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Economic Impact of Coal on Utah Economy Means Jobs, Tax Revenue

  • Comprehensive Study Shows Utah’s Coal Mining Industry Accounted for 4,700-Plus Direct- and Indirect Jobs in 2007, Especially in Rural Counties, and Approximately $200 Million in Revenue
  • Coal-Powered Electricity Generation Accounts for More Than 8,000 Utah Jobs and $350 Million in Revenue

June 29, 2010–A comprehensive research study today announced by the Eccles School of Business at the University of Utah illustrates the profound impact of Utah’s coal industry on the state’s economy-particularly in the rural coal-producing counties: Carbon, Emery and Sevier.

The report, entitled “The Structure and Economic Impact of Utah’s Coal Industry,” was authored by Dr. Pamela S. Perlich, Michael T. Hogue and John C. Downen of the Bureau of Economic and Business Research at the Eccles School of Business and sponsored by the Utah Governor’s Public Lands Policy Coordination Office.

“Utah’s coal industry has played a significant role in the economic development of the state for well over a century and continues to be an influential player,” said Perlich. “At present, Utah’s recoverable reserves of coal are 2.7 billion tons, while cumulative coal production to date is just over 1 billion tons.”

According to the study, 24 million tons of coal-2 percent of all national production-were mined in Utah in 2007 (the most recent year for which detailed statistics are available). The coal mining industry accounted for approximately 4,700 jobs-1,900 directly, with another 2,800 through indirect “ripple effects.” 85 percent of the jobs were in the three coal-producing counties. The industry’s direct financial impact to the state was $196 million for the year, two-thirds of this total going to Carbon, Emery and Sevier Counties.

Coal also powers another industry that accounts for even more jobs and revenues than does coal mining. “Utah’s current coal production is used primarily for electricity generation,” said Hogue. “The two industries have been historically linked in Utah. The most important barrier to further growth in coal-powered electricity generation is the cost of reducing emissions of those pollutants required by current and potential future regulation.”

Since the 1980s, coal-based electrical generation has accounted for more than 80 percent of the net electricity generated in Utah-compared with approximately half of net generation for the nation as a whole. Conversely, electric power generation is the largest market for coal, both in Utah and nationally. In addition to the 1,100 persons employed by Utah’s coal-powered electricity plants in 2007, 7,300 jobs in Utah were generated by this industry’s ripple effects. The statewide total earnings impact associated with the operation of coal-power plants are estimated to be approximately $350 million.

Coal’s economic impact is also felt in the royalties and taxes paid by the coal industry. The sum of property taxes levied both on coal mines and coal-powered electrical plants, royalties and rents from mining on state lands, and Utah’s share of federal royalties from coal mined on federal lands was approximately $51 million in 2007-in addition to an estimated combined $41 million dollars of tax revenue.

The researchers anticipate that coal will continue to exert a strong influence on Utah’s economy in coming decades. “The level of the industry’s future economic impact will be determined in large part by three largely interrelated factors,” said Hogue. “These include the future levels of mining; mining productivity, which is the average amount of labor needed to produce a ton of coal; and the level of coal-powered electric power generation.”

The research team analyzed three scenarios concerning the future level of Utah’s coal industry: Low, Middle, High. Statewide employment impacts of the coal mining industry rise from 4,703 in 2007 to 6,320 in 2014 in all scenarios, said Perlich. Both the Low and Middle scenarios then turn down to reach 3,524 (Low scenario) and 4,430 (Middle scenario), respectively, in 2030. The High Scenario continues to increase to a peak of 6,298 in 2022, and then declines to reach 5,775 in 2030.

The report does not account for the cost of any possible adverse environmental or health consequences of coal mining or coal-powered power generation.