Coal economy workers need help—and a carbon tax could provide it
Both as a result of market forces—especially low natural gas prices—and because of our search for clean energy sources, America’s coal workers and their communities are hurting. Coal consumption is declining, both at home and abroad, creating ripple effects across coal-reliant economies that begin with job losses and spill over to cause a host of economic and fiscal problems.
The jobs picture has been especially bleak for coal workers over the past year, with large layoffs occurring in even the most productive coal plants. Just last month, One of America’s most productive coal plants, in Wyoming, laid off 15 percent of its workforce. In Magoffin County, Kentucky, where coal production dominates local industry, unemployment reached 21.6 percent.
In new research published at Brookings this week, I take a closer look at how declines in coal production have impacted coal workers and local economies and consider industry projections for the coming decades. I show how it would be a risky bet to rely on a rebound in the coal sector to improve coalfield economies and how federal support will be necessary to help dislocated workers, their families, and retirees. Though several policy proposals have emerged to address the concerns of coal-reliant areas, there’s a striking disconnect between the urgent needs in coal country and the level of funding currently available to meet those needs.
There are solutions, though. If designed intelligently, the most cost effective climate policy approach—taxing or otherwise putting a price on carbon—could help fund the transition in coal communities. The future of coal in the United States is unpromising, with or without a climate policy, but nearly any serious measure to control greenhouse gases will amplify existing declines.
The regulatory approach the Environmental Protection Agency is pursuing under the Clean Air Act offers no way to alleviate disproportionate burdens on coal communities. In contrast, a carbon tax could raise ample revenue to not only assist in the transition but also offset burdens on low income households across America.
A number of factors are at work in these trends: slow growth in U.S. electricity demand; competition from natural gas at historically low prices; declining exports; and state and federal environmental and clean energy policies. For a while, booming growth in China had many thinking strong exports might revive U.S. coal production, but now China’s in a slowdown and the United States faces tough competition for the remaining imports. As of the third quarter of 2015, coal exports from the United States had declined for ten quarters in a row.
Policy changes are likely to cloud coal’s future further. The Supreme Court recently issued a stay of the implementation of the EPA’s Clean Power Plan (CPP) rule, which the agency projects would reduce carbon emissions from existing fossil-fueled electric power plants by 32 percent relative to 2005 levels, or about 17 percent relative to 2012 levels. Despite the stay, however, some states are continuing their compliance planning. Whether the rule survives in its original form or not, it appears that long term planning in the electricity sector is leaning heavily away from coal.
If we combine the amount needed for job training, infrastructure, and revitalization of coalfield communities with the estimated $2.3 billion needed to protect retiree benefits and resources needed to reclaim abandoned mines, a very rough estimate of the funding needed is in the tens of billions of dollars over a decade.
But a carbon tax doesn’t need to be all bad news for the coal community. As documented in my new research, coal consumption and production is on the decline for many reasons, and is unlikely to rebound any time soon. What coalfield communities need now is to move on their transition before things get worse. To do that, they need funding, which a carbon tax is uniquely suited to provide.
An analysis from the Tax Policy Center’s Donald Marron, Eric Toder, and Lydia Austin estimates that a carbon tax that starts at $25 per ton of CO2-equivalent emissions and increases by two percent above inflation each year would produce net revenue of about $90 billion in the tax’s first complete year and about $1.2 trillion over its first decade. Just three percent of the revenue over a decade could raise $36 billion for the transition. And that revenue projection is even lower than what might be raised by a piece of legislation introduced last year by Congressman John Delaney (D-MD), which would start the tax at $30 per ton.
Thus a carbon tax can raise more than enough revenue in the first ten years to fund a generous transitional assistance package for coal workers and communities and still allow for tax reform and other objectives that could motivate a legislative deal.
A well-designed carbon tax could be a win-win for coal communities and the environment. It’s time we give it a closer look.
http://www.brookings.edu/blogs/planetpolicy/posts/2016/04/26-coal-economy-workers-need-help-and-a-carbon-tax-could-provide-it-morris?hs_u=lsmithsliz@aol.com&utm_campaign=Economic+Studies&utm_source=hs_email&utm_medium=email&utm_content=28927689&_hsenc=p2ANqtz--l_6m1Ec-epiUPSePEUF-mmFKgYKq9wH5d73qHA_-TwmAzxmKSCow38orgwXkjtfU_YKOOLMH7FST9wsuXosac32G0nQ&_hsmi=28927689
Both as a result of market forces—especially low natural gas prices—and because of our search for clean energy sources, America’s coal workers and their communities are hurting. Coal consumption is declining, both at home and abroad, creating ripple effects across coal-reliant economies that begin with job losses and spill over to cause a host of economic and fiscal problems.
