UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

OFFICE OF 

AIR AND RADIATION 

MEMORANDUM 

Subject: 

From: 

To: 

Summary of Stakeholder Meetings 

Carissa Cyran 

Dockets EPA-HQ-OAR-20 13-0602. EPA-HQ-OAR-20 13-0603, and EPA-HQOAR-20 13-0495 

This memorandum summarizes meetings with stakeholders during the week of February 2, 2015. 

On February 2, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph GotTman met with representatives from Hoosier Energy. Sign-in sheet and 

presentation are attached. 

On February 3, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from Wyoming Department of 

Environmental Quality. Sign-in sheet attached. 

On February 3, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with Bill Ritter, Director of the Center for the New Energy 

Economy at Colorado State University. Sign-in sheet and handouts are attached. 

On February 4, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from National Hydropower Association. 

Sign-in sheet attached. 

On February 5, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from the Clean Energy Group. Sign-in sheet 

attached. 

On February 5, Associate Assistant Administrator for Climate and Senior Counsel for Air and 

Radiation Joseph Goffman met with representatives from Exelon. Sign-in sheet attached. 

Internet Address (URL) · http 1/www epa gov 

Recycled/Recyc lable • Pronted w1th Vegetable 011 Based Inks on 100% Postconsumer Process Chlo,ne Free Recycled Paper 
Date: February 2, 2015 

Meeting: Hoosier Energy Discussion on CPP 

Rule(s) Discussed: lPP 

Written Materials o 

Organization Phone Number 

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HOOSIER 

ENERGY 

An Alternative to 

EPA's Clean Power Plan 

Introductions 

• Hoosier Energy Participants 

Donna Snyder 

Sr. VP & CFO 

Bob Richhart 

February 2, 2015 

Michalene Reilly 

Mgr., Special Projects- Environmental 

Caleb Steiner 

VP, Management Services Sr. Financial Analyst 

Tom Van Paris Jay Holloway 

VP, Member Services & Communication Sutherland, Asbill & Brennan 

Randy Haymaker 

Director of Public Affairs 

Rae Cronmiller 

National Rural Electric Cooperative 

Association 

• Concerns with the Clean Power Plan - Reliability, affordability, 

remaining useful life of existing resources- lead us to propose 

an alternative 2 

1 
An Alternative 

• Addresses these concerns and achieves essentially the same, if 

not lower, emissions level as the CPP in 2030 

• Intended as a new framework 

• Acknowledges Energy Supply and Environmental Coordination 

Act of 197 4 and Fuel Use Act of 1978-essentially required all 

new generation to be coal-based and shaped nation's preference 

for new base load coal for next three decades 

• States determine achievable heat rate improvements on unit-byunit basis-recognizes those improvements that have already 

occurred 

An Alternative 

• States determine unit-by-unit baseline for measuring heat rate 

improvements using highest of years 201 0-2012-recognizes 

that substantial pollution control upgrades resulted in long outage 

periods during this time-frame so single year may not be 

representative 

• Measurement based on gross generation-recognizes that 

operation of pollution control equipment makes up majority of 

auxiliary power used at power plants 

• NSPS emissions rate test used for NSR projects 

HOOSIER 

ENERGY '\!• 

3 

HOOSIER 

ENERGY 

. '~'"' 

4 

1 

. 

2 
An Alternative 

• Recognizes remaining useful life of existing resources: 

