If You Burn Colombia’s Coal with Alabama’s Cash, Where are the Jobs?

Guest Blog | September 6, 2013 | Coal, Energy Policy

How closely tied are Alabama Power’s coal-fired electric plants and Alabama coal mining jobs? Not very, it turns out. Despite the attempt by one elected official to link the two, the fact is that 70% of Alabama Power’s coal comes from out of state, with 15% hailing from Colombia. From 2008-2012, only about 36% of the coal produced in Alabama was burned in Alabama Power coal plants. While Alabama employs somewhere between 4,000 and 5,000 miners, the coal they mine is largely exported out of state and used for making steel.

Despite its in-state coal reserves, Alabama is one of the biggest coal importers in the U.S., according to the report Burning Coal, Burning Cash: Ranking the States that Import the Most Coal, which was released by the Union of Concerned Scientists in 2010. Alabama’s annual spending to import coal from out of state ranked #1 in dollars per person ($297), #1 for spending as a percentage of GDP, and #1 for total dollars spent on international imports ($489 million), according to the report.

We thought it was time to update the numbers and tell a little more of the story.

When UCS examined recent years’ data on coal transactions from the Energy Information Administration, they discovered that coal burning in Alabama has decreased since 2008, the year of the original report’s data, as it has in the rest of the country. Low natural gas prices are widely credited for this shift. Alabama Power’s total use of coal (by weight) from Alabama also declined, and as a percentage of all the coal the company burned, Alabama-sourced coal increased only slightly from 27% to 29%. Over the last five years, however, an average of 70% of Alabama Power’s coal still came from outside the state. To pay for these imports, Alabama Power (and by extension its customers) sent about $1.3 billion annually out of state.

What will happen to Alabama jobs in the mining sector if coal usage by Alabama Power plants drops further? In light of these numbers, probably not much. As we’ve noted before, several of Alabama Power’s aging and inefficient coal-fired plants are ripe for retirement. Because retiring those units would be better for both customer pocketbooks and pollution reduction, it’s important to understand the true dimensions of the relationship between coal plants and Alabama mines.

Despite the decline in burning coal, employment in the coal mining industry in Alabama actually grew in the ten years leading up to 2011 (the most recent year for which data is available), as shown in the chart below. This chart was published in an excellent op-ed from Stacie Propst, the director of GASP, the Birmingham-based clean air group. It refers to employment data reported by companies to the federal Energy Information Administration. The growth is likely due to expanded mining of metallurgical coal, the kind processed into coke and used to smelt steel.

Furthermore, the jobs impacted by coal retirements are, notably, not Alabama union jobs. According to federal records of the mining industry, as of 2011 the only union mine in Alabama providing coal to Alabama Power was Jim Walter Resources’ North River #1 mine, which supplied Plant Gaston. Plant Gaston is slated to convert to burn natural gas by 2015. Drummond Coal‘s Shoal Creek mine once supplied Alabama Power, but as of 2011 this was no longer the case; the coal mined there is metallurgical grade. Alabama mining companies have shifted their focus toward mining metallurgical coal, for which the international market was strong but declined over the past few years to the point where 425 workers are being laid off at Shoal Creek this month.

Now, instead of providing local coal to Alabama Power, Drummond supplies Alabama Power’s plants with coal from its mine in Colombia, where, incidentally, the jobs situation is troublesome in a different way. Negotiations with the mining union over pay and benefits broke down in early August. A lawsuit filed in the U.S. on behalf of hundreds of family members of slain Colombians, including mine union leaders, alleged that Drummond paid a paramilitary group that terrorized civilians along the railway from the mine to the port, in order to discourage the FARC (Fuerzas Armadas Revolucionarias de Colombia) from attacking that rail line. The suit was dismissed in early August, but the human rights lawyer representing the families has vowed to appeal.

Many people are legitimately concerned about the impact of closing coal plants on the workers in those plants. While industry transitions are always challenging, it’s not all doom and gloom. Georgia Power plans to accomplish the closure of 15 coal- and oil-fired units without any layoffs, by re-locating employees and offering retirement packages. (Note that a “unit” is a generator. A plant typically has two to seven units. Georgia Power is retiring fifteen units at three coal plants, not fifteen plants as some have falsely reported.) Officials from Putnam County, where one of the closing plants is located, asked the GA Public Service Commission to help them develop new industry to replace lost tax revenue. They are exploring beneficial re-use of the plant site, which may include taking advantage of the existing transmission lines by constructing a solar farm. And de-commissioning coal plants has become big business in itself, expected to earn more than $5.3 billion by 2020.

It’s time for a frank conversation about Alabama’s power plants and its economy, based on facts about where the money is really going, what jobs are actually at stake, and how communities can work together to transition to a cleaner and healthier economy.


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