Study Details Impact of Domestic Coal on American Economy

The Economic Impacts of Coal Utilization and Displacement in the Continental United States, 2015 by Adam Z. Rose, Ph.D., and Dan Wei

Executive Summary

Our analysis shows that, in 2015, U.S. coal production, transportation and consumption for electric power generation will contribute more than $1 trillion (2005 $) of gross output directly and indirectly to the economy of the lower-48 United States. Based on an average of two energy price scenarios summarized below, we calculate that $362 billion of household income and 6.8 million U.S. jobs will be attributable to the production, transportation and use of domestic coal to meet the nation’s electric generation needs.

The United States relies heavily on coal to produce electric power. Domestic coal production has expanded from 560 million tons in 1950 to 1.13 billion tons in 2005, while coal consumption for electric generation has increased from 92 million tons to 1.04 billion tons in this period. Historically, coal has provided the lowest cost source of fossil energy in the U.S. Electricity is one of the most prominent commodities traded in the United States, second only to food in annual sales volume.

We based our analysis on state-specific “IMPLAN” input-output tables -- a widely utilized source of data on the composition of state economic activity -- to estimate the basic direct and indirect “multiplier” effects of coal utilization for electric generation. These multiplier effects include the economic impacts of coal mining and of government spending of taxes paid by coal mining for electricity generation, by companies that transport coal, and by coal-fueled electricity generation companies. We calculated results at the state level and compiled regional summaries by dividing the nation into five geographic regions (see Figure S1, in the PDF linked below).

The study first presents estimates of the positive economic output, household income, and jobs attributable to projected levels of coal production and utilization in 2015. We used a 2015 base case because electric generation and other projections for this year were readily available from U.S. DOE and U.S. EPA. These estimates measure the “existence” value of coal as the key fuel input into U.S. electricity generation. The analysis includes estimates of the impact of higher electricity rates on individual state economies if utilities were required to utilize fuel sources and generating technologies more costly than coal-based electricity.