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Wyoming Gov. Mark Gordon and Robert Godby, a University of Wyoming associate professor in the College of Business Department of Economics and Finance, visit at the Wyoming Infrastructure Authority spring conference March 28. Godby predicts current forecasts anticipating declining demand for coal are only going to get worse. Mark Wilcox photo

JACKSON – With steady waves of coal-fired plant shutdowns expected over the coming decades, the “war on coal” may already be won. But some Wyoming officials are saying it’s just the first fossil fuel domino to topple, which could leave Wyoming in a bind due to its energy-driven economy.

Coal has long been a dominant player in Wyoming’s economy. Between 1912 and 2018, Wyoming mined 11.8 billion tons of coal. In recent years, coal produced about 40% of the nation’s power, and Wyoming produced about 40% of the nation’s coal.

That means about 16% of all U.S. electricity is sourced from Wyoming coal. Suffice it to say that’s a lot of electricity.

Or carbon dioxide.

Or state revenue, in Wyoming’s case.

The high cost for Wyoming

Just in 2017, the most recent figures available through the Wyoming Mining Association, the state raked in an estimated $900 million in taxes, royalties and fees from coal extraction.

But that’s down more than 30 percent from highs of more than $1.3 billion in 2012. That represented 11.2% of all revenue brought in by the state that year. And until then, it had been on a steady rise along with coal production, which topped out in 2008.

That was arguably the year the so-called “war on coal” began as the Obama administration stepped up to the plate. Coal supporters have long derided the Clean Power Plan enacted by the Obama administration as an overreach targeting the coal industry.

In Wyoming specifically, the plan called for carbon emission cutbacks of 44% by 2030, well over double the 19% called for in the draft plan. And Wyoming leadership, at least, thought the plan was flawed scientifically.

“We do not believe EPA has the authority for this rule,” then-Gov. Matt Mead said at the time. “The fact that the agency more than doubled the damage to Wyoming in the final rule shows arbitrary and capricious action.”

But supporters came out of the woodwork for the Clean Power Plan. The Union of Concerned Scientists said the act gathered a record number of supportive comments when first proposed. The union is now fighting the Trump administration’s attempt to repeal the act. But even a successful repeal would probably be too little, too late for Wyoming’s coal industry.

Bankruptcies and shutdowns

Coal mining companies are filing for bankruptcy, with the most recent giant to topple being Westmoreland Coal Co., which owns the Kemmerer Mine.

Demand for coal has subsided as electricity markets braced for the impact of the Clean Power Plan, and what many claim is societal consensus that coal should stay in the ground, rather than airborne as post-generation carbon dioxide.

In fact, some utilities are running from coal faster than the up-in-the-air Clean Power Plan even requires.

“The energy industry is going to blow right past the Clean Power Plan,” DTE Energy CEO Gerry Anderson said in a news conference in March. The Midwest utility was announcing a plan to slash carbon emissions by 80% before 2040. In other words, utilities are planning as if their coal fleet needs to retire, even if legal battles make their actual fate uncertain.

According to Robert Godby, a University of Wyoming associate professor in the College of Business Department of Economics and Finance, 96 coal-fired generators are scheduled for retirement by 2025. About 1 in 3 of those plants uses Wyoming coal, meaning at least another 5.5% decline for Wyoming coal production.

And that’s not likely to be the end, he said. New generator retirements have been announced every two weeks since 2016.

“We do need to plan for this,” he said. “The likelihood is that current forecasts will get worse.”

But the inconvenient truth for energy-driven Wyoming is that coal industry problems may only be a shadow of things to come for fossil fuels.

Pre-emptive shift

If “King Coal” is completely overthrown, he’ll likely abdicate to the natural gas industry. That industry is buoyed by advances in hydraulic fracturing, or fracking, and a cleaner overall image than coal.

But oil and gas companies see the writing on the wall. Writing that says “Emissions = bad” in increasingly bold letters.

More and more oil companies are stepping forward to declare a carbon-neutral future that could completely undermine the way they currently do business.

Royal Dutch Shell, one of the largest oil companies in the world, announced in March that it would aggressively move into electricity production to become the largest utility within 15 years. That will take a $2 billion investment annually, according to Bloomberg.

“A key challenge to the company’s plan to become the world’s biggest power company is the fact that Shell has pledged to cut its carbon footprint in half by 2050,” Bloomberg stated in a news article. “This means most of the capacity it adds to its portfolio must come from wind and solar power.”

Translation? That writing on the wall is getting more legible, even though the Trump administration is trying to backtrack politically. Or, “Electricity can be more readily decarbonized,” said Kipp Coddington, director of energy policy and economics at the University of Wyoming’s School of Energy Resources.

He added that Shell isn’t the only company bracing for a future that seems to be slanting away from fossil fuels.

General Motors, Google and other big-name companies recently announced a venture making it easier for such businesses to pipe clean energy into their systems. Ford just invested $500 million in electric truck startup Rivian. BP has resolved to fall in line with the goals behind the controversial Paris Agreement on climate change.

The list goes on.

The wars to come …

And that leaves Wyoming in a bit of a tight spot. If the state can lose $400 million in annual coal revenues after only five years of decline, what could happen if the other pins holding the fossil-fuel industry together self-destruct just as dramatically?

“We still have coal issues here in Wyoming, but there’s now another battlefront,” Coddington said in addressing the Wyoming Infrastructure Authority’s spring conference in Jackson. He said people are no longer looking to 2050 to decarbonize, but to 2030, meaning that “people cannot move fast enough” away from fossil fuels.

“That’s the picture internationally,” he said.

Even the comparatively pro-fossil fuel Trump administration sees the picture. Coddington said the administration is trying to “slightly modify” some coal-fired standards, but has not said “we’re not doing any of this [climate change stuff].”

“Despite what you read in the news, the Trump administration is maintaining the legal underpinnings of the climate regulatory regime,” Coddington said. Rule loosening aside, the framework is unlikely to change significantly, he said.

The fossil fuel bridge

He called the use of fossil fuels like oil and gas for electricity merely a bridge to decarbonization, a bridge that’s shortening every day.

“I believe that the climate federal train is about ready to leave the station,” Coddington said, hinting at a change in administration. “It will leave in 18 months, and it may be the last train. Market dynamics are somewhat overtaken by what policymakers want to do.”

And that means Wyoming could move from boom-bust cycles to long-term bust – unless it prepares.

“I think natural gas is where coal was 20 years ago,” Coddington said, indicating a need to fight for coal and technologies like carbon capture and sequestration that would make coal generation carbon neutral. “But we need to recognize a second battlefront – California is trying to back natural gas out of the power market [with renewable energy storage].”

For Wyoming to stay viable with its fossil fuel market, Coddington said the state needs to start lobbying in other states while chasing the technologies that can make fossil fuels more environmentally friendly.

“Wyoming needs to be looking at other state’s bills to make sure acts of legislation include low-carbon fossil fuels,” he said, indicating the current push is simply part of a continually evolving energy transition.

“I don’t think it’s scary,” Coddington said. “I don’t think the world’s going to change tomorrow or three years from now. But it behooves everyone in Wyoming to have a plain, unvarnished view of what’s going on around us.”

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