CHEYENNE, Wyo. (AP) — A new economic study says pending federal regulations to limit carbon emissions from existing coal-fired power plants threaten to hit Wyoming's coal industry hard in coming years.
The Wyoming Infrastructure Authority on Thursday released a study prepared by the University of Wyoming that predicts the federal regulations could force a decline of up to 45 percent in Powder River Basin coal production by 2030.
Wyoming is the nation's leading coal-producing state. It's among several states pressing a federal lawsuit challenging the U.S. Environmental Protection Agency's proposal to require existing power plants to cut carbon emissions by 30 percent by 2030. The case is set for arguments next month in Washington, D.C.
Wyoming Gov. Matt Mead wrote to EPA Administrator Gina McCarthy in December saying that the EPA proposal would cut the demand for coal and drive up costs by requiring more electricity production from natural gas and other sources.
"Wyoming supplies 40 percent of the coal used in the United States — distributed to some 30 states annually," Mead wrote. "The mining industry employs — directly and indirectly — thousands of people in Wyoming."
The UW study says Wyoming would benefit from opening coal exports to Asia. Wyoming has been unsuccessful so far in efforts to access ports in the Northwest for coal exports. The prospect of trains hauling coal through Oregon or Washington to ports there has prompted stiff opposition from environmental groups and state regulators so far.
Mead this month signed into law a bill that gives the infrastructure authority the power to issue up to $1 billion in bonds to finance the construction of coal ports. Loyd Drain, executive director of the authority, said this week that the state is waiting for environmental review of proposed coal-port projects.
Drain said Thursday that he expects the EPA to issue its final rule regarding carbon limits on existing power plants this summer. The new economic study is the first of its kind to evaluate Wyoming's coal industry in over 20 years, he said.
"It's timely relative to new regulations as Wyoming looks to the impact of these new rules that are coming out in the summer," Drain said. It should help shape the direction and emphasis the state needs to place on coal initiatives, such as exports, he said.
According to the report, coal production in Wyoming has fallen by 17 percent since 2008 as result of factors including falling natural gas prices, slow national economic growth and increasing production of renewable energy. In 2008, the state produced a record 466 million tons.
Total state revenue from coal mining is $1.3 billion a year, or just over 11 percent of all government revenues in the state, based on 2012 figures, the report states.
The report analyzes a variety of environmental-regulation scenarios including the prospect of a carbon tax on coal production. It estimates that coal production in the state could drop from 20 percent to 45 percent and that state tax revenues could drop by up to 46 percent. Under the worst-case scenario, it states that one in 10 jobs in the Powder River Basin could be lost.
Exporting 100 million tons a year of coal to overseas markets would mean a $1.2 billion increase in the gross state product and spell an increase of 4,000 jobs at an annual total income of $345 million a year, the report estimates.