• Units online before 1978 phase out in 2030 unless they meet lll(b) new 

source performance standard 

• Units online 1978 and later phase out in 2050 unless they meet Ill (b) new 

source performance standard 

• Pre-1978 units that have performed significant upgrades to pollution control 

equipment from 2003 to present would also be included with the units from 

1978 and beyond 

• Recognizes that billions of dollars have been invested in recent years to 

comply with multiple EPA regulations with expectation of 33 years or more of 

continued operation 

• Reduces burden on consumers to pay for these investments and new 

replacement generation at the same time 

• Consistent with DOE timeline that more advanced and cost effective carbon 

capture technologies could be developed beyond 2035 

An Alternative 

• Assuming average heat rate improvements of 2% and replacement of 

pre-1978 coal generation with natural gas, estimated annual emission 

reduction in 2030 of 750 million tons under the alternative versus 612 

million tons under the CPP 

• Estimate is conservative as voluntary investments in renewables and 

energy efficiency programs would likely result in additional reductions 

• FERC, NERC regional transmission organizations and independent 

system operators retain emergency authority to determine facilities 

needed for grid reliability 

• At a minimum, alternative should be sub-categorization for small fossil 

electric power generation utilities as defined by SBA (750 employees 

or less) 

HOOSIER 

ENERGY 

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5 

HOOSIER 

ENERGY '.! .. 

6 

3 
4 
Hoosier Energy's Alternative to EPA's Clean Power Plan 

National energy policy should be determined by Congress, not by EPA. If Congress 

decides that transitioning to a lower-carbon economy is the energy policy path to pursue, then 

Hoosier Energy believes that transition should be done in an orderly and cost-effective 

fashion-one that recognizes reliability concerns and realistic time horizons and considers the 

useful life that remains in the valuable generating resources that currently exist. 

National concerns over natural gas availability prompted Congress to enact the Energy 

Supply and Environmental Coordination Act of 19741 followed by the Fuel Use Act of 1978 

(together, the Acts). The Acts essentially required all new electric generation to be coal 

capable. The Acts economically prohibited new generation from using natural gas as the 

primary fuel because of the historically higher fuel cost of natural gas coupled with the 

additional capital cost required to construct facilities that could run on both coal and natural 

gas. During the time the Acts were in effect, the nation's electricity needs grew substantially, 

particularly in rural America. As a result, about 60% of rural electric cooperatives' total 

baseload generation was constructed under the Acts. Although the Acts were repealed in 1987, 

their influence continued to shape the nation's preference for new baseload coal generation for 

the next two decades. Subsequent to original construction, billions of dollars have been 

invested in these coal-fired generating resources for pollution control equipment to meet 

numerous regulations issued by EPA and to ensure their continued economic and reliable 

operation for the remainder of their useful life-at least 33 years from the time the most recent 

investment was made in the unit. 

1 15 U.S.C. §791, et seq. 
Congress expects states to consider factors such as remaining useful life and stranded 

investments in determining the standard of performance to apply to each generating unit. The 

following alternative to the Clean Power Plan does just that: 

• States would determine unit-by-unit C02 emission limits based upon heat rate 

improvements that are achievable for each unit, taking into account investments in 

efficiency improvements that have already been made. Based on all unit-specific 

information, states would determine the mass-based emission limit applicable to the 

existing units. C02 emissions would be measured on a gross basis, which is consistent 

with all previous EPA rules. 

• On a unit-by-unit basis, states would use the highest of three years (2010, 2011 or 2012} 

to determine a C02 emissions baseline. This acknowledges that utilities were 

performing significant scheduled outages during this time-frame to install equipment for 

compliance with other EPA regulations and is consistent with prior EPA rulemakings. 

Natural gas prices were also at historical lows in 2012 which distorts normal coal 

generation capacity factors and, therefore, makes the use of 2012 as the sole baselineyear inappropriate. 

• Units which came on line prior to 1978 would be phased out in 2030 unless they can 

meet a valid new source performance standard by that time. 

• Units brought on line in 1978 or thereafter2 would be allowed to operate to 2050 unless 

they can meet a valid new source performance standard prior to or by that time. A 

2 Another alternative would be to consider any unit that has performed significant upgrades to pollution control 

equipment from 2003 to present to also be included with the units from 1978 and beyond. 

2 
2050 timeframe recognizes a remaining useful life of 333 years for these existing coal 

units. The timeframe is also consistent with the Department of Energy's timeline that a 

second generation of carbon capture technology might be developed by 2025 and more 

advanced and cost effective technologies could be developed beyond 2035.4 

• While the alternative should provide sufficient time for an orderly and cost-effective 

transition to a less carbon intensive energy portfolio, FERC, NERC, regional transmission 

organizations and independent system operators would retain their authority to 

determine which facilities are needed for grid reliability and to declare facilities that 

cannot close for that reason, if necessary. 

