COVER

DIFFICULT DAYS AHEAD

CLEANER AIR WILL MEAN FEWER JOBS

D'ARCY JENISH June 26 1989
COVER

DIFFICULT DAYS AHEAD

CLEANER AIR WILL MEAN FEWER JOBS

D'ARCY JENISH June 26 1989

DIFFICULT DAYS AHEAD

CLEANER AIR WILL MEAN FEWER JOBS

For the past decade, Nancy Makler has worked the midnight shift at an underground coal mine near Morgantown, W. Va., a city of 27,000 located near the Pennsylvania border. She earns $16.75 an hour shovelling coal that accidentally falls from conveyor belts. But despite her seniority, the 38-year-old recently married woman said that her job is far from secure. On June 12, President George Bush announced a comprehensive set of clean-air proposals, which includes measures to cut the sulphur dioxide (SO 2) emissions that cause acid rain. If the proposals become law, SO2 emissions, which in the United States are caused primarily by burning coal to produce electricity, will be reduced by about 50 per cent annually by the turn of the century. And for the miners of Morgantown, clean air will mean fewer jobs in the mines. Said Makler: “Miners are telling their kids that there are not going to be jobs for them in the coal mines.”

Losses: Across the major eastern coal-producing states of Kentucky, West Virginia, Pennsylvania, Illinois, Virginia, Indiana and Ohio, senior executives at mining and electric companies were also predicting difficult days ahead. They said that complying with the President’s proposals will cause job losses for miners and higher electricity rates for consumers. The mining companies anticipate widespread fuel-switching by the utilities, primarily to low-sulphur from high-sulphur coal—the higher the sulphur content, the higher the SO2 emitted—but also to natural gas. Utility company executives say that the President’s deadlines will force them to spend billions of dollars on scrubbers—which are small chemical plants inside generating stations that remove SO2 from gaseous emissions through complex chemical reactions. And federal politicians from the coal states said that they are prepared to fight the proposals. Said West Virginia Senator Robert Byrd: “What the president has outlined does not make good energy, economic or environmental policy sense.”

At the same time, many of the mining and utility executives complained bitterly about Canadian lobbying for U.S. acid rain legislation. They pointed out that there are almost 150 SO2 scrubbers operating in the United States, but none in Canada. They also noted that the largest single source of SO 2 emissions in North America is the Sudbury, Ont., nickel smelter owned by Toronto-based Inco Ltd. For his part, Inco’s director of environmental affairs, Charles Ferguson, noted that some U.S. utility companies produce greater volumes of SO 2

but in several plants. He also noted that Inco has spent more than $100 million since 1980 reducing its emissions. But anti-Canadian sentiments run particularly deep in Ohio, the ninthlargest coal-producing state. There, politicians and coal company executives contend that the Canadian lobby for U.S. acid rain controls was part of an effort to shut down American coalfired power plants in order to increase Canadian exports of hydroelectricity. Indeed, Robert Murray, president of the Ohio Valley Coal Co., told a state senate committee in May, “I am not exaggerating when I say that Canada is poised to become the electric power OPEC to the north.”

For the coal-mining companies, the impact

of the Bush proposals will depend on how the utilities decide to reduce their SO 2 emissions. Thomas Duncan, president of the Kentucky Coal Association, said that proposed targets and deadlines could have a devastating effect on his state. Last year, Kentucky produced 161 million tons of coal, and the industry employed 35,000 people directly. In many areas, Duncan noted, the mining companies offer the best wages available, and those wages represent up to half the industrial payroll in some counties. He added that 70 per cent of the state’s coal production, when burned, gives off up to five times more SO2 than the President’s guidelines permit. Although Duncan’s association was still assessing the proposals late last

week, he said that all but one of the ninemember Kentucky congressional delegation would oppose the President’s targets and deadlines.

For the utilities that burn coal to produce electricity, the Bush proposals are similar to several previous acid rain reduction plans that did not become law because of intense lobbying by the coal and utility industries. But this time, public concern over the environment is too strong, and too broadly based, to derail the

President’s package entirely, said Jeffrey White, assistant general counsel with Columbus, Ohio-based American Electric Power Co. Inc., the largest coal-burning utility in the United States. Indeed, the coal-producing states may find it difficult to win even minor changes to the proposals. Said White: “Asking for an extension of the deadlines would fall on deaf or angry ears.”

