Illinois Coal v. Western Coal
Who's getting burned?
Tougher air pollution rules resulted in a lot of western coal being burned in Illinois power plants in the 1970s. That was not the only reason for the sorry state of the Illinois coal industry in those days, but the media and politicians can't resist turning complicated issues into uncomplicated contests. The situation was more complex, as I tried to show here.
This is the first part of five. For other articles in the series, see "Illinois coal" on the Energy page.
When America's energy future dimmed with the announcement in the fall of 1973 of OPEC's oil embargo, coal's future glowed brightly. America's coal has ten times the energy of all the oil in the Middle East, and early in 1974 government and industry leaders agreed that coal—either burned by itself or converted into liquids or gas—would light the way to energy independence for the U.S.
Coal's future shone especially brightly in Illinois. Close to a quarter of U.S. reserves of high-heat bituminous coal lies buried in the Eastern Interior Coal Field, part of an ancient geological formation known as the Illinois Basin that spreads over the modern states of Illinois, Indiana and western Kentucky. When the OPEC embargo was announced, Illinois ranked fourth among coal-producing states in annual production. But Illinois is second only to Montana in the wealth of its recoverable coal reserves. Estimates vary, but one widely accepted guess puts the figure at 66 billion tons.
In 1973, Illinois mines produced 61.5 million tons of coal. The Federal Energy Administration guessed that by 1977 Illinois mines would be delivering at least 71 million tons a year, and that by 1980, when the new mines then being planned came on line, production should hit at least 75 million tons per year.
It didn't happen. When production figures for 1977 were added up, they totaled only 53.9 million tons, not 71 million. In 1978 production was nudged downward by a winter strike by the United Mine Workers, and slipped to 48.9 million tons, the lowest since 1963. Instead of booming in the post-OPEC era, the state's coal output had dropped almost 25 percent. Industry spokesmen began trying to convince a still sanguine public that the coal boom didn't exist, and some muttered private worries about whether their industry would even survive.
What ails Illinois coal?
What ails Illinois coal? Many claim to have found a single cause—over-regulation, for instance, or union intransigence or corporate greed. But while each of these diagnoses has merit, each is incomplete. These and other factors have dimmed the future of Illinois coal, but none is the sole cause for its recent decline.
Of all the diseases to which coal is prey, however, government is commonly regarded as the most debilitating by those in the industry. Federal clean air rules, for example, are a common cause of complaint. Illinois coal is a fuel of many virtues, but an estimated 95 percent of it contains from three to five5 percent sulfur by weight. When burned in a power plant boiler or factory, that sulfur combines with oxygen to form sulfur dioxide (SO2), a noxious gas that is also a precursor to other, perhaps even more dangerous pollutants.
Congress set limits on the amount of SO2 that could be allowed into the air in its Clean Air Act of 1970. To meet those standards, Illinois coal users could either install flue gas desulfurization units known as scrubbers, or they could simply switch to another fuel or burn low-sulfur coal. Low-sulfur coal (generally, coal with less than two percent sulfur content) means imported coal, usually from the West.
The effect of the new clean air rules was not felt immediately. The Illinois Environmental Protection Agency (IEPA), under the terms of the federal act, was responsible for developing and enforcing clean air regulations. In Illinois, the IEPA was the means to achieve compliance with Congress's clean air standards. Granting variances from its regulations in some cases and granting extensions of compliance deadlines in other cases, the goal, in the agency's words, was "to lessen the economic impact of air pollution regulations." It did. By IEPA estimates, Illinois users were able to burn 14 million more tons of Illinois coal in 1977 than would have been allowed had the new rules been strictly enforced.
In spite of such accommodations, the 1970 Clean Air Act did have very real, if not always immediate, effects on output. It signaled a new (and to the industry unwelcome) determination by the federal government to regulate what it had heretofore left unregulated. As R. E. Samples, president of Consolidated Coal (Illinois's and the nation's No. 2 producer), said in a 1976 address: "Coal consumers are understandably reluctant to enter into long-term contracts for coal they are not sure they will be allowed to burn. The coal companies, meanwhile, aren't prone to risk the $70 to $80 million required to open a two-million-ton underground mine only to have the market wiped out by a later decision."