Based on a review of the nation's existing coal units and using a conservative assumption 

that pre-1978 coal units would be replaced with NGCC units, C02 emissions under the 

alternative are essentially equivalent to the CPP in 2030. 

At a minimum, EPA should recognize this alternative as a sub-categorization for small 

fossil electric power generation utilities as defined by the Small Business Administration. 

Hoosier would also propose that the CPP or any alternative have language which allows NERC 

to declare an energy emergency and utilize units as needed to insure reliability. 

3 Assumes EPA issues a final rule in 2015 and approves state implementation plans in 2017. To the extent these 

dates are extended then this timeframe would also be extended as investments in generating units would be 

continuing. 4 Energy .gov web site (http:/ I energy .gov /fe/science-innovation/ carbon-capture-and-storage-research/carboncapture-rd) discussing carbon capture R&D and t he 2"d and 3'd generation time line for more advanced and cost 

effective carbon capture. 

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Center for Energy Economics 

and Pubhc Policy 

Summnry Report 

The Impact of rhe Coal Economy on Wyoming 

Prepared for: 

Wyoming Infrastructure Authority 

~cbruary 20 I 5 

Robert Godby 

Roger Coupa l 

David Taylor 

T im Considine 

Center for Energy Economics and Public Policy 

Dcpanmcnr of Economics and Finance 

University of Wyoming 

Laramie, Wyoming 
TI1is page left blank. 
SUMMARY REPORT: IMPACT OF THE COAL ECONOMY ON \XfYOMI1 G 

EXECUTIVE SUMMARY 

Coal production has been a cornersronc of the 

modern Wyoming eco nomy since the 1970 's, and 

has served as Wyoming's most stable source of rax 

revenues over the past fo ur d ecades. In the current 

marker environment, the coal industry in Wyoming 

is facing significanr pressure. 0 espire irs critical 

role in Wyoming, few srudies have quanrified the 

coal industry's impact on the statewide economy, 

and rhose rhat h ave a re significantly our of dare. 

·lhis study addresses this info rmation gap by 

describ ing the importa nce of the coal sccror ro 

Wyoming's economy roday. lr documents the risks 

and challenges facing rhe coal industry in the future 

due to marker conditions and regulato ry 

threats, and using the most recent dara ava ilable, 

conducts an impact analysis to dete rmine how 

these risks could affect rhe Wyoming economy 

and state revenues through 2030. The porenrial 

impacts of proposed carbon regulations 

introduced by the Environmental Protccrion 

Agency's (EPA) C lean Powe r Plan arc also 

estimated, as a rc rhe potential impac ts rhar 

large-sca le inte rna tio nal coal cxporrs could have on 

\'Vyorning's economy. This report concludes 

with analysis of th e policy cho ices W yoming 

faces in response ro these marker challenges. 

Share of gross state produce (GSP): 

Share o r rota llabor income: 

Sha re of roral employment: 

Stare revenue direcdy from coal mining, 

nor including ocher activities: 

The Importance of Coal to the Wyoming 

Economy Today 

Since 2008, coal production in Wyoming has 

fallen by 17%, and coal marke rs remain depressed. 

Assessment of market forces char may have caused 

this decline suggests that rhe three most imporranr 

conrriburors ro the decline have been: 

• 

• 

FaJling natural gas prices, causing 

some coal ro be displaced as a 

gene ration fuel natio nally 

Slow national economic growth, 

which has reduced electricity 

d emand and the need for 

W yoming coal 

• Growth of renewable energy 

production, which has displaced 

some coal-fired generation 

Figure ES-l summarizes rhe outlook from five 

well-known energy marke t forecasters rega rding 

coal production over the next 25 years. Four of the 

five rorecasrs suggesr 7.ero or nega tive growth in rhe 

nca r te rm relative ro rhe cu rrent national ourpur of 

Coni economy 

14.0 % 

9.3% 

5.9 % 

Coal mining only 

11.3% 

4.7% 

1.8 % 

$ 1.3 billion, or 11.2% of aJI government 

revenues collected in the state 

7l;e "coni economy" includes rtf/ rtctivity mused by the presence of con/mining, 

mil-shipping nnd coni-fired electricity genenuion in \'(lyoming. 

