Hard questions for Colorado towns that have hitched their wagons to coal
by Allen Best
One Sunday evening last September, while on a reporting trip to northwestern Colorado, I paused along the banks of the Yampa River west of Steamboat Springs to look for evidence of an old coal-mining town.
In 1979, I had worked as a reporter in Steamboat Springs and Craig. It was a boom time in both towns, but for somewhat different reasons. Steamboat’s ski-based economy was exploding. In Craig, the busyness was all about construction of the three giant coal-burning units at what was and is collectively called Craig Station.
Shuttling between the two towns in my blue Ford Pinto, dropping off freshly minted copies of the Hayden Valley Press at the airport and other locations, I used to see the sandstone foundations for Mt. Harris. It was one of several old coal mining towns scattered around Steamboat Springs. The kids in Steamboat, I was told, were called “slats,” because of their affinity for skiing on Howelsen Hill. The slats and the coal-mining kids were rivals.
Mt. Harris closed in 1965, after the seam played out, and 50 years later in the glowing gloom of that evening last September, I was hard pressed to see the evidence of this one-time town. Had I confused the location? No, a commemorative marker confirmed that this had been Mt. Harris.
Today, the coal-mining economy of Northwest Colorado remains similarly in doubt. Three coal mines and four coal-fired power plants are located within a 45-minute drive of Steamboat Springs, and all face at least low-level legal, cultural, and economic threats.
One of those mines, Twentymile Mine, is located about 20 miles south of Steamboat Springs amid hills covered with serviceberry and oak brush. At one time, giant shovels scooped mounds of coal from the valley, but that ended in the 1990s. The mining has moved underground. Even so, Peabody Energy, the owner of the Twentymile Mine, is the No. 1 property taxpayer in Routt County, paying three times the bill of Intrawest, the owner of the Steamboat ski area.
Veering toward bankruptcy
But Peabody has had its troubles. In mid-March, it announced it would delay payment of $71.1 million in debt payments and might seek bankruptcy protection. The New York Times on March 20 noted that three of the other large coal companies in the United States have done so already.
Banks have been pulling back from financing coal companies, the Times explained. The latest, JP Morgan Chase, recently announced it will no longer finance new coal-fired power plants in the United States or other wealthy nations. Bank of America, Citigroup, and Morgan Stanley had already announced that they are, in one way or another, backing away from coal.
Bankers have given different reasons. Some want to do their part to curtail climate change. For others, it’s strictly a business decision about risk. Coal is being undercut by less expensive energy sources, especially natural gas, but also by renewables and by stiffening regulations.
Environmental groups have also been trying hard to make life difficult for coal mining. Earlier on that Sunday last September, I had been in Craig after meeting with the mayor and a Moffat County commissioner. It was a Bronco game day, and so I cased the liquor store, to see what might be selling.
Conspicuously absent was my own beer of choice, Fat Tire. Not that I intended to do any swilling while on a reporting trip. But Fat Tire and its brewer, Colorado-based New Belgium, had been in the news earlier in the year. New Belgium had given money to an environmental group called WildEarth Guardians. The Guardians, in turn, had filed a lawsuit challenging federal leasing of coal at the ColoWyo Mine. Coal from that mine keeps the fires going at the three power plants at Craig Station, Colorado’s second largest electrical generating complex—and a major provider of electricity for many of Colorado’s ski towns.
The ColoWyo Mine employs 230 and the power plant another 300, many of whom live in Craig, population 9,000.
In response, all merchants in Craig had withdrawn all Fat Tires and other New Belgium products from their coolers.
This was not the first spear flung by WildEarth Guardians. Responding to another lawsuit, U.S. District Court Judge R. Brooke Jackson in 2014 had ruled that the federal government erred in its analysis of a proposed mine near Paonia. The government described in detail the job creation and other economic benefits of the mine but glossed over the economic harm caused by burning coal.
In Craig and other coal-mining towns of Routt, Moffat, and Rio Blanco counties, there’s a very different sense about all this. The three-county area has 3,149 of Colorado’s 8,467 coal-mining jobs, according to a report by economist Gary Horvath for the Economic Development Council of Colorado.
Coal pays well, too, at least compared to most jobs in the blue-collar sector. The mining jobs in northwest Colorado deliver an average household income of $110,449, according to Yampa Valley Data Partners.
Can Craig—and Hayden and Yampa and Oak Creek—figure out a different way to make a good living?
In Craig, so far, there seems to be little overt interest in even looking for alternatives. Atmospheric pollution? Many protest it as overblown. “Now, Denver and Boulder, that’s where you get air pollution,” they say.
