Impact on Coal Miners

A carbon tax (or cap and trade, or regulations, or any other serious attempt to reduce CO₂ emissions, probably including carbon capture and sequestration) is likely to have unfavorable impacts on some groups, and favorable impacts on others. In particular, coal miners are likely to lose. One of the short-term responses to reductions in greenhouse gases is likely to be a switch to natural gas for generating electricity—gas emits about half as much CO₂ as coal for a given amount of electric generation, and the greater ability of gas turbines than coal-fired boilers to change their output quickly means that more renewables can be used easily in an energy system that has more gas-fired and less coal-fired generation.

Video: Coal Miner (1:33)

Click here for a video transcript of "Coal Miner".

PRESENTER: This photograph, from the US Library of Congress, shows a coal miner from 1942 from the Pittsburgh, Pennsylvania area, the Montour Number 4 mine of the Pittsburgh Coal Company. We don't even know the miner's name. We do know that a lot of miners have done very difficult jobs to help their families, to help their communities, to help their countries. No one likes going around firing coal miners.

Coal, right now, is under a lot of pressure. Some of it does come from government regulations. Probably, more of it is coming from natural gas being cheaper, although you'll find an argument on that.

The economically optimal path for dealing with CO2 involves starting very slowly to deal with the problem, and making changes over decades, with the idea, in part, that coal miners, who made honest decisions to be coal miners, will retire in their jobs, coal investors will get their money back, but future generations will do something else. If we ignore the science and the economics, for now, we let another generation coal miners get started, then the economically optimal path will involve much faster changes, with a greater likelihood of firing coal miners. So in some sense, if you really hate the idea of firing coal miners, you want to put our knowledge into the decision-making now.

Pennsylvania coal miner (name unknown), from US Library of Congress. The CO₂ from coal causes expensive climate changes, but putting coal miners out of work would be expensive to them. The economically optimal path starting now would allow many miners to retire without being fired, but if we delay taking action until many more coal miners are hired, the economically optimal path starting in the future may fire many of them.

Source: Library of Congress Prints and Photographs Division Washington, D.C. 20540

There is a fascinating issue here, which overlaps with ethics in the next module. The economically efficient path puts a small price on carbon now, and then raises that price slowly but steadily, by perhaps 2-4% per year, so that in a few decades the price becomes high. A person who already decided to be a coal miner, obtaining the education, mortgage, and other things that go with that choice, has a good chance on the economically optimal path to retire as a coal miner, with future generations doing something else (or else with future generations mining coal and then capturing and sequestering the carbon). If someone invested in a coal-fired power plant, they likely will get their investment back on the optimal path.

But, the social cost of carbon is projected to climb rapidly as temperatures and damages rise. If we notably delay starting our response, so that a new generation of people become coal miners or coal-plant investors, the higher social cost of carbon in the future will mean that an optimal path starting in the future involves faster changes, which will make it much harder for those new “coal” people to complete their careers or recoup their investments. If you really are ethically opposed to the general act of firing coal miners or hurting the investors in coal plants, starting now to deal with climate change is probably better than delaying, because of the likelihood that delay now will lead to more coal miners being fired later. (The biggest danger to coal-mine jobs and investors in the US now may be the recent drop in gas prices as fracking has increased gas supply; the free market does not adopt 30-year plans to minimize impacts on coal miners. And, as noted below, the fracking boom involves commercialization of research that in significant part was paid for by the US government, so in that sense government policies have caused trouble for coal miners. Notice, though, as described in the Enrichment linked below, that even if the main danger to coal-mine jobs comes from the free-market influence of gas, the public communications may paint a very different picture.)

Want to learn more?
Read the Enrichment titled Coal Mining Jobs.