53 percent in 2015.

However, despite this decline, Appalachia remains more dependent on coal for electricity generation when compared with the rest of the country. This report also offers a risk factor analysis for coal-fired generation retirements and re-powerings, and notes that coal prices have little influence on coal-fired power plant retirement decisions.

Human Capital and the CIE explores two economic issues in Appalachia: future employment prospects for coal workers and changes in funding for K-12 education.

The first part of the report identifies occupations that may be affected by losses in the coal industry ecosystem and offers state-by-state analyses comparing these impacted occupations to similar occupations in other industries. These analyses suggest other industries where former coal industry workers might find alternative employment opportunities.

The second part of the report discusses how the changing coal economy may be impacting public funding for K-12 education at the state and local levels. It finds declines in both per-pupil spending and K-12 enrollment in many of Appalachia’s counties that are dependent on the coal industry.

This research was conducted by West Virginia University and the University of Tennessee with funding from the ARC through the POWER Initiative.

“This project is among the widest-ranging assessments of the coal industry ecosystem in Appalachia,” said Randall Jackson, director of the project and of the Regional Research Institute at West Virginia University. “This research focuses on how the coal economy has played out in our region, including its direct contributions, its supply chain relations with other industries such as transportation and energy generation, its implications for future industrial development, and the wide-ranging impacts on education and human capital. It offers a valuable foundation for addressing many of the challenges facing Appalachia in the coming years.”

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