The administration has taken a flexible approach by allowing the utilities to decide how they will reduce their emissions rather than dictating a solution, said White. That could reduce the impact on some mining companies. Gayla Hoffman, a spokeswoman for St. Louis, Mo.-based Peabody Holding Co. Inc., the largest U.S. coal producer, said that Peabody operates both highand low-sulphur mines. If

the utilities switch from high to low, Peabody’s revenues should remain stable, because its low-sulphur sales will increase, she said.

But the President’s deadlines are too short to complete the development of new coalburning technology, which is aimed at improving the efficiency of power plants and reducing the emissions, said Hoffman. As a result, Peabody will lobby to have the deadlines for reducing SO 2 emissions in two phases extended beyond 1995 and the year 2000. Without an extension, added White, the development of clean-coal technology could be delayed for years, because the utilities cannot afford to install scrubbers and develop better furnaces.

American Electric owns or operates 19 coalfired power plants in Ohio, Indiana, Virginia, West Virginia and Kentucky. Twelve of them are on the list of 107 generating stations that must cut their SO 2 emissions if the United States is to meet the targets. American Electric would prefer to finish developing its cleancoal technology, White said. But he added that the company may be forced to install scrubbers instead.

Enormous: A major problem with scrubbers is that they produce huge volumes of sludge, which is half liquid and half solid. Because of the complex chemical reaction involved, a scrubber produces 7V2 pounds of sludge for every pound of SO2 removed from the gases produced by burning coal, said White. American Electric has operated two scrubbers since 1970 at a generating station 110 km northeast of Columbus. The company was required to build an 800-acre disposal site, which is an enormous but carefully designed pit that is lined with clay. Another problem is that the utilities will be installing new scrubbers, which may cost from $240 million to $600 million per coal-burning furnace, on plants built in the late 1950s or early 1960s. Said White: “It’s like putting a new exhaust system on an old car.”

The best long-term solution, according to White and other utility executives, is new coal-burning technology. After 15 years of development work, American Electric is scheduled to complete a $ 185-million demonstration plant in July,

1990, which is equipped with a new type of coalburning furnace. Conventional furnaces generally operate at 1,649°C, but only 36 per cent of the heat produced is actually converted to electricity, he said. At the new facility, combustion will occur at 870°C, and close to 40 per cent of the heat will be converted to electricity. As well, the SO 2 released through combustion will react with limestone pellets in the new furnaces to form dry gypsum powder, which

may eventually be suitable for use in wallboard, said White.

White added that, unfortunately, most of the clean-coal technologies now being developed by the electrical utilities will not be ready for wide-scale use until at least 2005. And it could take until 2010 or 2015 before they cut SO 2 emissions by the amounts in Bush’s proposals.

Turmoil: Executives at several coal-burning utilities predicted that the cleanup will mean higher rates for their consumers. But they said that they will have to wait for the legislation to pass before determining the size of the increases. Wayne Lucas, vice-president of production and operations for Lexington-based Kentucky Utilities Co., said that about 50 per cent of the coal burned in the company’s five plants exceeds the President’s 1995 emission standards. He estimated that complying with the standards will cost the company from $110 million to $150 million. The rates of Kentucky Utilities’ 400,000 customers may increase by 20 per cent to 30 per cent, added Lucas.

Many observers also note that the mining companies and their workers have already experienced considerable economic turmoil over the past several years. Senator Robert Burch (D—Ohio) said that plummeting sales of high-sulphur coal in the mining districts of southeast Ohio have wiped out 10,000 to 15,000 jobs over the past eight years. In order to draw attention to the plight of the industry, Burch and two other senators introduced a bill in the Ohio senate last January to prohibit imports of Canadian electricity except during emergencies. He said that they also introduced the bill, which is unlikely to be passed, because they believe that Canadian lobbying for acid rain legislation has been economically motivated. If U.S. power plants that bum high-sulphur coal are shut down, Canada could increase its electricity exports, he said.

But in many of the coal-mining districts of the eastern United States, there is also a recognition that the Bush proposals are the result of a fundamental change in society’s attitudes toward the environment. West Virginia miner Makler said that sales of the high-sulphur coal produced around Morgantown have already decreased sharply because of concerns about acid rain. Despite her 10 years’ experience, she is at the bottom of the employee seniority list because everyone hired after her has since been laid off. And life in Morgantown may well get worse, she said, because almost everyone recognizes that clean air means fewer jobs in West Virginia.

D'ARCY JENISH

WILLIAM LOWTHER