All figures used are for fiscal year 2012. 
!MPACTOFTII E COAL ECONOMY ON WYOM INC 

1,600 

1,400 1 

1,200 

400 

200 

flA -2014 RefNence EVA ICF IHSGI INFORUM 

• 2025 1035 2040 

Figure ES- 1. Forecasts of U.S. coal production. 

approximately I billion to ns annually. 'I h rough 

2040, rhc ourlook for coal productio n gers 

considerably weaker in several cases, paniculary 

those that assume more stringent carbon regulatio ns 

occur. 

The Potential of Expanded International 

Coal Exports from Wyoming 

Coal ex ports ro internatio nal markets provide one 

possible means of protecting and expand ing future 

coal productio n in Wyoming. The primary challenge 

facing a majo r expansion ofWyom ing coal cxpons 

ro fo reign desrinarions is a lack of port capacity 

char would allow expansion of expon shipments 

ar competitive cost. Development of such pons 

has proven difficulr. and has ofren been opposed 

outside Wyoming on environmenraJ grounds. 

Conce rns associated with port d evelopment -

primarily in Oregon and Washingron - range from 

local traffic congestio n problems, dust and air 

quali ty concerns, and the impli ca tio n that such 

exporrs could conrribure significantly ro global 

climate change. 

2 

In addition ro environmental concerns, however, 

rhe greatest challenge in achieving such port 

expansion may be the perceived weakness of 

the coal marker and d omestic coal producers 

themselves. For example, Arch Coal, Inc., a 

financial backer o f o ne of rwo proposed large wesr 

coast port expansions (M illenn ium Bulk Termin al 

in Lo ngview, Washi ngto n) has experienced a sharp 

decline in irs capiral value. Arch Coal ho lds a 38% 

invesrmenr in the project. In November 20 14, 

Ambrc Energy, Ltd., the majori ty backer of the 

Millenn ium Bulk Terminal projecr, announced 

in a regulatory fi ling rhat it was divesting irs 

Norrh American coal export assets, selli ng them 

lO a Denver-based private-equity firm. Further, 

Peabody Energy Corpo ration, owner of half of the 

pro posed Gateway Pacific Terminal in Bellingham, 

\'V'ashingron is also in weak financial condition. 

Cloud Peak Energy, Inc., with an interest at borh 

planned rerminals recently reported losses o n coal 

exporrs and di vesred o f export mine interests. 

Weakness in U.S. coal markers has lefr domestic 

firms with limited ability to finance large-scale 

investments. The general market willingness to 

suppo rt such projecrs is also u nce rta in. 
IMPACT OF THE COAL ECONOMY ON WYOMING 

If opposition ro proposed new terminals could be 

overcome and rhe projects financed, rhe impact 

on rhe Wyomi ng economy could be substantial, 

especially if all of rhe proposed terminal capacity 

were accessible. Most of these potential economic 

benefits would accrue ro rhe Powder Ri ver Basin; 

however, rhc secondary effects would be felt 

throughout rhe stare. 

Threats to the Domestic Coal Market 

In add ition to international export scenarios, this 

reporr analyzed rhe potential impact of existing 

domestic ma rker challenges. Using rhe U.S. 

