Deregulation won’t save coal: market forces — not regulations — killed it, which is why Wyoming must diversify its economy, a visiting speaker told an audience Friday at the University of Wyoming.

Trevor Houser, a partner and researcher at the Rhodium Group, presented his research on the future of the U.S. coal industry to a group of students, professors and community members during an event in the Energy Innovation Center. Behind him, slide after slide displayed the decline of coal generation and consumption in the U.S.

Rhodium Group conducts economic research with a focus on China and India, how those countries affect international energy markets and the effects of policy decisions and climate change on those markets.

Houser came to UW to preview results from a research project conducted in partnership with Columbia University’s Center on Global Energy Policy.

Houser said the coal industry has been hurt by the rising preference and demand for alternative energy sources, such as nuclear, renewable and natural gas.

“Natural gas has played the largest exclusive role,” he said.

Throughout the timeframe of this decline, the Obama administration implemented or proposed a number of environmental regulations aimed at reducing carbon dioxide emissions. In theory, these regulations make coal costlier to produce and therefore less able to compete with natural gas or other energy sources.

But Houser’s research found damage wrought by these regulations on the coal industry were a drop in the bucket compared to damage done by market forces.

“Our estimate is that, at most, those regulations reduced coal consumption by about 4 percent,” he said.

“So, we’ve had a 30 percent decline, maybe 4 percent of that was due (to regulations.”

Marco Polo, a graduate student in international studies major, said Friday’s discussion of market forces gave him a new perspective.

“It was very useful because it opened my eyes to the more economic side of it and the supply and demand issue with coal,” he said.

According to Houser’s research, Wyoming’s troubles actually stem from China’s rapid decline in demand in the past several years. Between 2002-2011, the U.S. coal industry received a boost from rapid urbanization in China — a change that made China very energy-intensive as it sought to construct buildings and infrastructure. Now that this period of rapid urbanization has ended, China is shifting its focus to the service industry, which is much less energy-intensive than construction and infrastructure-building.

This change in demand from overseas importers had a dramatic impact on the domestic coal industry.

“If you add that up and look at the past four years, more than 50 percent of the decline in revenue for U.S. coal producers has been due to non-U.S. factors,” Houser said.

Bleak as his outlook was, Houser said the situation with coal presented an opportunity for Wyoming. He said Wyomingites find it difficult to discuss the future of coal because those discussions are always politically charged. He said any talk of diversification is like waving a “white flag” in the war on coal.

“The war on coal is now officially over,” Houser said. “So, it opens up space for people to have a real conversation about the outlook (for coal) and … sustainable economic development strategy in Wyoming and coal-producing communities around the country.”

Houser added this diversification can only happen if Wyoming acts soon, taking advantage of a presidential administration that emphasizes infrastructure while also encouraging tech and manufacturing firms to set up shop in Wyoming.

“What it requires is a focus on attracting those industries, creating political space to have a conversation about it and trying to get the federal government to be an active partner,” he said.

(7) comments

nickiefromwyo
nickiefromwyo

I wish I could be hopeful about the officials and citizens of Wyoming hearing this and deciding to change direction, but more likely, the economy will have to be burnt to the ground and destroyed before officials and citizens will give up on their entrenched view that "nobody is going to tell us what to do". Only total defeat will force them to make changes.

nickiefromwyo
nickiefromwyo

Wyoming could take a look at Kentucky, where a coal company has recognized that coal does not have a future and is building a solar farm on top of an area of reclaimed coal mine.

clipper
clipper

How many permanent jobs from the solar farm?

Brett Glass
Brett Glass

The speaker is correct. Statements by Wyoming politicians (and also national ones) regarding coal simply ignore science and economics. For those who aren't chemists, here it is in simple terms: Coal is impure (it contains unburnable minerals and radioactive isotopes) and the hydrocarbons in it are unsaturated (in other words, it contains less hydrogen than a partially saturated hydrocarbon such as petroleum or a saturated one such as methane). This means that it generates more CO2, more waste, and less energy. It was the first fossil fuel discovered by mankind, but also the least cost-effective and most polluting. It's a shame that, with the costs of other fuels plummeting, coal is now the fuel of last resort -- but them's the breaks. We in Wyoming must accept the facts. We also do have oil and gas, and should be turning toward these for mineral royalties rather than trying to prop up coal. We should also be diversifying our economy and reforming our tax structure. (Eliminating our sales tax, use tax, and business personal property tax and replacing all three with an income tax, for example, would make our state more friendly to new businesses and make us a shopping Mecca.) Let's get working on some POSITIVE change instead of attempting to command the sun to rise in the west!

waitasec
waitasec

In a state with a total population of just over 500K, I don't know if income tax will make much of a dent. A shopping mecca doesn't seem feasible since brick-and-mortar stores are closing by the thousands. I don't think there is an easy answer to help Wyoming. Raising taxes, tuition, or fees doesn't help if people don't have the money to pay them in the first place. Maybe "sell" the wind and water to other states at a premium? The Laramie drains in to the Platte; the wind farm transmission lines go to the west coast. There's just no quick and easy answer.

Brett Glass
Brett Glass

There are many, many companies which do business in Wyoming and exploit our state in various ways which do not pay their fair share of taxes because we have no income tax. We also have a large number of very wealthy people who do not pay their share. Our tax system is incredibly regressive and penalizes new native businesses while granting established and out-of-state ones a pass. It's time to fix the system. As for sales taxes: Eliminating them will draw shoppers from Colorado, Nebraska, Utah, and Montana (if it's foolish enough to impose a sales tax, as some of its legislators have suggested). It'd be a great boost for our economy.

clipper
clipper

Who gets to decide what everyone's "fair share" is?

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