If they concede carbon dioxide as a greenhouse gas, they dismiss the importance of U.S. efforts to reduce emissions. “We will throw the United States economy into a further tailspin because of this nonsense, and for what? One-hundredth of a degree,” said John Kincaid, a Moffat County commissioner, when I visited with him on the grounds of Northwest Colorado Community College.
Kincaid was referring to an estimate by the Cato Institute of how much the Environmental Protection Agency’s Clean Power Plan will slow global increases in temperature.
This was originally published in the March 28, 2016, issue of Mountain Town News. Please consider subscribing or donating (red box in upper right).
The EPA’s plan was formulated in response to a lawsuit filed by Massachusetts and 11 other states plus three cities and 13 mostly environmental non-government groups. In a 5-4 decision, the U.S. Supreme Court in 2007 ordered the EPA to show why it shouldn’t regulate emissions of carbon dioxide and other greenhouse gases from smokestacks under the Clean Air Act. It goes uncontested that coal-fired electricity plants account for roughly 28 percent of America’s annual greenhouse gas emissions.
Last August, almost eight years after the Supreme Court decision, the EPA announced the final Clean Power Plan. It runs more than 1,500 pages, plus supplements. The plan requires states to significantly reduce greenhouse gas emissions by 2030—in Colorado’s case between 32 percent and 38 percent.
The EPA gives states great flexibility in how to achieve reductions. Colorado can increase use of natural gas, which produces half the carbon dioxide of coal when burned, add more renewables, or even cut energy demand, by pushing greater efficiencies.
Colorado looks to be in relatively good shape. The EPA set an interim goal for 2022 and then a final goal for 2030Given all that it has already done and what is in the pipeline for the next few years, Colorado almost certainly will meet the 2022 goal and is about three-quarters of the way toward achieving its 2030 goal, according to Erin Overturf, senior staff attorney for Western Resource Advocates.
Howard Geller, director of the Southwest Energy Efficiency Project, also sees Colorado being in good shape. “It’s not huge in terms of what it’s calling for as opposed to the path we’re now on. That’s the relevant comparison: the path we’re on now and where the EPA said we need to get to. There isn’t that big a difference.”
Improved efficiency, said Geller, is the most cost-effective way to comply with the EPA’s requirements. “There’s still a lot we can do with energy efficiency in the state,” he said.
Still, there will be changes by 2030. “It’s fair to say that in order to meet these goals, there are going to have to be some changes in how we use energy in the state of Colorado,” said Will Allison, director of the Air Pollution Control Division at the Colorado Department of Public Health and Environment, when I interviewed him in September. “I think we can meet the challenge, but it’s not a slam dunk.”
Losing ground for a decade
Colorado’s population grew from 4.6 million to 5.4 million from 2004 to 2014, or about 14 percent. Demand for electricity grew at a slower clip, 11 percent, and has tapered since the recession.
Coal lost ground during the decade. It was responsible for 74 percent of electrical generation in 2004 but last year shrunk to 60 percent. Renewables have filled the gap, expanding from 3 percent a decade ago (that includes electricity from big dams in the West) to 17 percent in 2014. More specifically, wind has been the major story among renewables.
Natural gas has had smaller gains. During the next two years, however, it will become a larger slice of the energy pie, as Xcel completes replacement its old coal-fired power plants in Boulder and north of downtown Denver with natural gas-burning units by the end of 2017. Two of the four units have already been replaced, as outlined in the Clean Air, Clean Jobs Act of 2009.
That will significantly reduce Colorado’s greenhouse gas emissions from the power sector—but also shed jobs in Northwest Colorado. Coal for the plants comes from the Twentymile Mine.
When all is said and done, Xcel will have retired a third of its coal-burning fleet between 2004 and 2018, while adding just one unit, the Comanche 3 plant at Pueblo (partly owned by Holy Cross Energy).
Going online in 2010, Comanche 3 converts coal at 36 percent efficiency, according to Xcel, compared to 33 percent efficiency of older units. Combined-cycle natural gas plants are even more efficient, achieving 60 percent efficiency, points out John Nielsen, of Western Resource Advocates. This means fewer greenhouse gas emissions per megawatt-hour produced from coal.
Nielsen projects that coal will shrink further to 40 percent of the state’s energy mix by 2030.
Will the Clean Power Plan create stranded assets? That’s the phase used to describe still operable fossil fuel plants retired early because of public policies or new market forces. That’s a sensitive issue because newer plants have not been fully depreciated.
“The plant age is relevant to this discussion,” Martha Rudolph, director of environmental programs for the Colorado Department of Public Health, said at a meeting sponsored by Women In Sustainable Energy. “Given the flexibility the Clean Power Plan allows states in implementation, it’s unclear to what extent—if at all—utilities will see any stranded assets,” said Stacy Tellinghuisen, an analyst for Western Resource Advocates.
