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What shuttering coal plants means for energy jobs

American Electric Power's coal-fired John E. Amos Power Plant in Winfield, West Virginia.
Luke Sharrett | Bloomberg | Getty Images

With new environmental rules looming this week, coal-driven power plants are closing all over the United States, and jobs are going with them.

Utilities have been shuttering plants almost since regulatory changes were announced back in December 2011, but the number of closures has spiked recently, and several more plants are scheduled to close in the next few years. April 15 marks the deadline for power plants in the United States to adhere to the Environmental Protection Agency's standards on the amount of mercury and other toxins they emit.

A recent report from the Duke University Nicholas School of the Environment says the coal industry has lost nearly 50,000 jobs since 2011. But the report was also hopeful that cleaner alternatives have more than offset the losses—the natural gas, solar and wind industries together created almost four times as many jobs as the coal industry lost.

Utilities have been quickest to retire older plants, which tend not to burn as cleanly as newer facilities and would cost the most to upgrade. Major utilities such as Duke Energy and American Electric Power have decommissioned several plants and have plans to shut down more in the next few years.

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The new rules, coupled with cheap competition from other sources such as natural gas, point to an increasingly difficult future for the coal industry, according to Lucas Pipes, an analyst with Brean Capital.

"To understand the full impact of the EPA regulations, you have to consider the existing regulations, and the uncertainty over what future regulations might hold," Pipes said. "That uncertainty creates an environment where utilities don't want to invest in coal."

The biggest threat to coal
The biggest threat to coal

The Appalachian region of the United States—especially West Virginia, Kentucky and Pennsylvania—have been hardest hit by the closures. They run the oldest plants, and utilities are loath to make the investments. Operations in the Powder River basin of Montana and Wyoming are a bit more competitive and are thought to be better positioned, Pipes said.

But the trend will not reverse anytime soon, he said. If anything, investors should expect to see the coal industry continue to shrink.

Natural gas has become a formidable competitor to both coal and nuclear power, in large part thanks to the success of shale gas mining. Natural gas is generally considered to burn cleaner than coal, and it's trading just above an historically cheap $2.50/MMbtu. Utilities faced with the choice are ditching coal in favor of natural gas and increasingly inexpensive solar power.

That's all hitting more than just utility workers; it also means difficult times lie ahead for the country's coal mining regions.

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In the central Appalachian states, the coal jobs are "by orders of magnitude the best job out there," according to Phil Smith, of the United Mine Workers Association, a union representing coal miners. "These jobs will generally pay high 20s, low 30s with health-care benefits if you are union. There isn't anything that comes close to replacing even half the lost income."

Smith said he has seen about 15,000 miners laid off from jobs just in the Appalachian region over the last three years. Municipal governments are already concerned about shrinking tax revenue in regions where there are few other economic opportunities.

Though Pennsylvania and other nearby regions are also home to shale mining operations, coal miners are not getting those jobs. Smith says a lot of those operations are attracting workers in from traditional oil-producing states, and the jobs themselves require a different set of skills.

"If you drive around Kentucky, you are seeing a lot of license plates from Texas and Oklahoma," he said. "The locals aren't getting those jobs."

Overall, the regions with the most energy job increases were the Northeast, Southwest, Midwest and West.