Questions burn for Northwest Colorado coal industry with new federal leadership
New administration offers glimmer of hope while federal review signals increased regulation
January 13, 2017
Craig — The future of Colorado's coal industry is in flux as political power shifts right nationwide. After years of hard knocks, coal mining communities received a rare piece of good news this week when Gov. John Hickenlooper announced he would not move forward with an executive order to drastically reduce carbon emissions statewide.
However, this week also brought forth a report from the U.S. Department of the Interior on the federal coal program signaling possible hikes in federal royalties, new carbon mitigation requirements and more stringent environmental protections.
All this less than a week from the inauguration of President-elect Donald Trump — who has vowed to protect coal miners' jobs — and the future of the industry is looking tentatively more hopeful, if still uncertain.
The politics of coal
Northwest Colorado's coal mines have been caught in the political crossfire for several years now, from WildEarth Guardians' 2015 lawsuit against the federal government regarding Colowyo Mine to attempts from both the state and federal government to cut back on carbon emissions.
In a meeting with reporters Tuesday, Hickenlooper explained that his decision to abandon the proposed executive order limiting carbon emissions was due to heavy pushback from Republicans, according to the Associated Press.
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"I think the response — the pushback — from the executive order was so intense that the potential benefits were outweighed by the collateral damage," Hickenlooper said, as reported by AP. "That being said, I continue to hold it up as a vision."
The governor shared a draft of the executive order with the public in August, which very much mirrored the proposal set forth in the Environmental Protection Agency's controversial Clean Power Plan. The order would've required a 35 percent reduction in carbon emissions from power producers by 2030 compared to 2012 levels.
"It was the right choice to not go forward with that," said Lee Boughey, senior manager of communications and public affairs for Tri-State Generation and Transmission Association, Inc. "As we consider how carbon is addressed, there's a wide range of issues that need to be considered."
Tri-State owns Unit 1 at Craig Station — with partial ownership in Units 2 and 3 — and Colowyo Coal Mine, the power plant's main supplier. The company is Moffat County's No. 1 employer. It recently invested $5 million in a research facility to develop technologies for carbon capture.
Despite the absence of a state mandate, conservation groups are continuing their efforts to push for clean energy.
"All the politics in the world can't change the reality that climate change is real and that we are making climate progress," said WildEarth Guardians Climate and Energy Program Director Jeremy Nichols. "On the business side of things, coal companies are recognizing there are immense liabilities with burning coal and now is the time to start thinking of an exit strategy."
Will Trump dump the Clean Power Plan?
As Colorado's governor pursues other means of reducing carbon emissions, the EPA's Clean Power Plan remains stalled in the court system. Twenty-four states joined forces to sue the federal government in 2015 after the plan was announced, and court cases have since rendered a ruling that the EPA must account for job losses associated with new regulatory measures.
What will happen with the Clean Power Plan under the Trump administration remains to be seen, however his pro-coal rhetoric during the campaign has many in the industry feeling hopeful for the first time in years.
"As far as what the ultimate resolution will be, we have no idea what to expect," said Trapper Mine President and General Manager Jim Mattern. "But the things (Trump) said on the campaign trail certainly make me more hopeful for our industry."
The Clean Power Plan, put forth by the Obama administration, sought to cut coal-fired power plants' carbon emissions by 32 percent by 2030 compared to 2005 levels. Tri-State was among those to challenge the rule.
"We maintain our position that the EPA should withdraw the Clean Power Plan, which we believe is unlawful and unworkable," Boughey said in a statement. However, he added, "it is still much too early to make any assumptions regarding changes to the regulations that affect utilities" because of the change in administration.
Though conservationists are aware of Trump's forthright rhetoric on the Clean Power Plan — he wants to get rid of it — they're not daunted in their pursuit of clean energy.
"I'm really skeptical that it's going to lead to some kind of resurgence in the (coal) industry," Nichols said. "They're never going to bounce back to what they were. Transitions are happening that utility companies cannot just reverse."
Federal coal's modernization may equal more regulation, cost
Despite the massive ideological shift that's about to take place at the White House, the gears were set in motion a year ago by Interior Secretary Sally Jewell to carry out a head-to-toe review of the nation's coal program.
The scoping report released this week drew from hundreds of thousands of comments from various stakeholders. It concludes that modernization of the federal coal program is in fact warranted, given the program hasn't been reviewed since the mid-1980s.
"While energy markets, communities, environmental conditions, and national priorities have changed dramatically, the program has remained fairly static in its administration over the last thirty years," the report said.
The federal coal program details stipulations for leasing coal on federal land. Northwest Colorado's coal industry hasn't yet been directly impacted by the review process, which imposed a moratorium on new federal coal leases until the review is complete.
Colowyo has been able to continue the permitting process for the Collum expansion, and already holds six federal coal leases. The Collum project is currently awaiting a signature from a federal agent at the DOI before it can move forward.
Trapper Mine currently holds two active federal coal leases and two that have been mined out. Mattern expects the coal reserves under current leases to last at least another 10 years.
But once the review is complete, changes to the program could affect the mines. Among the main reforms the report considers are:
• Increasing royalty rates to ensure Americans are getting a fair return on the leasing of federal lands for coal mining;
• Accounting for greenhouse gas emissions through additional royalties, mitigation or other incentives for coal companies;
• Improving protections for public health and environment
• Increasing the efficiency of the leasing process.
Mattern disagrees with the proposition that current royalty rates are outdated.
"I think that the coal industry pays its fair share on federal coal," he said. "I think people in the U.S. are getting a good value, at least for what Trapper's paying on our federal royalties."
Likewise, Tri-State opposes any changes that would increase costs.
"As a cooperative, an increase in our electricity generation fuel costs are passed to our members and ultimately to rural electricity consumers," Boughey said in an email.
The review will culminate in draft and final programmatic environmental impact statements expected to be complete by early 2019.
As for what the new Trump administration will mean for Northwest Colorado's coal industry, much remains to be seen.