The jobs picture has been especially bleak for coal workers over the past year, with large layoffs occurring in even the most productive coal plants. Just last month, One of America’s most productive coal plants, in Wyoming, laid off 15 percent of its workforce. In Magoffin County, Kentucky, where coal production dominates local industry, unemployment reached 21.6 percent.
In new research published at Brookings this week, I take a closer look at how declines in coal production have impacted coal workers and local economies and consider industry projections for the coming decades. I show how it would be a risky bet to rely on a rebound in the coal sector to improve coalfield economies and how federal support will be necessary to help dislocated workers, their families, and retirees. Though several policy proposals have emerged to address the concerns of coal-reliant areas, there’s a striking disconnect between the urgent needs in coal country and the level of funding currently available to meet those needs.
There are solutions, though. If designed intelligently, the most cost effective climate policy approach—taxing or otherwise putting a price on carbon—could help fund the transition in coal communities. The future of coal in the United States is unpromising, with or without a climate policy, but nearly any serious measure to control greenhouse gases will amplify existing declines.
The regulatory approach the Environmental Protection Agency is pursuing under the Clean Air Act offers no way to alleviate disproportionate burdens on coal communities. In contrast, a carbon tax could raise ample revenue to not only assist in the transition but also offset burdens on low income households across America.
Why coal consumption is on the decline
In 2015, coal production in the United States totaled 890 million short tons, 24 percent below its high of 1.172 billion short tons in 2008. Over the last year, the declines have accelerated. Total U.S. weekly coal production fell by 39 percent from early April 2015 to early April 2016. The drop was particularly acute in Appalachia, where weekly coal product fell by 43 percent in that one-year period.A number of factors are at work in these trends: slow growth in U.S. electricity demand; competition from natural gas at historically low prices; declining exports; and state and federal environmental and clean energy policies. For a while, booming growth in China had many thinking strong exports might revive U.S. coal production, but now China’s in a slowdown and the United States faces tough competition for the remaining imports. As of the third quarter of 2015, coal exports from the United States had declined for ten quarters in a row.
Policy changes are likely to cloud coal’s future further. The Supreme Court recently issued a stay of the implementation of the EPA’s Clean Power Plan (CPP) rule, which the agency projects would reduce carbon emissions from existing fossil-fueled electric power plants by 32 percent relative to 2005 levels, or about 17 percent relative to 2012 levels. Despite the stay, however, some states are continuing their compliance planning. Whether the rule survives in its original form or not, it appears that long term planning in the electricity sector is leaning heavily away from coal.
Ripple effects of coal layoffs for state and local governments
Coal-related layoffs and bankruptcies come at a steep cost for workers and their families, but they also create broader economic problems for communities. The economic activity associated with coal production, including severance tax revenues, wages, property values, mine retiree benefits, and ancillary business activities are vital to the economic health of state and local governments. West Virginia, for example, distributes 75 percent of its net state coal severance tax to coal-producing counties. The figure below shows how those transfers have eroded over the past few years and hints at the potential fiscal problems facing local governments as coal production falls.What policymakers have done so far to help coal communities
Policymakers have recognized for some time the need to help dislocated coal workers and to protect retirees. The Obama administration has put forth several budget proposals—some funded and underway, others not—bundled as the POWER+ Plan, to support economic diversification, workforce retraining, and other activities. Various Presidential campaign pledges and draft bills have proposed assistance, but to-date Congress has not yet provided the broad support needed to address the many challenges discussed in this post. And whatever the assistance proposed by Congress or the Administration, we need a way to pay for it.If we combine the amount needed for job training, infrastructure, and revitalization of coalfield communities with the estimated $2.3 billion needed to protect retiree benefits and resources needed to reclaim abandoned mines, a very rough estimate of the funding needed is in the tens of billions of dollars over a decade.
How a carbon tax could fund programs to revitalize coal country
Advocates for coal workers and communities would be the first to point out that, on the surface, a carbon tax would hurt an already struggling industry. In some ways, they’re right: taxing carbon would disproportionately reduce coal use relative to other fuel types. That is both because it is the most carbon-intensive fuel (with about twice the emissions per unit of energy as its fossil competitor, natural gas) and because coal has so many lower-carbon substitutes in its chief market, electricity generation, such as renewables, natural gas, and nuclear. Indeed, a carbon tax would probably depress coal consumption as much or more than any other significant climate policy approach.But a carbon tax doesn’t need to be all bad news for the coal community. As documented in my new research, coal consumption and production is on the decline for many reasons, and is unlikely to rebound any time soon. What coalfield communities need now is to move on their transition before things get worse. To do that, they need funding, which a carbon tax is uniquely suited to provide.
