By Camille Erickson

February 14, 2021 - Wyoming’s coal industry has seen better days.

In a span of less than three months, two Powder River Basin coal mines announced plans to close due to worsening market conditions. Coal production in last year’s final quarter dropped 22% across the basin. Meanwhile, a steady stream of layoffs have continued unabated.

Wyoming leaders blasted the Biden administration when it issued an executive order instituting an indefinite moratorium on new federal oil and natural gas leases. But in many ways, coal came out largely unscathed from the surge of orders signed by President Joe Biden in the first weeks of his presidency. For one, Biden’s Jan. 27 order did not include a pause on new coal leases as many had expected.

But miners here in the nation’s top coal-producing state aren’t resting easy. Many say the worst is yet to come.

“We were a little surprised that there was no coal moratorium coming out in the first executive orders,” said Travis Deti, executive director of the Wyoming Mining Association. “But we’re still watching that very closely.”

A lot still remains unknown. More executive orders, regulatory rule changes or climate change legislation could follow. Plus, Biden’s executive order calls for a “carbon pollution-free electricity sector no later than 2035.”

But market conditions are weighing on coal more than any federal policy, according to energy experts. Coal fell out of the running in electrical markets long before a blue wave swept Washington or the COVID-19 pandemic constricted demand. And the coal sector will more than likely continue shrinking, regardless of who is in office.

It’s mostly a matter of how quickly.

“The bottom line is coal is declining,” said Robert Godby, an energy economics professor at the University of Wyoming. “It’s just more of the same story. Absent some reason to use it, or absent some major change in the market, coal will just continue to face headwinds. As the renewable market expands, it becomes more challenging for natural gas, and coal is on the short end.”

Even with the structural downturn, coal mining in Wyoming won’t suddenly stop tomorrow. But the burning question facing Wyoming communities is when and how to adapt to a new normal.

What Will Happen to the PRB?

In the past decade, coal production volumes in Wyoming have been slashed roughly in half. About 40% fewer miners are employed in Wyoming than 10 years ago. During the final quarter of last year, 13 of the 16 mines in the Powder River Basin, or PRB, saw year-over-year production declines.

Utilities across the country have been faithful customers of the PRB’s low-sulfur, inexpensive thermal coal for years. But they’ve gradually been pulled to cheaper natural gas and renewable energy.

Natural gas, wind, solar and coal can all be used to produce electricity. Utilities tend to favor the commodity that is cheaper. On top of that, demand for electricity nationwide hasn’t increased much, at least since the 2008 financial crisis. Then there’s mounting public concern over climate change squeezing fossil fuels out of the market.

These factors have led to a domino of coal-fired power plants closures in recent years. In just the past five years, about 48 gigawatts of coal-fired electric generating capacity have been retired nationwide, according to the Energy Information Administration, a nonpartisan data center. To put that into perspective, one gigawatt of energy is equivalent to over 400 utility-scale wind turbines.

Of the roughly 220 gigawatts of coal plant capacity remaining, at least 64 gigawatts will be retired by 2030, according to analysis by the Institute of Energy Economics and Financial Analysis, a think tank focused on a transition to sustainable energy.

Fewer coal plant customers has led to overcapacity in the PRB. In other words: too much coal and not enough plants to ship it to.

Many coal companies attempted to be nimble, scaling back production and thinning crews. But the costs of keeping the massive coal mines open have added up.

The Energy Information Administration released a report on Tuesday forecasting small increases in coal production over the next few years, due to higher natural gas prices and a resurgence in demand. But that bump in coal consumption won’t necessarily last long.

Research conducted by the investment firm Morgan Stanley, and reported by E&E News last week, went so far as to predict thermal coal generation will no longer be used to make electricity in the U.S. as soon as 2033.

Godby, the UW economist, is skeptical coal would be stripped from the grid as quickly as the Morgan Stanley report predicts. Nonetheless, the results do offer an ominous warning for Wyoming, he said.

“I think what it does is highlight that the market never gets better for coal,” Godby said of the report. “The challenges for coal just seem to mount as renewable energy becomes cheaper and cheaper, as motivations to expand renewable energy become stronger and stronger, and as people are more concerned about climate change or minimizing costs to ratepayers.”

Emily Grubert, a civil engineer and professor studying the power sector at Georgia Tech, also thinks coal’s decline in the PRB may be a bit more complicated and take a bit more time.

