Economic impacts on West Virginia from projected future coal production and implications for policymakers

Abstract

Multiple economic and geologic factors are driving fundamental changes in the nation’s energy system, weakening coal’s dominance as a fuel for electricity generation, with significant implications for places like West Virginia that are heavily dependent on coal for economic activity. Some of these factors include low natural gas prices, rising labor costs and declining productivity, economic competition with other coal mining regions, environmental regulations to reduce pollution and safeguard public health, state energy efficiency and renewable electricity standards, falling costs of renewable energy resources like wind and solar, and the likely prospect of future limits on greenhouse gas emissions. This analysis uses an input–output model to examine the effects on West Virginia’s economy from these multiple factors by exploring a range of scenarios for coal production through 2020. In addition to changes in the coal industry, hypothetical investments in additional sectors of the economy are considered as a way to gauge potential alternative economic opportunities. This paper offers recommendations to policymakers for alternative economic development strategies needed to create new jobs and diversify the state’s economy, and highlights the importance of transition assistance at the federal level.