An analysis from the Tax Policy Center’s Donald Marron, Eric Toder, and Lydia Austin estimates that a carbon tax that starts at $25 per ton of CO2-equivalent emissions and increases by two percent above inflation each year would produce net revenue of about $90 billion in the tax’s first complete year and about $1.2 trillion over its first decade. Just three percent of the revenue over a decade could raise $36 billion for the transition. And that revenue projection is even lower than what might be raised by a piece of legislation introduced last year by Congressman John Delaney (D-MD), which would start the tax at $30 per ton.
Thus a carbon tax can raise more than enough revenue in the first ten years to fund a generous transitional assistance package for coal workers and communities and still allow for tax reform and other objectives that could motivate a legislative deal.
A new way forward
Coal-reliant communities across America are suffering, and policymakers need solutions. Many proposals have been offered, but their scale is too small for an appropriate package of support. By replacing Clean Air Act regulations with a tax on the carbon content of fossil fuels and other greenhouse gas emissions, the U.S. could provide coal workers and communities with more-than-ample resources, while at the same time producing superior environmental and macroeconomic outcomes.A well-designed carbon tax could be a win-win for coal communities and the environment. It’s time we give it a closer look.
http://www.brookings.edu/blogs/planetpolicy/posts/2016/04/26-coal-economy-workers-need-help-and-a-carbon-tax-could-provide-it-morris?hs_u=lsmithsliz@aol.com&utm_campaign=Economic+Studies&utm_source=hs_email&utm_medium=email&utm_content=28927689&_hsenc=p2ANqtz--l_6m1Ec-epiUPSePEUF-mmFKgYKq9wH5d73qHA_-TwmAzxmKSCow38orgwXkjtfU_YKOOLMH7FST9wsuXosac32G0nQ&_hsmi=28927689
Today at 5:11 pm by Rocky
» Sudanese advisor criticizes Kuwaiti analyzes regarding the development road project
Today at 2:21 pm by Rocky
» Al-Mandalawi stresses the need to strengthen economic and trade cooperation between Iraq and Poland
Today at 2:04 pm by Rocky
» Power maneuvers: America provides defensive weapons to Kurdistan in exchange for withholding from Ba
Today at 10:26 am by Rocky
» Kuwait is drilling an oil well near Umm Qasr, towards Iraqi territory
Today at 10:24 am by Rocky
» In the document... the first Iraqi ministry identifies the obstacles to changing the new official wo
Today at 10:22 am by Rocky
» Italian Institute: Iraq is stuck in its own crises, including Baghdad’s efforts to undermine the “au
Today at 10:21 am by Rocky
» The head of the Integrity Commission announces the holding of an international Interpol conference i
Today at 10:18 am by Rocky
» Planning: Iraqi companies are not efficient in conducting the population census
Today at 10:14 am by Rocky
» utube MM&C 4/24/24 Support - USA- Turkey - Timing- Currency Value - Tabled
Today at 8:08 am by Rocky
» MM&C 4/25/24 National Bank of Iraq goes live with Temenos core banking and payments
Today at 8:06 am by Rocky
» A banking official indicates a "danger" to Iraq by depriving more than half of its banks of dollars
Today at 7:55 am by Rocky
» With the participation of the Association of Private Banks, investment opportunities are on the tabl
Today at 7:45 am by Rocky
» Within a month... an Iranian border crossing recorded a noticeable increase in exports of goods to I
Today at 7:44 am by Rocky
» The Association of Private Banks appreciates the efforts of the government and the Central Bank to c
Today at 7:43 am by Rocky
» Al-Maliki's coalition presents a third candidate for the position of governor of Diyala
Today at 6:57 am by Rocky
» Arab gathering: The Kirkuk problem is getting complicated and the Sudanese must intervene
Today at 6:56 am by Rocky
» Next week.. a Kurdish delegation will visit Baghdad to meet with the Minister of Finance
Today at 6:54 am by Rocky
» Under the pretext of salaries... Al-Party refrains from handing over port revenues to Baghdad
Today at 6:53 am by Rocky
» Association of Banks: For the first time, we are witnessing a clear targeting of depriving half of t
Today at 6:51 am by Rocky
» Parliament does not know the reason for the delay in sending the 2024 budget schedules: Voting takes
Today at 6:49 am by Rocky
» Applicants for the 2024 Hajj are demanding that the Central Bank secure the dollar for them through
Today at 5:09 am by Rocky
» Governmental and private banks will showcase their services tomorrow during Financial Inclusion Week