The archetypal case is that of Commonwealth Edison, the state's largest electric utility which supplies the electricity to the Chicago metropolitan area.
In 1977, after several extensions, the IEPA insisted that Commonwealth Edison Co. live up to the state-imposed SO2 emission limit of 1.8 pounds per million Btu (British thermal unit) at its Powerton generating plant near Pekin. The company chose to comply by burning low-sulfur coal from Wyoming rather than by installing scrubbers which would make Illinois coal comply with state emission limits. The Powerton plant had burned several million tons of Illinois coal per year since its opening in the late 1960s. ComEd later testified that burning and scrubbing Illinois coal at Powerton would cost $6.10 billion more than continuing to burn unscrubbed Illinois coal over the 30-year life of the plant. On the other hand, burning low-sulfur western coal instead of unscrubbed Illinois coal would cost an estimated $5.26 billion more over 30 years.
Clearly, neither option was cheap, but of the two the western coal option was the cheaper, saving ComEd customers an estimated $840 million over 30 years—a little more than $3 per customer per year. (It should be noted that a few Illinois utilities, including the Central Illinois Public Service Co. and Springfield's municipally owned City Water, Light and Power, have concluded that scrubbing Illinois coal is cheaper than using western coal.) Burning western coal was found to be cheaper than scrubbing Illinois coal even though, at the time the calculations were made, the delivered price for Wyoming coal was more than twice that then being paid for Illinois coal (up to $28 per ton compared to $13). Although Illinois coal was cheaper, in other words, it was the most expensive option for ComEd at its Powerton plant if it was to be made clean enough to satisfy state emission standards. Other utilities in Illinois and nearby states added up their own numbers and came to the same conclusion.
Clean air standards
In a 1976 study of Illinois coal markets, Ramesh Malhotra, then a mineral economist for the Illinois State Geological Survey, and Jack Simon, the survey director, said the 1970 Clean Air Act was "primarily responsible for the slow growth in Illinois coal development" since 1973. Malhotra and Simon noted that since passage of the act, the imports of low-sulfur coal from mines in the American West (chiefly Wyoming and Montana) had increased dramatically in the Midwest, which was Illinois' traditional market stronghold. Before the Clean Air Act, for example, nearly half the coal burned by Minnesota's electric utilities had been mined in Illinois; seven years after the act, only nine percent was from Illinois. The rest came from the West.
Utilities are by far Illinois coal's best customers, accounting for nearly 85 percent of sales in recent years. By 1975, electric utilities in Iowa were getting 41 percent of their coal from the West, in Indiana 14 percent, in Wisconsin 26 percent. Adding insult to injury, some 33 percent of the coal burned in Illinois's own electric utilities in 1975 had been dug west of the Mississippi and hauled into Illinois by trains carrying coals to Newcastle, one hundred cars at a time. By 1977, the estimate was close to 40 percent.
Congress adopted amendments to the Clean Air Act in 1977 which tightened the regulatory noose even further by requiring, in effect, that standards for new emission sources set in 1970 be made more stringent. These New Source Performance Standards (NSPS) apply to large coal-fired plants built after September 1978. They forbid the use of unscrubbed low-sulfur fuel as a compliance ploy and further require the installation of SO2 scrubbers capable of removing 90 percent of the sulfur from high-sulfur coals and 70 percent from low-sulfur coals. The 1970 emission limit of 1.2 pounds of SO2 per million Btu of heat produced (the so-called absolute emission standard, contrasted with the complementary percentage emission standard to which scrubbers will be held) has been retained. This was a relief to the Illinois industry which feared that the revised NSPS might make it illegal to burn some Illinois coals even with scrubbers. By design, the new rules reduce the advantage temporarily enjoyed by low-sulfur coal states. As the Illinois Business Review noted in a coal market analysis published in its May issue, "The total effect of the revised NSPS will . . . be to strengthen considerably the [future] demand for Illinois coal."
The conventional wisdom that it has become impossible to have both a healthy environment and a healthy coal industry is disputed by environmentalists and others, including some miners' union officials. They say that the blame for shrinking Illinois coal markets should be put on the utilities' refusal to install scrubbers, not on the excessive zeal of clean air bureaucrats. Some utilities have complained that scrubbers are not only expensive to build but that they don't work well.
