HUNTINGTON, WV – The Center for Business and Economic Research (CBER) at Marshall University recently released the West Virginia Consensus Coal Production Forecast for 2015. The forecast is used in planning analysis to provide the best expectation of future production-based tax revenue to be collected for mandatory reclamation activities conducted through the Special Reclamation Fund and the Special Reclamation Water Trust Fund.
Compared to the 2014 Consensus, West Virginia coal production is expected to be between 3 to 6 million tons higher in each year of the forecast. The higher projections are due largely to revised production forecasts that reflect closures of higher-cost mines, thus increasing competitive production from remaining West Virginia mines, in addition to expectations of delayed retirement of existing coal-fired power plants throughout the forecast horizon.
“Four forecasts are used to create the consensus forecast. The near-term consensus is that West Virginia will produce around 105 million tons of coal in 2020, a decline of 6 percent from 2014 production. Production is expected to decline slowly through 2035, with 97 million tons forecasted for that year,” said Christine Risch, Director of Resource and Energy Economics at CBER.
None of the component forecasts model the impact of the Environmental Protection Agency’s Clean Power Plan as that rule was not final at the time the forecast was produced. Future versions of the forecast will incorporate that policy.
Along with other factors, the forecast is used to establish the per-ton production tax revenue necessary to sustain the reclamation obligations of the two reclamation funds. The tax is based on expected levels of future coal production as well as the capital and operating costs necessary to reclaim bond-forfeited mining permits. Other important factors such as bond release rates, expected rates of forfeiture, and inflation are also incorporated into the tax calculation.
CBER works with organizations in the public, private, and non-profit sectors to provide economic research and analysis in the areas of regional economic development, energy and natural resources, and education and health. For more information about CBER or the Consensus Coal Forecast, visit marshall.edu/cber.