Today at 5:08 am by Rocky
» Iraq's oil exports rise despite OPEC+ cuts
Today at 5:06 am by Rocky
» A study explodes a "surprise"... Iraq is among the countries that export oil to "Israel": How is the
Today at 5:04 am by Rocky
» Al-Araji emphasizes working to strengthen national identity
Today at 5:02 am by Rocky
» Al-Sudani visits Saudi Arabia to participate in the World Economic Forum in Riyadh
Today at 5:01 am by Rocky
» Iraq is talking about producing one million additional liters of gasoline
Today at 4:59 am by Rocky
» The Council of Ministers approves the implementation of the Baghdad Metro project
Today at 4:56 am by Rocky
» Minister of Commerce: We formed a joint economic committee with Türkiye
Today at 4:55 am by Rocky
» Resources: Government measures have contributed to improving the water situation in Iraq
Today at 4:53 am by Rocky
» Parliamentary Finance: Baghdad will continue to send salaries to the region’s employees until settle
Today at 4:51 am by Rocky
» A parliamentarian describes the corruption of Iraqi ports as “ghouls” and reveals the involvement of
Today at 4:49 am by Rocky
» Obelisk Hour: Basra is the subject of political conflict and ambiguity over the fate of the funds al
Today at 4:48 am by Rocky
» Turkmen leader: An agreement on the local government of Kirkuk is near
Today at 4:45 am by Rocky
» Anbar calls for the operation of its factories despite financial obstacles
Today at 4:44 am by Rocky
» Turki: The crisis of the Presidency of Parliament prompted the Sunnis to amend the Council’s interna
Today at 4:43 am by Rocky
» The Agriculture Committee confirms the existence of Iraqi-Turkish-Iranian discussions on water
Today at 4:42 am by Rocky
» Resources diagnose the challenges facing the water file in Iraq
Today at 4:38 am by Rocky
» Parliament pledges to the Interior Ministry: We will transfer money to buy weapons from citizens
Today at 4:33 am by Rocky
» Al-Issawi is the closest.. Parliament sets the date for deciding the choice of the new president
Today at 4:31 am by Rocky
» Deputy: Iraq's investments have risen and need a comprehensive review of previous years
Today at 4:30 am by Rocky
» Iraqis consume 7 billion eggs annually and import about $900 million
Today at 4:28 am by Rocky
» The Iranian role complicates attempts at open cooperation between Iraq and Turkey. Turkey is trying
Today at 4:26 am by Rocky
» Move in Iran to obtain $242 billion from Iraq in compensation for the eight-year war
Today at 4:25 am by Rocky
» 12 decisions from the Council of Ministers regarding the Baghdad Metro and Najaf-Karbala train proje
Today at 4:23 am by Rocky
» Sudanese Advisor: The path to development has begun... the Baka and the militias “we silence them wi
Today at 4:21 am by Rocky
» Not from Kurdistan.. How did Iraq become a source of oil for “Israeli tanks”?
Today at 4:19 am by Rocky
» Parliamentary Agriculture criticizes the Sudanese and Erdogan agreement: Türkiye will control water
Today at 4:16 am by Rocky
» The Iraqi government issues new decisions
Yesterday at 2:35 pm by Rocky
» The story of “reduced oil” to Jordan, from “compulsion” to mutual benefit.. Is there a loss?
Yesterday at 2:33 pm by Rocky
» The Council of Ministers takes 12 decisions for the Baghdad Metro and the Najaf-Karbala train
Yesterday at 2:32 pm by Rocky
» utube MM&C 4/23/24 Iraqi Dinar - IQD Update - Development Road Project - Saviour of Global Banking
Yesterday at 10:18 am by Rocky
» Kidney from pig transplanted into deathly ill New Jersey woman — and begins working almost immediat
Yesterday at 10:15 am by Bama Diva
» The most difficult option.. Warnings of the danger of floating the Iraqi dinar without achieving an
Yesterday at 9:48 am by Rocky
» Trade from the “Economic Committee” with Türkiye: It will overcome all obstacles facing the traders
Yesterday at 9:46 am by Rocky
» Washington's hope for stable relations with Baghdad clashes with Iraqi parties' rejection of the Ame
Yesterday at 9:41 am by Rocky
» Karim Badr: Development is America’s will to kill silk
Yesterday at 9:36 am by Rocky
» Oil: Opening of a new port for liquid gas for vehicles in Baghdad
Yesterday at 9:33 am by Rocky
» A media advisor warns of corruption in a draft law on the Parliament’s agenda
Yesterday at 9:21 am by Rocky
» Economist: There is serious work to lift US sanctions on Iraqi banks
Yesterday at 9:16 am by Rocky
» Will the agreements signed with the US Treasury reflect positively on the exchange rates?