Critics of the utilities insist that the industry's all-but-unanimous reluctance to install scrubbers has more to do with profits than with alleged inefficiency. The rules by which the Illinois Commerce Commission (IllCC) regulates the state's electric utilities require that a company equipping a power plant with scrubbers must apply for a rate increase sufficient to cover the costs of building and running them. However, if the company opts to burn western coal, the costs of that coal and, what is more important, the attendant costs of hauling it to Illinois, may be recovered incrementally in the form of automatic fuel adjustment charges that require no IllCC hearing and which are added to customers' electric bills every month—a sort of pay-as-you-go clean air compliance program. Therefore, even if the costs of burning imported coal and burning scrubbed Illinois coal were identical, imported coal would still be a more attractive route to compliance. This especially nettles the Illinois' United Mine Workers, whose complaints have stimulated a reexamination of the fuel adjustment chapters of the IllCC rulebook.
But the problems of marketing Illinois coal can't be blamed entirely on the fact that it is high in sulfur. For some areas of the nation western coal is not merely cleaner but cheaper as well, and not just cheaper to burn but cheaper to buy. For example, Malhotra and Simon report that in 1975 utilities in the northern part of Illinois' market (Michigan, Minnesota, Iowa, and Wisconsin) were paying from 13 cents to 35 cents less per million Btu for delivered western coal than for Illinois coal. Those price differences are, if anything, more pronounced four years later, and most observers tend to agree that the northern market is all but lost to Illinois mines.
One optimistic suggestion is that the price advantage now enjoyed by western coal will gradually narrow as western producers find themselves squeezed by higher costs. Haulage costs to the Midwest have skyrocketed, up 60 percent in recent months. The 1977 federal strip mine reclamation act threatens to boost costs when it is enforced. These costs plus wages and taxes were expected to push up the price of western coal, and in 1976 a U.S. Environmental Protection Agency official spoke hopefully of a trend back toward Illinois coal.
In Illinois, Indiana, and Missouri, the costs of hauling western coal some 1,300 miles have already made it a much less attractive fuel, even to utilities which could burn it legally without scrubbers. But prices paid on a spot basis so far in 1979 indicate that the prices for Illinois coal delivered to Chicago have gone up from 75 to 95 percent since 1975, while delivered costs for. Montana and Wyoming coal, though up, have risen less. In 1975 the cost of Illinois coal in Illinois averaged 66 cents per million Btu, compared to 77 cents and 95 cents for Wyoming and Montana coal, respectively. Although data for 1979 is incomplete, random price checks by staff of the Illinois State Geological Survey suggest that the relative price advantage of Illinois coal over Montana coal in Illinois in 1979 is only a fifth of what it was in 1975, and that Wyoming coal may now actually be cheaper in Illinois than Illinois coal. Most coal is delivered under long-term contracts whose price arrangements differ considerably from the spot market. But the general outline is accurate enough: Illinois coal isn't just too dirty to burn in many markets, it also is becoming too expensive to burn.
Why? Like every other question about Illinois coal, this one has a plethora of answers. For example, geology is to blame for much of the cost of mining in Illinois. Most western coal is taken from highly productive strip mines, while more than half of Illinois' coal (55 percent in 1977) comes from underground mines which are inherently less efficient than strip mines.
The principal reason Illinois mining has gone underground is that only 12 percent of Illinois' coal is strippable. (Strippable coal is generally considered to be any coal that is at least 18 inches thick lying within 150 feet of the surface.) But Illinois coal strippers have recently been forced to contend with geology in another guise. Most of Illinois's strippable coal is buried under prime farm soils. The destruction of such a vital resource has long angered farm groups and environmentalists, and it was largely through their persistent lobbying that Illinois adopted in 1972, and amended in 1975, one of the toughest state mined-land reclamation laws in the U.S. Among other steps, it requires that strip miners re-contour mined land and reconstruct topsoils displaced by mining, all in order to restore the land to the possibility of productive use.
