By Charles Young
April 1, 2021 - A new study by economists at West Virginia University shows that despite steep industry declines, coal continues to play an important role in the state’s economy.
The study, “The Economic Impact of Coal and Coal-Fired Power Generation in West Virginia,” published by the West Virginia University College of Business and Economics Bureau of Business & Economic Research, found that coal mining directly employs more than 13,000 people in West Virginia, who earn compensation totaling around $1.5 billion annually.
Additionally, estimates indicate that coal mines spend a total of around $6.5 billion in the state’s economy directly each year.
Coal mining generated approximately $9.1 billion in total economic activity in the state in 2019, supported nearly 27,000 jobs, provided around $2.1 billion in employee compensation and generated around $514 million in severance taxes and other state and local tax revenue, according to the study.
During the same period, coal-fired power generation produced approximately $4.8 billion in total economic activity, supported nearly 6,600 jobs, provided around $725 million in employee compensation and produced more than $97 million in select state and local tax revenue.
In total, coal mining and coal-fired power generation combined produced approximately $13.9 billion in total economic activity, supported nearly 33,300 jobs, provided around $2.8 billion in employee compensation and produced more than $611 million in severance taxes and select state and local tax revenue.
Dr. John Deskins, Bureau of Business & Economic Research director, said the total economic impact of coal mining does not end at the mine — it goes far beyond the portal and upstream through the business economy.
“Despite production declines in recent years, coal remains a very important part of West Virginia’s economy, as illustrated in our research,” Deskins said. “Coal continues to support a sizable share of the state’s economic output and thousands of high-paying jobs.”
The study details how the coal industry in West Virginia and the U.S. has experienced substantial declines over much of the past decade.
The downturn was felt more strongly in West Virginia than the rest of the U.S. through 2016. Total coal production in West Virginia peaked in 2008 at nearly 158 million tons, then declined to less than 80 million tons in 2016, a nearly 50% decline. Over the same period, in the rest of the U.S., production fell from one billion tons to just over 0.6 billion tons, a decline of about 36%.
Contrary to these general trends, coal production in West Virginia increased in 2017 and stayed at around 93 million tons through 2019, or an increase of more than 15%. During the same period, coal production in the rest of the U.S. declined by 5%.
West Virginia’s share of U.S. coal production declined through 2016, as well, but rebounded in the three following years. West Virginia accounted for 15.8% of U.S. coal production in 1995. The share fell to 11.0% in 2016 before rising again in 2017 and to 13.2% in 2019.
West Virginia remains the second-largest coal producer in the U.S., behind only Wyoming, whose share of U.S. coal production in 2019 was around 39%.
The study also provides a long -term prediction of future coal consumption, saying the industry will likely face further hardships in the coming decades.
The U.S. Energy Information Administration predicts that after a “big drop” in 2020, due in part to the COVID-19 pandemic, the domestic demand for U.S. coal will rise in 2021, according to the study.
“However, as competition with natural gas continues, the domestic demand for coal is expected to drop again in 2023, and will gradually decline after that through 2050,” the study says. “Coal exports are expected to grow slowly over the next decade, and will stay relatively flat after that through 2050.”