Yesterday at 7:52 am by Rocky
» Iraq continues its quest to join the World Trade Organization
Yesterday at 7:51 am by Rocky
» Iraq completes the completion of the files for the initial offer of goods and services to join the W
Yesterday at 7:50 am by Rocky
» Economist: Travelers' dollars are leaking into the parallel market...and this is what the Central Ba
Yesterday at 7:32 am by Rocky
» President of the Federal Court: It is not permissible to force anyone to join any party, and the pol
Yesterday at 7:30 am by Rocky
» The Council of Ministers holds its session headed by Al-Sudani
Yesterday at 7:27 am by Rocky
» America weakens Baghdad...and increases Kurdistan's military capabilities
Yesterday at 7:26 am by Rocky
» The Iraqi government plans to build 10,000 schools throughout the country
Yesterday at 7:23 am by Rocky
» American threats close the Iraqi Stock Exchange at a loss
Yesterday at 7:21 am by Rocky
» Increase in external transfers at the Central Bank
Yesterday at 7:20 am by Rocky
» Al-Maliki calls on Britain to cancel restrictions on the entry of its companies into Iraq
Yesterday at 7:18 am by Rocky
» Planning and the European Union are discussing signing a number of agreements in the development, en
Yesterday at 7:16 am by Rocky
» Parliament talks about the mechanism for recovering smuggled funds and hints at the next stage
Yesterday at 7:13 am by Rocky
» Interior Ministry: The number of completed national cards reached 37 million cards
Yesterday at 7:06 am by Rocky
» Amnesty International: Violations of freedom and human rights continue in Iraq and the Kurdistan Reg
Yesterday at 7:04 am by Rocky
» Parliamentary Oil: The government is proceeding with the decision to raise the price of improved gas
Yesterday at 7:03 am by Rocky
» A parliamentary committee in Basra to investigate violations of the port company and the local gover
Yesterday at 7:00 am by Rocky
» Revealing the 10 most important American exports to Iraq
Yesterday at 5:31 am by Rocky
» A noticeable increase in the rate of Iraq's import of Chinese cooling devices
Yesterday at 5:30 am by Rocky
» Prime Minister: Working on projects without completing the infrastructure is a waste of money
Yesterday at 5:28 am by Rocky
» Iraq.. Extending the deadline for registration procedures on plots of land
Yesterday at 5:27 am by Rocky
» What is the main purpose of conducting the population census in Iraq?
Yesterday at 5:25 am by Rocky
» A plan to transform Iraq from a barren land to green with 5 million trees
Yesterday at 5:24 am by Rocky
» The Housing Fund announces the acceptance of more than 11 thousand loans through the Ur platform
Yesterday at 5:23 am by Rocky
» The Bank of Baghdad is moving to increase its capital to 400 billion dinars
Yesterday at 5:20 am by Rocky
» The electronic payment system will soon be adopted on Iraqi buses
Yesterday at 5:19 am by Rocky
» “It threatens our interests and destroys our economy.” An Iraqi project “irritates” the Kuwaiti stre
Yesterday at 5:18 am by Rocky
» Warning from the Central Bank about “misuse of electronic payment cards”
Yesterday at 5:17 am by Rocky
» Iraq and the Sultanate of Oman are discussing sending capacities through the Gulf countries
Yesterday at 5:16 am by Rocky
» The fact that a decision was issued to deport Syrian workers from Iraq
Yesterday at 5:14 am by Rocky
» Rice comes first... America exports 10 foodstuffs worth more than 350 million dollars to Iraq
Yesterday at 5:14 am by Rocky
» A sixth licensing round for gas exploration
Yesterday at 5:12 am by Rocky
» Baghdad is preparing to host the 50th session of the Arab Labor Conference
Yesterday at 5:11 am by Rocky
» Scientific symposium on the future vision of the tripartite budget
Yesterday at 5:09 am by Rocky
» Five conversion power stations enter service in Najaf
Yesterday at 5:08 am by Rocky
» Planning: Conduct a population census next November
Yesterday at 5:07 am by Rocky
» Experts: Spreading misleading information harms development and investment
Yesterday at 5:03 am by Rocky
» Economists call for tightening money laundering laws and port controls
Yesterday at 5:02 am by Rocky