Testimony of Cecil E. Roberts, President

United Mine Workers of America

Before the

Committee on Environment and Public Works

United States Senate

November 15, 2001

Mr. Chairman and members of the committee:

As president of the nation=s first and foremost energy union, I appreciate the opportunity to participate in the committee=s consideration of legislation to reduce emissions from coal-fired powerplants. The United Mine Workers of America (UMWA) supports additional reductions in sulfur dioxide (SO₂), nitrogen oxides (NO_x) and mercury from coal-fired power plants, provided that the reductions are designed in a way that preserves coal miners jobs. However, we do not support reduction schemes that force or encourage electric utilities to switch away from coal, thereby causing economic harm to coal miners and their communities.

UMWA members mine, process, transport and consume coal in their daily jobs. That=s how most of them put food on the table, pay their bills and build a future for their families. Their economic interests are entwined with energy and environmental issues more than most other workers. The issues being discussed by the committee with regard to S. 556 not only raise the question for them of how much their utility bills may rise as we seek to reduce emissions, but whether they can remain gainfully employed and support their families.

The Role of Coal in America=s Energy Supply

Coal is an indispensable part of America=s energy supply, and the United States is blessed with an abundance of coal. The latest estimates indicate that the U.S. has a demonstrated coal reserve base of over 500 billion tons, with an estimated 275 billion tons of recoverable reserves. At current production rates, this represents about 275 years of recoverable coal reserves. Coal represents about 95% of all U.S. fossil fuel energy reserves. About one-quarter of all the world=s known coal reserves are found in the United States. U.S. recoverable coal reserves have the energy equivalent of about one trillion barrels of oil. That is comparable to all of the world=s known oil reserves.

Coal is used to generate some 56% of our nation=s electricity. To back coal out of our nation=s energy supply mix means that we would have to find some other fuel to replace it, most likely natural gas. Such a fundamental shift in U.S. energy policy brings into question not only the cost, but also the availability of natural gas supplies. We know that we have enough identified, economically recoverable coal reserves to last for hundreds of years. While sufficient domestic supplies of natural gas may be currently available, future availability--and cost--is much less certain than in the case of coal. We believe that substantial increases in demand for natural gas inevitably will lead to higher costs and greater dependence on foreign sources for supply. And we should all be mindful of the five-fold increase in natural gas prices that some of our citizens faced last winter. Environmental policies that drive electric utilities away from coal and toward more natural gas use may well be in conflict with our energy policy goals of maintaining a reliable, low-cost mix of generating sources that can temper the price increase of one particular fuel.

While we are blessed with an abundant supply of coal, we are challenged in its use because of the nation=s concern about the environment. Americans demand a cleaner environment at the same time they demand low-cost, reliable and available energy. For coal to continue to play the vital role that it can--and should--play in our energy mix, we must ensure that coal is consumed with the minimum amount of emissions that technology will allow. This means that we must continue to develop highly advanced technologies to convert coal to a usable form of energy more efficiently and to capture any harmful emissions before they escape into the atmosphere.

How Coal Miners Fared Under the 1990 Clean Air Act Amendments

Before getting to specific comments on S. 556, let me say at the outset that coal miners did not fare well under the Clean Air Act Amendments of 1990. Electric utilities engaged in substantial fuel switching in response to Title IV acid rain controls and UMWA members in the high sulfur coal producing regions in northern Appalachia and the Midwest were displaced by the thousands. Nearly 60% of the SO₂ reductions achieved in Phase I were accomplished through fuel switching and only about 28% were accomplished through installation of scrubbers. This coal switching proved to be devastating to high sulfur coal mining communities. Let me cite just a few examples. In 1990, coal mines in northern West Virginia produced 56.6 million tons and employed 10,053 coal miners. In 2000, production had fallen to 37.6 million tons and employment had declined to 3,712 coal miners, a 33.6% drop in production and a 63.1% drop in employment. In Ohio, coal production was 35.3 million tons in 1990 and the state=s coal mines employed 5,866 mine workers. By 2000, output had declined to 22.3 million tons and employment had dropped to 2,688 mine workers, a 36.8% drop in coal production and 54.2% decline in coal mining jobs. In Illinois, coal production was 60.4 million tons in 1990 and 10,018 coal miners were working. By 2000, production had fallen to 33.4 million tons (a 44.6% reduction) and only 3,454 coal miners were working (a decline of 65.5%). In western Kentucky, 5,586 coal miners produced 44.9 million tons in 1990; by 2000, only 2,510 coal miners were employed (a drop of 55.1%) and production had declined to 25.8 million tons (a drop of 42.6%).

That=s a 78 million ton loss of coal production and over 19,000 lost jobs in those four states alone. Overall, the major eastern coal producing states lost over 113 million tons of coal production from 1990 to 2000 and employment is down by over 30,000 jobs.

