Summer 2010
The cost of importing coal for power plants is a drain on the economies of many states. UCS shows how these expenditures can be redirected into cleaner energy solutions that create local jobs.
By Jeff Deyette and Barbara Freese
Almost all states burn coal to generate electricity; 38 of them are net importers of coal from other states and, increasingly, other nations. These 38 states spent more than $25 billion on coal imports in 2008—with just 11 states accounting for two-thirds of the spending.
This significant transfer of wealth out of coal-consuming states gets little attention, but in light of our need to address global warming (coal-fired power plants are the United States’ largest source of heat-trapping emissions) and strengthen local economies battered by the recession, it should not be ignored. Our new report Burning Coal, Burning Cash: Ranking the States That Import the Most Coal shows which states spend the most money on coal imports and how a shift to investments in energy efficiency and homegrown renewable energy can create local jobs and keep dollars circulating in-state.
The High Cost of Coal PowerNew research confirms that we cannot afford to continue relying on this dirty fuel source. Our monthly electric bills do not reflect the staggering costs that coal mining, transport, and use exact on our health and environment. A new study from the National Academy of Sciences (NAS) found that air pollutants from U.S. coal-fired power plants caused $62 billion in damage in 2005 alone, with the biggest and dirtiest plants contributing more than $1 billion each to this total. These costs are associated almost entirely with premature deaths—particularly from heart and lung disease—caused by sulfur dioxide, nitrous oxide, and particulate (soot) emissions from smokestacks. Other costs include damage to crops, timber, and buildings. The $62 billion figure does not include the global warming impact of coal plants—even though coal plants are the nation’s top source of heat-trapping emissions. UCS analysis shows that unchecked global warming could saddle taxpayers, businesses, and governments nationwide with damage amounting to hundreds of billions of dollars. The NAS study also excludes other environmental and health costs associated with coal, including: • Creation of dangerous ash and other solid wastes
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A Growing Dependence on Distant Coal Supplies
A factor in the high cost of U.S. coal imports is the geographic mismatch between where coal is mined and where it is burned. In the past, most U.S. coal came from east of the Mississippi, where most power plants (and population centers) are located. Today, more than half of U.S. coal comes from west of the Mississippi—mostly from Wyoming’s Powder River Basin, whose market share has doubled since 1990 and is projected to keep growing. Wyoming shipped coal to power plants in 34 states—as far away as Georgia and New York—in 2008.
Because shipping coal by barge is less expensive than by rail, many states on the Atlantic and Gulf coasts also spend significant amounts on coal imported from overseas. International imports more than tripled from 1999 to 2008, with Colombia supplying 80 percent of this coal in 2008, followed by Venezuela and Indonesia. While the Northeast is less dependent on coal overall than the Midwest or Southeast, it is more dependent on international imports. Massachusetts, for example, imported 83 percent of its coal from Colombia—the largest percentage of foreign imports of any state. Connecticut imported more than half the coal it used from Indonesia.
The Billion-Dollar Import Club
The 10 states that spent the most on net coal imports (total imports minus total exports) in 2008 are mainly clustered in the Southeast and Midwest (see the map below). Each of these states (as well as South Carolina) spent more than $1 billion on imports. In some states, spending on coal more than doubled from just six years earlier, largely due to a 2008 spike in coal prices.
Georgia spent the most, shelling out $2.6 billion—more than $500 million of which went to Wyoming. Like many of the most import-dependent states, Georgia mines no coal but still relies heavily on coal relative to other power sources (60 percent of its in-state electricity generation comes from coal-fired power plants).
(Click to enlarge)
| Ten states accounted for nearly two-thirds of total U.S. coal imports in 2008 (see map, far left; state rankings appear in parentheses). Of these states, Georgia sent more than $2.6 billion out of state—more than any other state. It imported some of its coal from as far away as Wyoming and South America. |
Other top coal importers actually mine significant amounts of coal but still depend heavily on imports due to their high levels of consumption. Alabama, Indiana, Ohio, and Texas may all consider themselves coal-mining states, but each imported a majority—50 to 80 percent—of the coal burned in their power plants in 2008.
Missed Opportunities in the SoutheastThis coal-dependent region lags far behind the rest of the nation in energy efficiency and clean energy. Research indicates that efficiency policies could reduce energy bills in the South as a whole by $41 billion in 2020, yet the region seems blind to this opportunity. On average, states and utilities with ratepayer-funded electricity efficiency programs spent $7.38 per person in 2007, with many leading states investing between $12 and $38 per person. Alabama and Georgia, in contrast, each spent no more than 50 cents per person—hundreds of times less than they spent per person on coal imports. Furthermore, southeastern utilities have been generally opposed to an RES, whether at the state or federal level; North Carolina is the only state in the region that has adopted such a policy. Opponents argue that an RES would unfairly burden the Southeast with the need to import renewable power from the wind-rich Midwest—despite the billions of dollars the region currently spends on coal imports and the fact that it has its own abundant renewable resources. The Southeast has actually tapped some of this potential in creating biomass pellets for power plant fuel—but these pellets are shipped overseas (helping Europe cut its global warming emissions) instead of being used locally. Meanwhile, southeastern power plants burn coal imported from as far away as Wyoming and South America. |
How to Break the Coal Habit
Investing in energy efficiency and in-state renewable energy resources are two effective and affordable ways for states to cut their coal expenditures. States could keep more of their ratepayers’ money circulating within the local economy, improve air and water quality, protect public health, and reduce the heat-trapping emissions that cause global warming (see the sidebar above).
Energy efficiency programs can stimulate the local economy by saving consumers money and cutting electricity demand at costs well below the retail price of power—even in the states with the lowest electric rates. See the sidebar at left for our analysis of the economic and environmental benefits that states with high coal import costs could receive by investing in these programs.
Every state could further reduce its dependence on coal by boosting investments in local renewable energy resources such as wind, solar, and plant-based bioenergy (although the potential and costs of such resources vary by region). The Midwest, for example, has some of the best wind resources in the country; the Southeast has untapped potential for solar, wind, and low-impact hydroelectric power generation. And both regions have abundant bioenergy resources (from the agriculture and forest products industries, and other sources) that could be harvested in a sustainable manner and burned directly in coal plants, displacing up to 15 percent of the coal currently used.
Strong policies at the state and federal level can ensure these resources are fully utilized. A renewable electricity standard (RES), for example, requires utilities to gradually increase their use of renewable energy. UCS pioneered this approach and has helped many states pass or strengthen an RES; today, 29 states and the District of Columbia have such a standard in place.
| In this issue of Catalyst:
> The Weight of the Evidence |
There are many compelling reasons to shift away from coal and toward clean energy. Now, for many states, we offer one more: the economic boost that would come from keeping dollars in-state rather than spending them on imported coal.
Jeff Deyette is a senior energy analyst and assistant director of energy research and analysis for the UCS Climate and Energy Program. Barbara Freese is a senior policy analyst/advocate in the program.
The full report, online at www.ucsusa.org/burningcoalburningcash, ranks every state on six different measures of coal import dependence and includes profiles of the 24 most-dependent states.
