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)