Although nationwide coal production was essentially unchanged over the decade, the high sulfur coal regions suffered serious economic harm as a result of the 1990 Amendments. And the sad fact is that the coal producing states that gained output from the utilities= fuel switching did not gain significant numbers of new jobs. Having gone through that experience with the 1990 Amendments, we view with a skeptical eye any legislative proposal that sets emission reduction targets and timetables that surpass our technological capabilities.

S. 556 Would Be Devastating to Coal Miners and Their Communities

We believe that S. 556 falls into that category. Indeed, it appears from government analyses that S. 556 may threaten to disrupt coal mining communities far more than Title IV. Emission reductions called for in the bill would be achieved in large part by utilities switching away from coal, not by installation of control technology. As we understand it, S. 556 would require electric utilities to meet the following emission reduction targets by 2007:

$ Sulfur dioxideB75% reduction from Title IV Phase II levels, a cap of about 2.2 million tons nationwide;

$ Nitrogen oxidesB75% reduction from 1997 levels, a cap of about 1.5 million tons nationwide;

$ MercuryB90% reduction from 1999 levels, a cap of about 5 tons nationwide; and,

$ Carbon dioxideBreduction to 1990 levels, a cap of about 500 million tons nationwide.

We have reviewed economic analyses of S. 556 conducted by the U.S. Energy Information Administration (EIA) and the U.S. Environmental Protection Agency (EPA). These studies find that implementation of the targets and timetables in S. 556 would result in a one-third to one-half reduction of coal use in the electric utility sector. Much of the loss in coal production stems from the bill=s requirement for a 90% reduction in mercury and the 1990 carbon dioxide cap. Technology to control mercury is in various stages of research and development, and is unlikely to be in widespread commercial application by 2007. As a result, utilities faced with a 90% reduction requirement are likely to switch from coal to natural gas. In the case of carbon, there is no current technology to capture and sequester carbon from electric utility emissions. Indeed, the federal government has only recently begun research and development of such technologies. Faced with a requirement to return to 1990 carbon emission levels, utilities are expected to engage in substantial fuel switching away from coal.

Because the mercury and carbon dioxide reductions called for in S. 556 cannot be met with technology, the end result of the bill is to require utilities to switch from coal to natural gas. The U.S. currently produces about 1.1 billion tons of coal annually. In its analysis of S. 556, EIA found that implementation of the reductions would cause the loss of 506 million tons of coal production nationwide from its reference case in 2010, rising to a loss of 657 million tons in 2020. Even if we assume that there would be no growth in coal production in the reference case, S. 556 would mean the loss of 319 million tons by 2010 and 423 million tons by 2020. Such coal market disruptions far exceed the coal switching that resulted from Title IV. In addition, these losses are likely to have a negative economic impact all coal producing states, not just the high sulfur states in the eastern coal fields. For example, EIA projects a loss of 190 million tons in 2010 from eastern coal producing states (from a base of 564 million tons) and a loss of 316 million tons from western states (from a base of 725 million tons). We have attached summary coal production impacts from two EIA studies at the end of this statement.

What would be the economic cost of this loss of coal production? Tens of thousands of coal miners would lose their jobs in areas of the country that have little or no comparable alternative employment. These are the jobs, in fact, that support other jobs in the region. Coal mining jobs, along with the railroad and electric utility jobs that depend on coal mining, tend to be the economic engines of their communities. As these jobs disappear, other jobs that directly or indirectly provide goods and services to the these industries and their workers are affected. Using conservative economic multipliers from the U.S. Commerce Department, we estimate that the loss of 190 million tons of coal in eastern coal producing states in 2010 would mean the loss of $4.7 billion annually in direct coal mining revenue, $9.1 billion per year in lost economic output in all industries, $2.5 billion per year in lost household earnings, and the loss of more than 85,000 jobs in all industries. In the western states, the loss of 316 million tons of coal by 2010 would mean the loss of $2.9 billion annually in direct coal mining revenue, $5.3 billion per year in lost economic output in all industries, $1.4 billion per year in lost household earnings, and the loss of nearly 50,000 jobs in all industries. In addition, over a hundred thousand retired coal miners look to the coal industry for lifetime retiree health benefits that were earned during their working lives. If we wipe out half the coal industry, where are the retirees going to get their health care? Who will finance those life-saving benefits when we have removed $7.6 billion of revenue from the coal industry?

The UMWA believes the burdens that would be placed on coal miners and their communities by S. 556 are unacceptable. They should not be asked to give up their jobs, their health care and their economic futures because of arbitrary deadlines and reduction targets that cannot be reasonably expected to be met with available technological controls. S. 556 would be punitive in the extreme for coal miners and their communities. It should be rejected for more cost-effective reductions that will allow coal to continue its vital role in our energy mix and coal miners to continue their employment.

