Wyoming coal is projected to have its second worst production year since its peak in 2008. Economists say the decline will likely continue, putting the state’s economic future on shaky ground.
Despite the Trump administration’s push to boost the coal industry, production totals for the past year are expected to hover around 200,000,000 short tons. For comparison, it was 466,319,331 in 2008 – more than twice what production is now.
“This year in Wyoming, it'll probably be the second worst [production] year ever, after last year,” said Robert Godby, University of Wyoming associate economics professor. “So, it's not great by historical standards at all.”
Godby also sits on Wyoming’s Consensus Revenue Estimating Group (CREG), which forecasts state revenues. And coal is a big player.
“We are so dependent on coal mining revenues in our state budget,” Godby said. “We don't have an income tax. The sales tax is competitive with other states. We've recently reduced our property taxes, which puts more strain on our revenue base.”
Coal contributed $563 million to the state in taxes, royalties and fees, according to the Wyoming Mining Association’s most recent estimate based on 2022 numbers. Godby added that about 12,000 Wyoming jobs benefit from coal.
Over the last 50 years, the state has made bank from coal – billions of dollars to fund the government, schools, roads and parks. The state now has its own sovereign wealth fund thanks to coal.
Consequently, Wyoming is trying everything to prevent coal production from continuing its 16-year decline. This has included reducing state severance tax rates, previously suing the federal government for unfavorable regulations, researching non-electricity generation uses for coal and mandating studies into carbon capture technology. The latter could potentially make burning coal a much more environmentally friendly option, although it’s largely unproven on a commercial scale and is estimated to be very costly.
“We really can't afford to lose a source of revenue without making really difficult political decisions, like creating an income tax or raising other taxes,” said Godby.
That’s why when Pres. Trump took office, Wyoming sighed relief. The administration has promised to bring coal back through its ‘Unleashing American Energy’ agenda. This has included rolling back fees, taxes and regulations; opening up new federal land for coal; and putting hundreds of millions of tax payer dollars toward reviving the industry.
Even still, experts project coal to continue its decline.
“Really it just comes down to cost,” said Godby. “It's just more expensive to run a coal fired power plant. The power plants in the country are fewer and fewer because they're all getting older.”
Electricity companies operating the coal plants have scheduled retirement dates for many of them. Wyoming’s Naughton plant outside of Kemmerer is fully switching to natural gas by the new year.
The Trump administration has mandated in the eleventh hour that some retiring coal power plants remain open. The order most recently impacted two plants in Indiana, but so far hasn’t included Wyoming.
Godby said keeping aging plants operating is tricky. He compared it to an old car.
“You get to the point where you say, ‘I don't think it's worth it to put new tires on it, or to replace the brakes.’ You're just going to drive it until it makes more sense to buy a brand new one,” Godby said. “And that's kind of how coal fired power plants are. They've gotten to the point where they have a lot of deferred maintenance. They're also just old, and so for that reason, they're more expensive to run.”
The last new coal plant in Wyoming was built in 2011, the Dry Fork Station near Gillette.
“That one is considered the only power plant in the country that can compete with renewable energy,” Godby said. “There's only one power plant in the country that can do it, and it's right next to the cheapest source of coal in the country.”
That source is a coal mine less than a mile away from the plant, so it costs very little to transport the mineral.
So instead of “buy a new one” like in the used car example, Godby said utilities aren’t building new coal plants, they’re opting to switch to natural gas or renewable sources of energy. In fact, this year renewable energy has outpaced coal as the main source of electricity across the world.
“The bottom line is, our energy system is evolving towards a renewable basis, with natural gas being kind of the fossil fuel backup,” Godby said.
Despite the Trump administration slightly slowing that shift, he said the decline is still inevitable. Godby pointed to the recent coal lease sales scheduled this past fall. Industry celebrated the news, as the last successful federal sale in the Powder River Basin (PRB) was in 2012 – that gap is due largely to a lack of industry interest. The PRB stretches from northeast Wyoming into southeast Montana, and it’s the top producing coal region in the U.S.
The first sale this past fall was for Montana, and it wasn’t successful. The coal company bids were so low, the federal government couldn’t legally accept them. The Wyoming sale was indefinitely postponed.
“The fact that they've had to cancel lease sales when this is such a pro-coal administration tells you that even the White House can't offset markets,” Godby said. “Markets are really the final determinant of whether coal is going to be around in the power generation market.”
Although the Trump administration recently opened up new land for potential coal leasing in the Powder River Basin, sales have yet to be scheduled.