Compliance with the Illinois reclamation law has added to the cost of digging coal in this state. E. R. Phelps, the president of the Peabody Coal Co., which operates four strip mines in Illinois, said in a 1976 speech that compliance would cost up to $8,000 per acre, all of which would have to be added to the purchase price of Peabody coal. Exactly what effect such increased costs have had on the marketability of Illinois coal is hard to say, though it seems safe to say that while the costs incurred by the state reclamation law may or may not have hurt Illinois coal's competitiveness, they surely haven't helped it.
The federal government passed strip mine reclamation legislation in 1977, in the form of the Federal Surface Mining and Reclamation Act. The federal regulations developed from that act are very much more stringent than Illinois's, especially as they apply to the restoration of prime soils; Peabody has estimated that meeting these federal regulations will add another $2.94 per ton to the cost of strip mining Illinois coal. The national coal associations and some of the larger coal companies have filed suit against the U.S. government to halt enforcement of these federal regulations. So too have three states, including Illinois. The Illinois Department of Mines and Minerals complained in a suit filed in the District of Columbia federal court in May that the regulations discriminated against coal mined in Illinois and other farm states because they make the restoration of mined land prohibitively expensive. The regulations are now being enforced on an interim basis and will not go fully into force until 1980.
State strip mine reclamation rules that went into effect in 1972 eroded strip mining's traditional efficiency. Productivity as measured in tons mined per man/day in Illinois strip mines slipped 27 percent between 1969 and 1975, to fewer than 26 tons; the steepest slide began in 1972.
Illinois coal operators who mine coal below ground face similar conundrums. In addition to the natural inefficiencies that attend the removal of rock-hard coal from deep underground (from 150 to 650 feet), certain new inefficiencies were imposed by the federal Coal Mine Health and Safety Act in 1969. The stricter safety standards set forth in this act have reduced the number of deaths and accidents below ground, as intended. But they have also contributed to reduced productivity of Illinois' 25 underground mines. According to industry figures, output in deep mines dropped from 22.9 tons per man/ day in 1969 to 13.4 tons in 1976—a reduction of more than 41 percent. The combined productivity figure for strip and deep mines in 1976 was 18.5 tons, and although official productivity statistics for 1977 and 1978 are not yet available, the Illinois State Geological Survey estimates that productivity in 1978 for all Illinois mines was from 20 to 25 percent lower than 1976 levels. As M. V. Harrel, a vice president for operations for the Freeman United Coal Mining Company, explained to a 1976 conference in Chicago, "Lower productivity, even more than higher wage rates, is pushing the cost of coal beyond the economic reach of individuals, industry and even the government itself."
Unions and management
As noted, government regulation was responsible for much of this decline. But not for all of it. As Harrel observed, "Neither labor nor management can hide behind the act completely." The productivity record of the United Mine Workers of America (UMWA), for example, whose District 12 includes 96 percent of Illinois' nearly 18,000 miners, is not good. After a four-day walkout in April over bidding for a training job, for instance, 550 UMWA miners at Freeman United's Orient No. 6 mine in Jefferson County reportedly began a work slowdown that reduced production to ten percent of normal, and in retaliation the company locked them out. And in May, in another typical dispute, some 2,600 UMWA members working in five Peabody Coal Co. mines walked out for two days over a new company disciplinary policy intended to slow absenteeism; the miners returned to work under a temporary restraining order issued by a federal judge.
Coal company production statistics filed with the Illinois Coal Association reveal that in the 12 months ending March 31, 1979, a total of 573 eight-hour production shifts were idled in Illinois mines because of wildcat walkouts, resulting in the loss of an estimated 1.3 million tons of production.
Though industry spokesmen feel obliged not to say so publicly, miners' unions are as big a handicap to Illinois coal as bureaucrats. In addition to wildcatting and absenteeism, they say, union contracts add significantly to the cost of digging Illinois coal. Western mines, especially in Montana and Wyoming, are largely nonunion, and although wage rates are high, certain other labor costs, such as pension and health plan payments mandated by the national UMWA contracts, are much lower.
Nor do western operators have to deal with the UMWA's historical, now almost traditional, reliance on the strike. During the extended walkout in the winter of 1977–78 over the latest contract, some midwestern utilities were kept supplied from nonunion, or at least non-UMWA, mines in the West. It was a lesson not lost on some coal consumers, for whom dependability of supply is critical.
