By Taylor Kuykendall

The U.S. EPA said its newly proposed rule restricting greenhouse gas emissions at existing power plants, dubbed the Clean Power Plan, will lead to major reductions in coal production and employment.

"EPA projects coal production for use by the power sector, a large component of total coal production, will decline by roughly 25% to 27% in 2020 from base case levels," the rule states. "The use of coal by the power sector will decrease roughly 30% to 32% in 2030."

The EPA's base case analysis represents market conditions without the impacts of the proposed Clean Power Plan. The base case forecast does include impacts of EPA regulations and settlements in place through 2013, including the Mercury and Air Toxics Standards and the Clean Air Interstate Rule, but does not include the impacts of the Cross-State Air Pollution Rule, which the U.S. Supreme Court validated in April.

Under the EPA's modeling, coal production is projected to decrease in 2020 and beyond due to improved efficiency at existing coal plants, demand reduction from demand-side energy and a shift in generation from coal to less carbon-intensive sources. While coal accounted for 42.5% of total U.S. net electricity generation in the first quarter of this year, its share of generation would fall to roughly 30% under the Clean Power Plan.

According to the EPA's regulatory analysis, relative to its base case, about 30 GW to 49 GW of coal-fired capacity is projected to be uneconomic to maintain by 2020 under the range of scenarios the agency analyzed. The EPA projects that depending on the compliance approach, 168 GW to 185 GW of existing coal-fired generation will improve its operating efficiency in order to comply with the new rules.

A recent SNL Energy analysis of coal-fired power plants found that about 27 GW of coal-fired capacity is already scheduled to retire between 2014 and 2022.

The rule predictably has been greeted with disdain by coal advocacy groups and other pro-coal officials, who say the proposal will cause economic loss and drive up electricity costs. Mike Duncan, president and CEO of the American Coalition for Clean Coal Electricity, said the rules would "for all intents and purposes" create an "energy crisis" in America.

"As we predicted, the administration chose political expediency over practical reality as it unveiled energy standards devoid of common sense and flexibility," Duncan said. "These guidelines represent a complete disregard for our country's most vital fuel sources, like American coal, which provides nearly 40% of America's power, reliably and affordably."

National Mining Association President and CEO Hal Quinn also warned that the Clean Power Plan would threaten the affordability of electricity due to restrictions on coal-fired power.

"EPA's previous power plant rules have pushed our nation's electric grid close to the edge of breaking, as we saw this past winter, and this new rule could finally break it," Quinn said. "This is a major gamble that America cannot afford to make."

The largest projected tonnage declines are expected to be in the West, where the EPA said coal production for electric power could fall as much as 34%, to 292 million tons in 2020 compared to the EPA's base case of 446 million tons. Coal from Appalachia could fall as much as 37%, dropping from 140 million tons in the base case to as low as 87 million tons under one scenario. Coal from the Interior region could fall as much as 11% compared to the base case.

The EPA analyzed two options for its new emissions guidelines. The first, Option 1, involves higher deployment of four different approaches to lowering emissions over a longer time frame, and Option 2 provides for a lower deployment over a shorter time frame. The EPA also looked at a state-based compliance approach or a regional-based compliance approach under which groups of states work collaboratively to comply with the guidelines.

The EPA's regulatory impact analysis did not analyze potential impacts on coal production for electric power under Option 2. Under Option 1, the EPA analysis showed that in 2020 overall coal production for electric power would fall 25% to 636 million tons under a regional-based compliance approach and fall 27% to 616 million tons under a state-based compliance approach.

Net jobs gain, but decline for the coal sector

The EPA projects the rule will increase job-years in the electricity, coal and natural gas sectors by 25,900 to 28,000 job-years in 2020 under Option 1 and increase job-years by 26,700 to 29,800 in 2020 under Option 2. Under both options, the state-based compliance approach represented the higher job-year increase.

The EPA measures changes in labor utilization by job-years, which is defined as the equivalent of one full-time individual for one year. The impacts on coal extraction are projected to be between 10,900 and 14,300 job-years in the period between 2016 and 2020, and as high as 18,000 lost job-years in the period between 2026 and 2030 compared to the base case.

According to the EPA's regulatory analysis, in 2013 the U.S. Bureau of Labor Statistics reported 79,000 coal mining employees while the U.S. Mine Health and Safety Administration reported 80,000 coal mining employees and 32,000 contractors. A recent SNL Energy analysis of MSHA data shows that coal mining jobs have plummeted since 2012, dropping to 77,639 employees in the last quarter of 2013, the lowest level since the first quarter of 2009.

The United Mine Workers of America said in a news release that 75,000 "direct coal generation jobs," including jobs in coal mines, power plants and railroads, will be lost in the U.S. by 2020. Those job losses, the UMWA said, are expected to more than double to 152,000 by 2035.

"This is simply a recipe for disaster in America's coalfields, especially the eastern coalfields," UMWA President Cecil Roberts said. "That is where the hammer of this rule will fall the hardest. And it's not just that these jobs will be lost, it's that the ability of companies to continue funding pension and retiree health care benefits will be at great risk."

Roberts said the UMWA does not dispute the science regarding climate change, but does dispute how the government is addressing the issue. He said the jobs the EPA estimates will be created will likely not be in the coalfields, will not have "decent" benefits and will not "pay particularly well."

"Coal miners have been asked for 150 years to provide the means to energize America and make our nation the strongest on earth," Roberts said. "We have always answered that call. We have done what our nation asked of us. But under this rule, our reward is to be kicked to the curb, hopefully out of sight and soon forgotten."

In a statement issued ahead of the release of the rules, Kentucky Coal Association President Bill Bissett said the rule would certainly be "very bad news" in coal states such as Kentucky. He said his organization will be actively working to protect coal despite the work of the EPA and anti-coal activists.

"At a time when the rest of the world is increasing its use of coal in both emerging and traditional economies, we have a president who is going to damage our nation's economy and the reliability of electricity with his pen because he knows that he cannot get such wrongheaded legislation through Congress," Bissett said. "At a time when Kentucky's coal industry is already suffering historic numbers of job losses and a downturn in our production, the president's actions Monday will be one more attempt to destroy our domestic market."

The EPA is aiming to reduce greenhouse gas emissions from existing power plants by 30% from 2005 levels by 2030, with interim goals set for 2020. The EPA estimated net climate and health benefits of $48 billion to $82 billion from the rule.