measures to encourage more coal production and use, and the removal of restraints which impair the coal industry without substantially contributing to the national welfare. Expansion of the coal industry in the future must be orderly, rational and carefully planned. To expand, the industry must have a healthy production base, and investors must believe the climate for expansion is favorable. Production capability in 1985 will, in part, be determined by coal's position in the next several years. The industry cannot expand unless it survives the immediate future in good health. Thus, a part of the task confronting industry and government is to structure the economic and legal parameters of coal production, distribution and use so that expansion is encouraged. President Nixon, in his first energy message to Congress this year, gave strong support to such a national initiative by urging that the highest national priority be placed on developing our coal. In his second message on June 29, he called for increased research and development funding for coal, to unlock its huge store of energy for the benefit of the nation. In Congress, Senator Jackson and Chairman Randolph have introduced legislation calling for a dramatic increase in coal R&D. In their farsighted proposal, they have recognized the most vital objective of providing the United States, by 1983, with the capability to be self-sufficient in environmentally acceptable energy sources." If we are to gain this objective, and I believe it is undebatably desirable, we must begin now--and begin where we are, not in some never-never land. If we are to double the coal industry's capacity, we must begin with today's mines, producing years. In other words, we must build on what we now have, and that means maintaining a market for the coal we now produce, a market which involves burning it in the ways now available. We can and must improve these methods as rapidly as possible, but we cannot stop using coal until environmentally perfect methods are achieved. In short, we must work toward the twin goals of energy self-sufficiency and environmental cleanliness through evolution, I am confident we can attain both goals in time. not revolution. But neither can be reached instantly, nor can we reach the environmental objective without maintaining a viable production 1 1 base. As a result of federal activity in the establishment of sulfur standards and action taken by the states, however, a substantial part of the coal industry's productive capability is now threatened with extinction. III. Impact of Clean Air Act The implementation of the Clean Air Act and similar legislation has had a devastating effect on the nation's coal industry. This has taken its toll in a number of ways--on markets, mines and men. The impact of the Act on coal markets, especially along the East Coast, has been well-documented. Air pollution controls began to significantly affect the coal industry beginning with sulfur limits, first imposed by New York City in 1964, which were responsible for a 550,000-ton drop in coal shipments by 1968. Utilities generally found it easier to obtain low-sulfur oil, even at a premium price, than low-sulfur coal. This was compounded by the fact that it is possible--for a price--to remove most of the sulfur from oil, while an equally successful process for highsulfur coal did not then, and still does not, exist. The result was a dramatic change in the number of plants burning coal. In 1964, in New England, the Mid-Atlantic, and a part of the South-Atlantic regions--an area covering within 100 miles of the Atlantic coast (the normal market limit of residual oil) from Norfolk, Virginia, north to Canada--100 coal-burning power plants consumed 40 million tons. By 1973, only 20 plants burning coal remain in these areas, and their coal consumption is estimated to be 15.5 million tons. Coal-burning capacity by electric utilities had gone from 86 per cent of the total in 1964 to 13.4 per cent of the total in 1973 in the regions affected. Coal supplied 70 per cent of the electric utility fuel in that area in 1964; this year it will supply 15 per cent. Regional variations were pronounced as shown in the attached charts, but the trend is clearly downward. Of course, while this was taking place, demand continued to grow. The major beneficiary was oil--all imported, mostly lowsulfur, and increasingly from the Middle East. Electric utility oil consumption in 1964 in the area in question was 12 million tons of coal equivalent, while the 1973 is estimated to be 77 million tons of coal equivalent, an increase of more than six-fold. The strictures of the Clean Air Act will work an even greater hardship in 1975, when the primary and most secondary air quality standards go into effect. The magnitude of the problem is evident in an unpublished draft report done under the sponsorship of the Environmental Protection Agency; this report was done by the Mitre Corp., a leading consulting organization associated with MIT. It shows that by 1975, 324 million tons of the coal which normally would be consumed that year will violate the SO2 standards. That figure represents 54 per cent of the total coal consumed in 1975. Moreover, the report indicates that by 1977, this situation will be even worse. With no reliable SO2 removal systems commercially avail able, the coal industry will only be able to market coals low enough in the natural state to meet those stringent SO2 requirements. The prospects of the industry surviving under such an alternative are nil. The Environmental Protection Agency has established regulations as prescribed by the Clean Air Act which must specify a New Source Performance Standard (for plants over 250 million Btu per hour, about 25 MWe) of 1.2 pounds of SO2 per million Btu. This will require, in the absence of other control means, the use of "east of the Mississippi" coal containing less than 0.7 per cent sulfur. A U. S. Bureau of Mines study published in 1966 showed that only about 8 per cent of our coal reserves in this area of the country could meet the requirement. The scarcity of low-sulfur coal is further evidenced by the fact that utilities have been attempting to obtain such coal for years, with only limited success. According to the Bureau of Mines, electric utilities received 42 million tons of coal in 1964 with a sulfur content of one per cent or less. In 1969, according to the American Institute of Chemical Engineers and the Federal Power Commission, they received 44 million tons. Five years of intensive searching increased the supply only two million tons. |