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How New EPA Regulations Could Affect Indiana’s Mining Towns

Residents in Southwest Indiana worry new EPA regulations could cause major job loss in the area, although economists say it's too soon to tell.

Barn with coal mine

Photo: Gretchen Frazee

A barn sits on a farm just south of a surface mine in Pike County. The Cardinal Mine has already been mined for years, but new technology is helping companies reach coal they previously thought was unattainable.

Southwest Indiana is dotted with small towns where front yards are decorated with American flags and yard signs that read “Proud Union Home” and “Count On Coal.”

Nearly everyone here is associated with the coal mining industry or at least knows someone who is.

That’s why residents are trying to prepare for what they say will be a major blow to their economy if the regulations the Environmental Protection Agency proposed last month go into effect.

The EPA proposal, which is in the middle of a public comment period, would cut carbon emissions nationally 30 percent by 2030. In Indiana that would mean a 20 percent drop in emissions within the next 15 years.

The $64 Billion Question

Just south of Petersburg, Ind., employees at Solar Sources Underground are loading thousands of pounds of coal onto train cars.

The company is a middle man in the coal industry. Each day, it’s four full-time workers load coal from the nearby mines onto trains, where it’s then shipped off to nearby power plants.

Every year, they load more than 2 million tons of coal, but that’s less than half the amount they could be shipping.

“Solar sources has infrastructure in place that we could mine between 5 million and 5.2 million tons of coal a year if the contracts were there,” Solar Sources Underground Vice President John Stachura says as he stands in front of piles of dark black coal stacked several stories high.

Solar Sources Underground also has a permit to mine the land just west of this facility, but the land is sitting untouched. Stachura says they aren’t mining for the same reason they aren’t shipping out more coal–there isn’t enough demand.

And Stachura blames that on the EPA.

“We’re becoming a regulation nation,” he says. “At one time coal mining was fun. It’s not so much fun anymore.”

Stachura says forcing power plants to reduce the amount of coal they burn has a domino effect.

“They get cut back, we get cut back,” he says, adding that his company employs outside contractors who would also be impacted if he had to reduce his budget.

Most of the companies in this area are larger than Solar Sources Underground. Duke Energy and Indianapolis Power and Light own nearby power plants, and corporations like Peabody Energy run the mines.

Those companies employ thousands of workers in the nine counties in Southwest Indiana where coal deposits have been mined.

“In this [Knox] county, mining is the second highest paying job category that we have, second only to utilities, which the coals supplies most of the power source for those utility companies,” says Knox County Economic Development Corporation President Gary Gentry. “It’s integral to our economy.”

Gentry says he understands there could be benefits to the climate and air quality if the EPA regulations go into effect, but he worries about the impact on utility costs and jobs.

What will that economic impact be?

“That’s the $64,000 question or maybe the $64 billion question,” says Indiana Business Research Center Economic Analyst Timothy Slaper. “Because I don’t think anybody really knows.”

But Slaper says the EPA regulations aren’t the only thing impacting the coal market. Free-market factors such as the cost of natural gas also play a major role.

Take a look at this chart below. Natural gas prices have plummeted in recent years as fracking is opening up a large supply of gas. In the meantime, coal prices have increased slightly

Gas and coal prices

Photo: Scott Carmichael

This graph shows the percent change in natural gas versus coal prices in the U.S.

Those market conditions means more power plants, including several in Indiana, are switching to natural gas.

“If that is a huge trend, and we have fertilizer plants that are using it as a feed stock, if we plan on exporting it to Japan in ships, suddenly it’s not going to be $4. It’s going to be closer to that break even point when gas isn’t all that expensive compared to coal,” Slaper says.

In the meantime, power plants are still being forced to cut their emissions, and, in the short term, the easiest way to do that is to burn less coal.

While some companies like Solar Sources Underground are looking at shipping more coal overseas to make up the difference, the drop in demand could still have an impact on a large range of workers–from those working in the power plants to the miners who are on or, in some cases, in the ground digging up the coal.

1970s EPA Regulations And The Coal Industry

Aja Mason

Photo: Gretchen Frazee

Retired coal miner Aja Mason points out an old hard hat that's now housed in The Museum of the Coal Mining Industry in Lynnville, Ind.

Retired mining engineer Aja Mason says the coal industry has been here before.

Today, Mason runs The Museum of the Coal Industry in Lynnville, Ind. Forty years ago in 1969, he was just entering the mining industry as a mechanic for the Ennis/Old Ben coal company.

One year later, the EPA was created, and soon after that, the federal government started enforcing new environmental standards on the coal industry.

“I kept hearing companies say we’ve got to mine the coal cheaper, we’ve got to mine the coal cheaper. There would be times when we would have a lot more days off, then it picked up again,” Mason says.

One of the biggest challenges came in the late 1970s, when Congress labeled sulfur dioxide as a pollutant and forced power plants to find a way to remove the sulfur from coal or face closure.

“Environmentalists said we had to clean up the coal stacks and clean up the pollution in the air, and that was a big expense that most of the power plants have done,” Mason says. “They’ve put the scrubbers on the power plant and made the coal feasible to burn. We moved right along and hopefully we will again.”

Energy Companies, Employees Say They Need More Time

ipl power plant

Photo: Gretchen Frazee

Indianapolis Power and Light's Petersburg Generating Station is burns coal from mines in nearby counties. Indianapolis Power and Light is shutting down one of its other coal-fired plants in Martinsville and replacing it with an all-natural gas facility.

Mason says he thinks the coal industry could meet the EPA standards if they were given more time.

Representatives from the Indiana Statewide Association of Rural Electric Cooperatives agree.

“The electric cooperatives are urging the EPA to work with us on these regulations to limit the impact on your electric bill and Indiana’s economy, while finding a common sense solution to leave our children a cleaner planet,” Indiana Statewide Association of Rural Electric Cooperatives spokeswoman Jennifer Ruffato said in an emailed statement.

Environmentalists, however, say the timeline lenient enough.

“The technology exists today. There are off the shelf, energy-efficiency measures that can be implemented today at a very low cost. Wind power is now competitive with both coal and natural gas and solar is fast approaching,” says Kerwin Olson, the Executive Director of Citizens Action Coalition, which advocates for a statewide sustainable energy policy. “We believe the technology is readily available today, and the time frame should even be shortened.”

The EPA is requesting states submit plans by June 2016 on how they are going to meet the reduction goals. However, the EPA is also providing the states with the option to use a two-step process for submitting final plans if more time is needed.

As mentioned, the EPA’s goal for Indiana is that the state will reduce its carbon emissions 20 percent by 2030. It has also set an interim goal of a 16 percent reduction by 2020.

Gretchen Frazee

Gretchen Frazee is a reporter/producer for WFIU and WTIU news. Prior to her current role, Frazee worked as the associate online content coordinator for WFIU/WTIU. She graduated from the University of Missouri-Columbia where she studied multimedia journalism and anthropology. You can follow her on Twitter @gretchenfrazee.

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