Energy Information Agency's (EIA) An nual Energy 

Outlook 2014 (A£020 14) projections, autho rs 

assembled several Wyoming coal production 

scenarios. These scenarios considered the following 

influences on coal production: 

I. Fundamental market efficts driving coal 

market demand and production costs: 

• Conrinued weak demand due to low 

natural gas prices caused by recent 

increases in domestic natural gas 

production 

• Continued weak demand due to 

slower national economic growth 

lead ing to slower electricity load 

• 

growth 

Decreases in p roductivity growrh in 

rhe coal mining sector, resu lting in 

increased coal production costs 

2. Regulatory changes a.Decting Wyomi11g energy 

rnarkets: 

• U.S. EPA p roposed Clean Power 

Plan fo r new and existing electricitygenerating power planrs1 

The EPA Clean Power Plan is also referred to as 

"Ill (d)"- the section number of the Clean Air Act that 

the rule falls under. 

3 

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I ', I' I i I' I \ i •/., I .. 1:·, II ) l\1 

Increase in Gross State Produce 

$ 1.2 billion annually 

Increase in jobs: 

4,000+ new jobs 

Increase in labor income: 

$345 million annua11y 

Analysis of EIA coal p roductio n projections using 

an impact model consrrucrcd specifically for rhis 

srudy suggests that of the fundamental factors that 

may decrease Wyoming coal production, rising 

coal costs pose the g reatest rh rear. For example, 

using rhe ETA's scenarios and assumptions, in 

a worst-case scenario assuming an economy ar 

fu ll employmenr and growing normally, coal 

production in Wyoming could fall by 20% from 

20 12 levels by 2030. The decrease could occur due 

to lower productivity growth ar mines and higher 

wage and capital cosr growth rhan recent historic 

norms. Based on these assumptions, employment 

losses in the stare wou ld roral nearly 4,800 jobs by 

2030, relative to 20 12 employment levels. 

Assuming no changes to the regulatory landscape 

of 20 12, EIA p rojections suggest low natural gas 

p rices and slowingeconomicgrowth presen t a much 

smaller th reat to future Wyoming coal productio n 

than rising coal p roduction costs. In both low gas 

price and slow growrh scena rios considered, coal 

output levels would be between 4% and 8% greater 

by 2030. While adverse marker effects could result 

in less ourpur rhan rhese estimates, especially if 

multiple market effects occurred simultaneously, 

rhe analysis suggests thar fu ndamental marker 

facrors pose a less serio us rhreat ro Wyomi ng coal 

production rhan those presented by potential 

carbon regulations. 
Potential Impacts of the EPA's Clean Power 

Plan Proposal 

lhe EPA's Clean Power Plan targets carbon dioxide 

emissions reductions of 30% of 2005 levels, but 

places the burden of reduction unevenly among 

states. ln Wyoming, the proposed rules would 

require a reduction in the stare's CO 1 emissions 

rare by 19% from 20 12 levels. 

The: EPA's proposed Ill (d) rules allow stares 

to determine rhe means of meeting mandated 

~:missions reductions goals. These may includt: 

energy efficiency as a reduction mechanism, and 

stares may choose to design regional compliance 

programs, cooperating with other stares. Given the 

range and uncerrainry of the policy combinations 

states may choose, projections of the potential 

impact of the proposed regulation were performed 

as four separate scenarios. Scenarios considered 

include allowing energy efficiency (EE) to be used 

as a compliance strategy, and the degree of srate 

cooperation (nationwide or regional). Scenario I 

considers national scale cooperation with energy 

IMPACT OF THE COAL ECONOMY ON WYOMING 

efficiency; Scena rio 2 considers national scale 

cooperation without energy efficiency. Similarly, 

Scenario 3 considers regional level cooperation with 

energy efficiency and Scenario 4 considers regional 

level cooperation without energy efficiency. 

To define the potential impacls of the EPA 111 (d) 

proposals, authors enlisted the help of Rhodium 

Group, a New York-based consulrancy that 

shared a set of proprietary simulations developed 

to esrimare rhe impact of rhe EPA's proposed 

greenhouse gas (GHG) regulations on the 

national economy. A comparison of the Rhodium 

Group modeled scenarios corresponding to those 

scenarios considered in th is study for Wyoming 

coal production is presented in Figure ES-2. 