Management has earned its share of criticism too, from miners for maintenance failures that lead to breakdowns, and from others for the industry's failure to forecast the current demand slump that is responsible for the 150 to 200 million ton coal surplus that is clogging coal yards around the U.S. There is also talk of darker deeds, so far unproven, such as price-fixing and undercutting Illinois coal by developing more profitable markets in other fuels and other coal regions at the expense of Illinois. Arguments about who is doing what harm to the Illinois coal industry are, appropriately enough, often bitterly unproductive. One fact beyond dispute, however, is that sometime in 1978, Wyoming overtook Illinois as the nation's No. 4 coal-producing state.
Clearly the price of Illinois coal has had a depressing effect on its market potential. As prices edge upward, it faces competition not only from cheaper coals from the West and elsewhere but from other fuels. One of the hopes held out to utility planners by the nuclear generating industry was that atomic power plants would be much cheaper to run than coal-fired ones, and as coal prices climbed from the $4-a-ton mark in the late 1960's toward the $20-a-ton mark, utilities came to regard that hope more and more fondly. As a result, more of Illinois's electrical needs (some 30 percent) are supplied by nuclear plants than in any other state. Rising costs and the political fallout from the Three Mile Island accident in Pennsylvania may keep the nukes' share of Illinois' power generating business from rising much above 1979 levels. But with seven more nuclear power plant presently being planned or built in Illinois, nuclear power is likely to be a fixture in the state's energy landscape for the next few decades at least.
One of Illinois coal's most vexing problems can't be blamed on bureaucrats, boards of directors, or mine unions, and that is the recent, unprecedented slump in the growth of demand for electricity. Because of conservation by its customers and slower-than-hoped for population and economic growth in its service area, for instance, Commonwealth Edison in May of 1977 reduced its projected electric demand growth rate by 20 percent to 6.1 percent—still healthy growth, but enough slower that ComEd abandoned plans to build two new generating plants and slowed construction schedules on other capital projects by as much as 18 months. And what has happened to ComEd is happening to electric utilities throughout the Midwest and the nation; in February the Edison Electric Institute estimated that as many as 100 of 250 coal-fired generating plants then being planned might be canceled or deferred.
The Illinois coal industry is healthier than its present fevered condition suggests, however. It should be remembered that the industry has been given up for dead before —as recently as the 1950s—before America started living better electrically. The slump in electric demand growth, for instance, does not mean that demand for coal by utilities will not grow, only that it won't grow as fast as once predicted. Illinois mines have lost most of their customers to the north, but they have been steadily picking up new ones in the fast-growing—and coal-poor—Southeast. The U.S. EPA's new source performance standards may prove to be the salvation rather than the ruin of the high-sulfur coal industry; a 1977 market study done for the federal Department of Energy by the Argonne National Laboratory suggests that the blanket scrubbing requirement of the EPA standards will enable producers in the Illinois Basin by the mid-1980s to recapture markets temporarily lost to western coal. Though nuclear plants now being constructed will cheat coal of its share of the short-term electric generating market, the longer term future for nukes looks, if anything, as gloomy as coal's present prospects. Work continues on new ways to burn high-sulfur coal more cleanly, and the process of fluidized bed combustion looks especially promising. And the conversion of Illinois' vast coal reserves into more manageable liquid and gaseous fuels requires only that prices for petroleum products rise high enough to match the now uneconomical costs of producing substitutes from coal.
The bridge to the future?
America is still sorting out its energy options. At a minimum, many knowledgeable observers see coal as a crucial transition fuel, a bridge to America's solar or fusion future. If that happens — and opinion on both the inevitability and the desirability of coal as such a transition fuel is far from unanimous — much of that bridge is likely to be built of Illinois coal. ●
Essential for anyone interested in Illinois history and literature. Hallwas deservedly won the 2018 Lifetime Achievement Award from the Illinois State Historical Society.
One of Illinois’s best, and least-known, writers of his generation. Take note in particular of The Distancers and Road to Nowhere.
See Home Page/Learn/
Resources for a marvelous building database, architecture dictionary, even a city planning graphic novel. Handsome, useful—every Illinois culture website should be so good.
