Report backed by enviro groups says coal is costing Illinois money

A report released June 27 by the Center for Tax and Budget Accountability and Downstream Strategies estimates that in the 2011 Fiscal Year, the coal industry drained nearly $20m from the Illinois state budget.

These costs were subsidies and expenditures related to supporting the coal industry. The report was commissioned by the Sierra Club, Prairie Rivers Network, Faith in Place, and Eco-Justice Collaborative.

“Coal mining and support activities play a relatively insignificant role in the Illinois economy, representing only 0.2 percent of private industry economic activity in 2010,” said Amanda Kass from Center for Tax and Budget Accountability. “The level that state lawmakers subsidize the coal industry in Illinois does not pay off for the state budget or for state residents.”

Coal companies, some with more than 600 mine permit violations on record, take advantage of state-offered perks and breaks while using damaging methods to mine high-sulfur coal and export it out of state, the report said.

“Demand for Illinois coal is on the rise,” said Rory McIlmoil, former Energy Program Manager at Downstream Strategies. “As the companies expand Illinois operations, the cost to the state associated with supporting and regulating the industry will grow as well, and these costs are significant, amounting to more than $66 million in Fiscal Year 2011. Our report shows that the costs associated with the Illinois coal industry far exceed the revenues generated by coal-industry activity. This finding suggests that more should be done to maximize the revenues generated by the industry while at the same time reducing costs.”

Illinois coal exports are up five-fold since 2010, yet the state imposes no severance tax, the report said. This means that Illinois foots the bill for damaged farmland, at-risk water supply and dirty air left behind from mining and burning coal, but sees no local tax revenue from the exports, the report said.

Illinois coal production last peaked in 1984 at nearly 64 million tons, representing 7.2% of total U.S. production at that time, said the report. Since then, Illinois’ share has fallen to 3.1%, and annual production has declined by 48% overall. Due to the sharp decline in coal production, direct coal employment in Illinois fell by 75% between 1984 and 2010, representing a loss of over 10,000 mining-related jobs. Most of the decline is the result of the passage of the 1990 Clean Air Act, which forced many power plants to switch away from this high-sulfur coal. But, newer, tighter clean-air laws are forcing installation of new SO2 scrubbers on power plants, which allows these power plants to burn this high-sulfur coal.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.