Regardless of how policy is implemenred, 

imposmon of proposed II I (d) rules results in 

a significant decline in projected Wyoming coal 

ou~ut in all scenarios. By 2030, these declines 

range from approximately 20% to 4 5% decreases 

from 20 I 2 production levels, depending on the 

scenario. 

Coal Production: 111(d) Scenarios 

500 

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- 111d • Nat ana w/ EE 

llld· Reg ·ona.w/ EE 

- - GHG 525 1nc S~b annua 'i 

GHG $1C n:: 5:a annua ~ - ow gas 

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- AE0201' Reference 

- llld · Nat ona wi o EE 

- llld ·Reg ana ,•;/o EE 

- • • GHG 510 nc 5';, annua ..,. 

Figure ES-2. C<>al production projections across Ill (d) regulatory scenarios. 

4 

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R R R R 
IMPACT OF THE COAL ECONO~IY ON \WOMI 1

G 

For comparison, aurho rs show how forecasrs for 

various carbon raxes, a commonly considered 

policy option, compare co rhe EPA's Ill (d) rules 

using the EIA AE020 14 carbon tax scenarios. 1l1e 

impacr of a greenhouse gas rax of $ 25/ron results 

in the mosr detrimental hypothetical ourcome for 

coal production, and ocher scenarios with a $ 10/ 

ton rax level have an impact similar ro the various 

Ill (d) scenarios modeled. 

The ways in which other srares choose ro implement 

I I I (d) compliance measures have an impact 

on Wyoming. In order of p roduction outcome 

from best (greatest production) ro worst (least 

production), the policy scenarios considered rank 

as follows: 

I. 1 a tiona I cooperarion wirh energy efficiency 

2. Regional cooperation with energy efficiency 

3. National cooperation without energy 

efficiency 

4. RegionaJ cooperatio n without energy 

efficiency 

Including energy efficiency. regardless of the scale 

of cooperation wich o cher scares, resulcs in greacer 

coal production chan scenarios that do nor include 

,.. .... : v v c 

lll(d) Employment changes 

due to Coal Impact (Statewide) 

• • I 

·2 c=• 

2::20 

• llld- Not ona \. EE • llld - Not ona \ o EE 

• llld- Reg ona v 1 EE llld- Reg ·ona vue EE 

energy efficiency. Energy efficiency measures 

n.:duce electricity demand and d fecrively result in 

carbon reduccions across the wider economy. 

ll1e I I I (d) dimare regularion has the porenrial 

co drastically d ecrease Wyomi ng coal producrion. 

Projected coal oucput under rhe most favorable 

producrion circumstances decreases by 32% of 

2012 produccion by 2025. Using rhe production 

outcomes described in Hgure ES-2, even in rhc 

bcsr case, impacr modeling of rhe Ill (d) scenario 

suggcscs a loss of over 7,000 jobs across rhc state 

by 2025, relative LO 20 12 employmenr. Orher 

scenarios analyz.cd exhibit continuous and greater 

losses. Eftccrs of the regulations would impact 

the Powder River Basin region ofWyoming most 

severely, where one in ten jobs would be eliminated. 

Complicating rhe analysis of rhe economic impact 

of the EPA's Ill (d) rule on the Wyoming economy 

is the potential to usc lucl-swirching between coa l 

and natural gas as a mea ns for the srare to compl y 

wirh the regulation. Since Wyoming produces 

a significant amounr of natural gas, authors 

accounted for porcnri:dly mirigaring cffccrs of rhc 

narural gas secror ro determine rhe overall impact 

of rhe EPA's proposed Clean Power Plan regulations 

o n the scare. 

-2.o=. 

. .:.c;. 

lll(d) Employment changes 

due to Gas Impact (Statewide) 

--·· . 111 .11 

• 

2~25 

I 

• 111d - Na: ana \'• EE • 111d- f.Jat ana \I o EE 

a llld - Reg ana v. EE 11ld - Reg ana v. 'o EE 

Figure ES-3. Combined coal and natural gas employmen t effects due to EPA lll (d) impactS. 