For one, some of the coal-fired power plants purchasing PRB coal survived the first big wave of coal plant closures. Though she predicts more coal plants shuttering in the near term, a number of units buying PRB coal have already installed equipment to meet emission requirements and could last longer than super emitters or older plants.

“I think we may see some durability — not anywhere near what we’ve had in the past — but there may actually be some continued demand for PRB coal a little bit longer than is obvious here,” she said.

Nonetheless, the Biden administration’s declaration to accelerate the nation’s shift to a carbon-free power sector sets a dramatically new tone from the previous administration.

That outlook has consequences, according to Seth Feaster, an energy data analyst at the Institute for Energy Economics and Financial Analysis.

The “administration may be setting a tone and providing incentives to push out, probably, coal first and natural gas second,” Feaster said. “They will be less friendly to fossil fuels and utilities might take that and accelerate their own plans, which they have already been doing. Policy aside, the economics of running coal plants in the country are very challenging at best.”

What About Jobs?

Biden campaigned on a promise to create new jobs under his clean energy plan and not leave communities tied to coal and other fossil fuels behind.

Just before signing his Jan. 27 executive orders on climate change, Biden emphasized he had a plan to support towns and states most directly affected by the proposed energy transition.

“It’s not time for small measures,” Biden said then. “So let me be clear, that includes helping revitalize the economies of coal, oil and gas, and power plant communities. We have to start recruiting new, good-paying jobs, capping those abandoned wells, reclaiming mines.”

“We’re never going to forget the men and women who dug the coal and built the nation,” he added. “We’re going to do right by them and make sure they have opportunities to keep building the nation in their own communities and get paid well for it.”

Biden’s oil and gas leasing moratorium was one part of a suite of executive actions all aimed at combating climate change and putting the U.S. on a path to eliminate carbon pollution from its power sector by 2035 and achieve a net-zero economy by 2050.

But the order also included the formation of an interagency working group tasked with investing in communities relying on coal, oil and natural gas as the country transitions to carbon-free power sources.

But to some here, the gesture fell flat.

Deti, of the Wyoming Mining Association, said the administration may have good intentions, but it wasn’t enough.

“These guys are miners, it’s what they’ve done all their lives, and to simply suggest waving a magic wand and going to build solar panels or learning to code is patronizing and insulting,” he said. “For the person that has to go to work every day, pay a mortgage and put food on the table for the family, it’s empty.”
What should the state do?

Some coal miners and members of fossil fuel towns have held out hope, though.

The Just Transition Fund, a national organization working to secure an equitable future for resource-dependent communities cheered the Biden administration’s decision to create an interagency workgroup.

In a recent letter to the administration, the group outlined a series of demands for how the president and his cabinet could support coal-dependent communities. It called for the administration to establish an office of coal community economic transition and funnel federal dollars to the places hit hardest.

“The workers and communities that fueled our country for generations must be a central part of the new, clean economy,” the group said.

To Feaster, the energy data analyst at the Institute for Energy Economics and Financial Analysis, the time for Wyoming to prepare for the long-term downturn in coal is now.

“The PRB has a fairly big window in order to really prepare for this,” he said. “Coal is not going to be gone overnight. But the process is already in place.”

The small uptick in coal production this year could be a crucial time to listen to the warning signs — like the recent closure announcements of the Decker and Coal Creek coal mines — and dramatically ramp up economic diversification efforts, he said.

Instead of expending limited resources and time on resisting these imminent coal retirements, like local governments and industry in New Mexico did with the Navajo Generating Station, Feaster recommended Wyoming identify ways to mitigate the economic hardship.

“If I were to advise people in the state of Wyoming,” Feaster said, “they need to take advantage of these moments when there is a little bit of stability, even if it is short term, in order to start preparing for the future when the taxes are still rolling in, because the next downturn is likely going to bring significantly more pain.”

Grubert, the Georgia Tech civil engineer and professor, offered a similar recommendation: prepare now to avoid harsh economic consequences down the road.

“Historically, the way this transision has gone so far is people just get fired one morning,” Grubert said. “That is clearly untenable. You have a situation that is going to be hard, and not going to be preferred by a lot of people, and for good reason.”

“But having five, 10 or 15 years to think about it,” she continued, “rather than being at a whim of a (coal company) bankruptcy in the morning, is really important.”