Coal's decline puts some communities in economic peril
Local governments face severe economic risks from coal's ongoing decline and future climate policies, yet often fail to disclose these threats in their municipal bond filings, a report shows.
Why it matters: It's a sobering look at what could be in store for specific mining-dependent regions, where coal revenues account for a third or more of the budget, and the sector's collapse could have severe ripple effects.
- The analysis — from a Columbia University energy think tank and the Brookings Institution — arrives as Democratic White House hopefuls push emissions policies that would hasten coal's power-sector decline.
- However, the Democratic proposals also aim to help fossil fuel workers and communities transition to other economic sectors.
What they found: One conclusion is that "even a moderately stringent climate policy could create existential risks for the coal industry." Mining employs roughly 53,000 people and its economic importance to coal-dependent regions affects far more people still.
- Another is that while new climate policies would further threaten coal-mining regions' ability to pay outstanding bond debt, their filings fail to capture this.
- "[O]ur review of the outstanding bonds indicates that municipalities are at best uneven and at worst misleading (by omission) in their characterizations of climate-related risks," it states.
The bottom line: The report emphasizes the need for economic diversification of coal-reliant economies — and federal investment and support for these regions and their workers.
- "A new source of government revenue may be required to push a serious economic development program across the finish line, and logical source of these funds would be a federal carbon price," it states.
Go deeper: Coal communities risk fiscal collapse (Washington Examiner)