5 
This analysis indicates rhar despire the Ill (d ) 

rules stimulating Wyoming's natural gas sccror, 

employment losses in the stare's coal industry arc 

no r offset by the additional natural gas productio n 

prompted by carbon regulation. The negative 

impact to employment in Wyoming from reduced 

coal production is appr~x matcl y rwo to four 

rimes larger rhan rhe positive employment effects 

from narural gas production. Across all scenarios 

a naly-zed, the total impact on statewide employment 

ranges from a 0.3% decline in 2016 ro a 3.2% 

decline in 2030, relative to 201 2 employment levels. 

The impact of the regulations would be expected ro 

lead to a contraction in statewide economic activity 

and employment regardless of any orher offsetting 

economic growth in Wyoming. 

IMPACT OF T HE COAL ECONOMY 0 ' \VYOMI 'G 

State Revenues 

Amhors analyzed borh rhl' d tecr of changes in coa l 

productio n from fundamental marker risks (shown 

in Figure ES-4 - adverse production cost changes, 

slow economic growth, and continued low natural 

gas prices) and potential Ill (d) impacts on 

state revenues. Of the fu ndamemal marker risk 

scenarios, srate revenues were highest in the case 

of higher coal productio n costs, rhe worst outcome 

for the wider Wyoming economy in terms of 

employment and productio n. Conversely, stare 

revenues were lowest in the low coal production 

costs scenario, the best outcome for the statewide 

economy. Other scenarios had little impact on 

stare revenues. 

Total Coal Economy State Revenue Change from Reference: 

Market Scenarios 

---- -• I 

-2a.c=. 

-!.O.C' o 

H ~h E:::cn L01· E:::on H gh Coa Cost 

Figure ES-4. Total coal economy tax revenue change. 

7he scenario in which coal 

production is highest results 

in the lowest tax revenues to 

Wyoming. 

6 

-· I --• ---

Lew Coa Cost t- gh Gas Ro L01·. Ga5 Re501.r:::e 

The potential impacts of proposed ca rbon 

regulations o n stare revenues are severe. The mosr 

favorable o utcomes for stare revenues are those in 

which energy effi ciency is used as a compliance 

strategy, as shown in Figure ES-5. 

Because EPA's I II (d) is anticipated ro increase 

demand for natural gas in d ccrriciry generation, 

autho rs also considered the potentially o ffserring 

effects rhis could have on srare revenues. Combined 

coal and gas effects on srare revenues are shown in 

Figure ES-6. Tax revenues continue ro decline in 

all poli<:y implementation scenarios, suggesting 

that positive natural gas effects do not offset thl' 
IMPACT OF THE COAL ECONOMY ON WYOMING 

Total Coal Economy Tax Revenue Change from Reference: 111(d) 

Scenarios 

---· I I 

• llld - I Jat on a W' EE • 111d- Nat on a w/o EE e llld- Reg ona \',I EE • llld- Reg ona ,·,/o EE 

Figure ES-5. Total economy tax revenue change: Il l (d) scenarios. 

Total Energy Tax Revenue Change from Reference: 111(d) 

Scenarios 

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• 1::::1 - tic: on a ,., EE • 111::1- IJ~: on a\ o EE llld- Reg ona \'• EE • llld- Reg ona v. o EE 

Figure ES-6. Total energy economy tax revenue change: I ll (d) scenarios. 

losses in state revenue due ro lower coal productio n 

caused by 111 (d). Authors also fo und that stare 

revenue is highest in Lhe scenario worst fo r coa l 

productio n. O verall, proposed carbon regulations 

n:sulr in a predicted decline in the stare's combined 

coal and natural gas revenues of berween 36% and 

46% by 2030, as shown in Figu re ES-6. 

Conclusions 

')he greatest risks Wyoming's coa l indusrry faces. 

and by extensio n the grcarcsr risks to stare revenues 

d erived from coal production, arc posed by proposed 

carbon regulations. Significant expa nsion of 

inrcrnario nal coal ex pons on rhc o rder of I 00 million 

rons annually may be possible with the openi ng of 

proposed new export terminals, which would have 

significa nt economic hencfir ro Wyoming. 