The UMWA Supports A Three-Pollutant Approach That Preserves Coal Miners= Jobs

The UMWA supports appropriate additional reductions in sulfur dioxide, nitrogen oxides and mercury from coal-fired powerplants, provided that they are designed in a way that preserves coal miners= jobs. We do not support inclusion of carbon dioxide in the committee=s emission reduction bill. By enacting a three-pollutant bill, we believe that the U.S. can make considerable strides in environmental control and public health while still pursuing a national energy strategy that includes coal. Inclusion of carbon dioxide in this bill, in our opinion, force utilities to switch away from coal and will unnecessarily delay, and possibly prevent, its enactment.

A clear plan for reducing emissions of sulfur and nitrogen oxides could provide the electric utility industry with greater certainty for planning and investments, lead to the simplification of regulatory programs, and create significant job opportunities for the construction and operation of pollution control devices. At the same time, such a strategy would allow coal miners and their communities to retain the high-paying jobs that they so desperately need.

In reviewing S. 556, we are concerned that the legislation has gone too far in specifying the magnitude of emission reductions to be accomplished over the next decade. We believe that a more realistic--and more cost-effective--set of reductions can be enacted that would not conflict with the nation's need to continue using coal, while improving air quality and enhancing the use of available air pollution control technologies. For example, EIA=s analyses suggests that a 50%-65% reduction in SO₂ and NO_x could be achieved in the electric utility sector without severe loss of coal markets and coal mining jobs. We believe that these reductions should occur in one phase, with appropriate deadlines to ensure that utilities will have enough lead time for the orderly installation of technology without potential disruptions of the nation=s power supply. In addition, the committee should consider the compliance deadlines with an eye toward the financial condition of the nation=s electric utilities, particularly the medium-sized utilities.

In terms of mercury, we are concerned that technological controls for reducing mercury emissions from coal-fired powerplants are in a very early stage of commercial development. Setting an overly ambitious target for controlling mercury--where there is simply no evidence of an imminent threat to public health--could be harmful to coal mining communities and be at odds with the larger national energy policy debate. Therefore, we recommend that mercury controls occur in two or more phases.

The UMWA participates in an EPA workgroup on mercury control. We are not confident that technologies will be available by 2007 to ensure S.556's reductions are achieved. It is likely that a more modest reduction could be achieved at substantially lower costs through available technologies, without imposing any risk to public health. In all events, it would be desirable to postpone setting a final mercury target until the "co-benefits" of mercury reductions through NO_x and SO₂ controls are demonstrated through a first phase control program focused on reducing these emissions.

A target for annual NO_x emissions of about 2 million tons should be feasible with the use of selective catalytic reduction (SCR) and other NO_x control equipment. However, some utilities are encountering difficulties with SCR equipment in boilers designed to burn high-sulfur coals. Again, these difficulties highlight the need to set reasonable deadlines to ensure that the technologies used to meet the reductions work well in tandem.

Based on our experience with the Ozone Transport Assessment Group process, and EPA's subsequent NO_x SIP Call, we would recommend a NO_x emission rate of 0.20 lb. NO_x/MMBTU as the planning basis for new NO_x control requirements outside of the eastern 18-State SIP Call region, and for non-ozone season emission controls within the SIP Call region itself. We recognize that the 0.15 lb. ozone season limit on plants in the SIP Call region would be difficult to change given recent court decisions.

In general, a NO_x emission limit of 0.20 can be achieved more readily than a limit of 0.15 because it provides greater opportunities for the use of low-NO_x burners, overfire air, and other less capital-intensive equipment. Unlike the densely-populated East, there are no ozone problems in western states other than California justifying an extremely low NO_x limit below the levels otherwise required by the Clean Air Act.

S. 556's proposed 2.2 million ton cap on annual SO₂ emissions, compared to the 8.9 million ton cap that will result once the 1990 acid rain program is fully implemented, would represent a very significant further reduction of sulfur emissions that contribute to acid deposition and to other environmental problems. The 8.9 million ton SO₂ cap in the 1990 Clean Air Act Amendments itself represents a 50% reduction of SO₂ emissions from 1980 levels.

Based on a variety of studies that have been done in the private sector and by government agencies, we see a somewhat more modest SO₂ reduction target--roughly in the range of 3.0 to 4.0 million tons--as representing both a technically achievable and cost-effective control level that would not conflict with our goal of ensuring that coal miners can continue to provide for their families.

An SO₂ and NO_x control plan along these lines could be implemented as a first step in a longer-range plan to reduce mercury emissions. The experience in mercury "co-benefits" achieved by the first phase controls for SO₂ and NO_x emissions would be vital in assessing the feasibility of ultimate mercury reduction targets. In light of this, the committee may want to consider early reduction allowances for SO₂ controls that also reduce mercury emissions on the theory that such reductions are more valuable than those strategies that only reduce SO₂ alone. There is precedent for such extra credit in Title IV of the 1990 Amendments, which allocated 2:1 bonus allowances to utilities that chose to install control technology.

In summary, Mr. Chairman, the UMWA is prepared to work with the proponents of additional reductions in SO₂, NO_x and mercury emissions in coal-fired power plants, provided that the reduction provisions are designed in a way that preserves coal miners= jobs. We look forward to working with you to achieve these goals.