A legal challenge to the EPA’s authority could slow or even block implementation of the Clean Power Plan. Colorado Attorney General Cynthia Coffman, a Republican, joined 26 other states in a lawsuit that alleges the EPA has over-reached its authority under section 111 (d) of the Clean Air Act.
Colorado has decided to prepare its plan on the assumption that EPA authority will be upheld.
Coming and going in South Routt
South of Steamboat, some see the end of coal as probably inevitable. The valley is iconic Colorado, with the Yampa Valley curling from the Flat Top Mountains through Egeria Park and down past the towns of Yampa and Phippsburg.
Local schools depend heavily upon the property tax assessments levied on Peabody Energy’s Twentymile Mine. About 45 percent of the valuation comes from the mine. Union Pacific, which runs almost nothing but coal trains from the Yampa Valley, pays another 5 percent to 7 percent of school property taxes.
Coal traffic also keeps the lights on round-the-clock at Penny’s Diner in Yampa, a town of 429, in case railroad crews need to eat.
While some people commute to hotel and restaurant jobs in Steamboat, the pay of the coal sector is far better: $80,000 to $120,000.
Among those taking stock of the changes is Paul Bonnifield, an historian with several books to his credit whom I first encountered at the Turntable, a railroad diner in Minturn, in the early 1990s. He was working for the railroad then as a brakeman, and the offices of The Vail Trail were next door.
Bonnifield told me last September that the value of his house would immediately drop in value 40 percent to 50 percent if Twentymile Mine closes.
It wouldn’t be the first setback, though. Oak Creek was founded as a coal-mining town but lost steam when railroad locomotives switched to diesel. That was after World War II. “I lived in this country when the coal mines went bust in the 1950s and we were part of Appalachia,” said Bonnifield.
To survive, said Bonnifield, the coal industry needs a cleaner product. By that, he means that carbon emissions must be captured and prevented from spewing into the atmosphere. Such technology exists, but it’s expensive and has not been demonstrated to work at scale. The U.S. government has allocated billions to research, including an experiment conducted adjacent to the Craig Station coal-fired plants, but with little success. Many environmentalists insist that the technology is a dead end.
Compromise is needed, said Bonnifield. “Given the political climate we have today, I don’t hold much hope for that,” he said. “The people in the mining industry, they are going to fight it because it is government regulation, it’s not necessary, and nothing is wrong with (coal). Those who are environmentalists say the coal is killing the Earth.”
In Craig, there’s talk about the need for compromise but no real vision of what it might look like.
“That coal was put here for a reason,” said Mayor Ray Beck. “It is here for our use.” Wearing a black shirt and a black hat, Beck dismissed the Clean Power Plan as regulatory overreach. In this local view, today’s coal-burning technology is the supreme triumph of civilization with no need for further invention. Coal is reliable and affordable, end of story.
A different story for Craig
For several years various people in Colorado have been talking about the need to help Craig transition to a new future. Craig itself has done a bit of that. Beck mused on the potential for hemp farms. Craig voters in November will also decide whether to adopt a lodging tax, with the money proposed to pursue economic diversification.
Moffat County, like many other rural regions, still has not fully recovered from the Great Recession, Kincaid points out. Moffat County has shed more than 6 percent of its population since 2010 even as Colorado altogether grew 6 percent. “Even the avid environmentalist, I doubt, would want to see 230 people (the number of employees at the ColoWyo Mine) lose their jobs,” said Kincaid, a reference to the WildEarth lawsuit.
But even without coal mines closing or the Clean Power Plan being implemented, coal mines in the Yampa Valley have shed 25 percent of
employees in the last three years, from 832 positions to 642, according to Yampa Valley Data Partners. Northwest Colorado has broader problems.
Environmentalists have indeed been contemplating career changes for coal miners. State Sen. Kerry Donovan, a Democrat from Vail, whose district includes shuttered coal mines in Delta County, introduced a bill last winter to provide assistance to coal miners. It was defeated by Republicans in committee.
Last October, former Colorado Gov. Bill Ritter, in an aside at a conference in Boulder, suggested that Craig should look to Salida as a model for how to put together a new career after mining.
But I know Salida reasonably well, and I’m not so sure Craig has the same assets to work with. There is no string of 14,000-foot peaks in the background, no Victorian main street. It’s farther away from the Front Range. Away from the ski lifts, rural America is a difficult proposition.
The general sense about Craig is that the coal-mining economy has some life in it yet.
But things can turn on a dime. Look at Aspen in 1892, when the big mansions were still being built. Then Congress ended the silver subsidy, the hammers became silent, and there wasn’t much noise at all in Aspen for a half-century.