7 

Wyoming may have to 

choose whether to prioritize 

production and employment 

or its own revenues in 

implementing its carbon 

mitigation strategies. 
By 2030, the rem1inals would nor, however, en tirely 

ofEer the potential coal p roductio n losses resulting 

from carbon regulatio ns in any of the poli cy 

scenarios considered in rhis study. 

1l1c ways in which po licymakers in Wyoming and 

across the nation implement strategies ro meet 

new carbon regulations is critical to rhc economic 

impacts the stare will experience. G reater usc of 

energy efficiency measures coupled with wider 

cooperatio n among stares ar a natio nal scale arc 

critical to minimizing the impact of rhe regulation 

o n Wyoming's economy. 

IM PACT OF T i lE COJ\L ECONOMY ON WYOMING 

1l1e ways in which Wyoming implements policies 

to meet carbon regulatio ns wiU also have an impact 

on stare revenues. Policies char result in the highest 

scare revenues have th e worst impacts on the coal 

industry and by extension statewide production 

and employment. This suggests that the stare 

may have ro choose whether ro prioritize stare 

productio n and employment o r irs own revenues 

in implementing its carbon mitigation strategies. 

Mo re impo rtant will be whether Wyoming can 

inAuence o ther stares ro implement carbon co n trol 

strategies least d etrimental ro irs coal industry. 

This report would nor have been possible withou t assistance from a number of people. Thank 

you ro Mahd i Chahkandi, G abrielle H orvath and Jcnna Canrrcll, rhe dedicated graduate 

srudenrs who helped with rhe data collection and analysis necessary ro prepare rhis report. 

We are also indebted to Trevo r H ouser and Rhodium Group fo r allowing us the use of 

their EPA lll (d) rule simulations describing the po tential effects o f these pro posed rules o n 

Wyoming coal and narural gas output. Their willingness to share is grcarly :1ppreciated. 

Others served as resources, offered patienr help and guidance in the preparation of vario us 

secrio ns in this repo rt and deserve mentio n. (an Andrews at Rocky Mounrain Power read 

several versio ns of ea rly chapters, offeri ng correctio ns and comments. Help and insight was 

also oHe rcd by rhe W)roming T nfrasrrucrurc Autho riry (WLA) Study Technical Support G ro up, 

including Jo nathan Downing (Wyoming Mining Association), Marr Jo nes (Burl ington 

No rthern Sanra Fe}, Everett King (Ambrc Energy), Bill Mai (Univcrsiry of Wyoming), 

Colin McKee (Wyoming Governor's OfHcc), Rita Meyer (Rocky Mountain Power), 

Dan Noble (Wyoming Department o f Revenue), Joe Ritzman (SSA Marine), Greg 

Schaefer (Arch Coal), Deck Sloan (Arch Coal), John Lowell (Arch Coal), and Nathan 

Nicholas (Wyoming Governor's Office). WlA board members Mike Easley 

(Chairman); Kyle White (Vice Chairman); Do n Collins (Treasurer); David Sparks 

(member); and J.M. Shafer (member) also con tribured to this effon:, as did fo rmer WlA 

board member Bryce Freeman (Wyoming's Ofllce of Consumer Advocate). 

The report could no t have been completed ,.vithou t rhe support o f rhe WJA, and in particular 

irs Execmive Directo r, Loyd Drain, and rhe effo rts of L:lllra Ladd, o ur project liaison. 

Assistance from the Universiry of Wyoming's School of Energy Resources (SER), especially 

Abby Mellinger Scott and Diana Grant Hulme, was also crucial to the project. Funding for 

rhe repo rt was provided by rhe WIA and rhc ER. 

As usual, all errors remaining arc strictly rhe autho rs', and are nor the respo nsibility o f those 

who have helped us along the way. Thank you everyone, and a hearrfelr than ks and ou r 

apologies to those we have fo rgotten to mcncion as well. 

8 




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