What Happens to the U.S. Economy If ‘Progressives’ Kill Coal?

A new study by Heritage Foundation analysts Nicholas Loris, Kevin Dayaratma, and David Kreutzer clarifies the economically-devastating potential of the war on coal.

In effect, the study asks: What if anti-coal ‘progressives’ get everything they wish for?

Using the Heritage Foundation Energy Model, which is based on the U.S. Energy Information Administration’s National Energy Model System (NEMS), the three researchers analyze the economic impacts of a regulatory agenda phasing-out coal electric generation between 2015 and 2038. They find that by the end of 2023:

• Employment falls by nearly 600,000 jobs.
• Manufacturing loses over 270,000 jobs.
• Coal-mining jobs drop 30 percent.
• A family of four’s annual income drops more than $1,200 per year, and its total income drops by nearly $24,400 over the entire period of analysis.
• Aggregate gross domestic product (GDP) decreases by $2.23 trillion over the entire period of the analysis.

What accounts for those losses? First, phasing out coal generation will dramatically increase demand for natural gas, boosting gas prices by 28%. Gas is a key feedstock for several manufacturing industries:

Natural gas is not only a critical source of electricity generation; natural gas and liquids produced with natural gas provide a feedstock for fertilizers, chemicals and pharmaceuticals, waste treatment, food processing, fuel for industrial boilers, increasingly used as a transportation fuel, and much more.

The main reason, though, is simply that killing a major source of affordable electric power will increase business and household energy costs:

It will cost more to heat, cool, and light homes, and to cook meals. These higher energy prices will also have rippling effects throughout the economy. As energy prices increase, the cost of making products rises. Higher operating costs for businesses will be reflected in higher prices for consumers. Because everything Americans use and produce requires energy, consumers will take hit after hit. As prices rise, consumers buy less, and companies are forced to shed employees, close entirely, or move to other countries where the cost of doing business is lower. The result is fewer opportunities for American workers, lower incomes, less economic growth, and higher unemployment.

Two maps in the Heritage study should remove any doubt that the war on coal is an attack on a vital component of the U.S. economy and, thus, a danger to public health and welfare. The green map shows that coal provides the majority of electricity in 21 states. The blue map shows that coal is the largest single source of electricity in half the states.