Coal Industry Stabilizing Around Region
Coal production dropped in recent years as coal-fired power providers worked to comply with new federal regulations, but Ohio Coal Association President Mike Cope believes there are a number of positive takeaways as the industry moves into 2021.
“We have stabilized in Ohio. There was a period (of uncertainty), especially (when) American Electric Power was divesting itself of coal power plants. They had been one of the biggest users of coal in Ohio — I think across the country,” Cope said, explaining how the number of coal-fired electric generating facilities across the Buckeye State has “rapidly” decreased in recent years.
“But that has at least taken a breath now,” Cope commented. “One of the things that we are doing legislatively — we are exploring working with a member of the General Assembly in the (Ohio) Senate to introduce legislation to require whoever owns a plant … to put them up for sale before they close them. So we’re working on that. That’s just a fairness issue to us.”
Cope said in many cases coal-fired power plants have closed prior to reaching the end of their full “useful lifetime.”
Cope said there are cases where companies have come into Ohio and purchased power plants, believing they can operate them at a profit. He said the Cardinal Plant near Brilliant, where two of the three units are owned by electric cooperative companies, is a good example.
“Electric co-ops themselves are still heavily using coal — so they’re a primary example of where, if a co-op can make it work, then we think it can be commercially viable for other corporations,” Cope said.
“So it (the coal industry around Ohio) has stabilized and we made some progress with nuisance environmental regulations,” Cope continued. “The Trump administration relaxed some of those things. But really the major issue for coal in Ohio and the United States is the cost per ton. It’s too low, and we’ve had a difficult time competing against the really cheap natural gas, which of course in Eastern Ohio is really abundant.”
However, he is quick to point out that with the supply of natural gas currently going down, the demand will go up — and the price will go up.
“If the price goes up, then that takes some pressure off of coal and makes it more economically feasible,” Cole explained. “So those are some of the things that are on the horizon. We’ll just have to see how it plays out.”
Following a year when U.S. coal production fell by 168 million short tons (24%) in 2020 due to less demand for coal amid low gas prices last year, the U.S. Energy Information Administration expects overall coal production to rise in 2021 due to an increasing demand for coal in the electric power sector as natural gas prices are expected to increase, according to the agency’s website.
Cole said the industry as a whole did not have to close down since the onset of the pandemic, as the industry was designated as a necessary industry.
“So, we didn’t have to shutter like when they closed down some of the restaurants. … As far as (coal mine) shutdowns in Ohio, we haven’t had any,” Cole added.