The online version of The Encyclopedia of Chicago. Crammed with thousands of topic entries, biographical sketches, maps and images, it is a reference work unmatched in Illinois.
The Illinois chapter of the American Institute of Architects in 2018 selected 200 Great Places in Illinois that illustrate our shared architectural culture across the entire period of human settlement in Illinois.
A nationally accredited, award-winning project of the McLean County Historical Society whose holdings include more than 20,000 objects, more than 15,000 books on local history and genealogy, and boxes and boxes of historical papers and images.
Every Illinois town ought to have a chronicler like D. Leigh Henson, Ph.D. Not only Lincoln and the Mother road—the author’s curiosity ranges from cattle baron John Dean Gillett to novelist William Maxwell. An Illinois State Historical Society "Best Web Site of the Year."
Created in 2000, the IDA is a repository for the digital collections of the Illinois State Library and other Illinois libraries and cultural institutions. The holdings include photographs, slides, and glass negatives, oral histories, newspapers, maps, and documents from manuscripts and letters to postcards, posters, and videos.
The people's museum is a treasure house of science and the arts. A research institution of national reputation, the museum maintains four facilities across the state. Their collections in anthropology, fine and decorative arts, botany, zoology, geology, and history are described here. A few museum publications can be obtained here.
“Chronicling Illinois” showcases some of the collections—mostly some 6,000 photographs—from the Illinois history holdings of the Abraham Lincoln Presidential Library.
I will leave it to the authors of this interesting site to describe it. "Chicagology is a study of Chicago history with a focus on the period prior to the Second World War. The purpose of the site is to document common and not so common stories about the City of Chicago as they are discovered."
The Illinois Labor History Society seeks to encourage the preservation and study of labor history materials of the Illinois region, and to arouse public interest in the profound significance of the past to the present. Offers books reviews, podcasts, research guides, and the like.
The University of Washington’s America’s Great Migrations Project has compiled migration histories (mostly from the published and unpublished work by UW Professor of History James Gregory) for several states, including Illinois. The site also includes maps and charts and essays about the Great Migration of African Americans to the north, in which Illinois figured importantly.
An interesting resource about the history of one of Illinois’s more interesting places, the Fox Valley of Kendall County. History on the Fox is the work of Roger Matile, an amateur historian of the best sort. Matile’s site is a couple of cuts above the typical buff’s blog. (An entry on the French attempt to cash in on the trade in bison pelts runs more than
Southern Illinois University Press 2017
A work of solid history, entertainingly told.
author of Abraham
Lincoln: A Life
One of the ten best books on Illinois history I have read in a decade.
Superior Achievement Award citation, ISHS Awards, 2018
A lively and engaging study . . . an enthralling narrative.
The Annals of Iowa
A book that merits the attention of all Illinois historians
as well as local historians generally.
Journal of Illinois HIstory
A model for the kind of detailed and honest history other states and regions could use.
A fine example of a resurgence of Midwest historical scholarship.
Journal of the Illinois
State Historical Society
to read about
to buy the book
SIU Press is one of the four major university publishing houses in Illinois. Its catalog offers much of local interest, including biographies of Illinois political figures, the history (human and natural) and folklore of southern Illinois, the Civil War and Lincoln, and quality reprints in the Shawnee Classics series.
The U of I Press was founded in 1918. A search of the online catalog (Books/Browse by subject/Illinois) will reveal more than 150 Illinois titles, books on history mostly but also butteflies, nature , painting, poetry and fiction, and more. Of particular note are its Prairie State Books, quality new paperback editions of worthy titles about all parts of Illinois, augmented with scholarly introductions.
The U of C publishing operation is the oldest (1891) and largest university press in Illinois. Its reach is international, but it has not neglected its own neighborhood. Any good Illinois library will include dozens of titles about Chicago and Illinois from Fort Dearborn to
The newest (1965) and the smallest of the university presses with an interest in Illinois, Northern Illinois University Press gave us important titles such as the standard one-volume history of the state (Biles' Illinois:
A History of the Land and Its People) and contributions to the history of Chicago, Illinois transportation, and the Civil War. Now an imprint of Cornell University Press.
Reviews and significant mentions by James Krohe Jr. of more than 50 Illinois books, arranged in alphabetical order
by book title.
Run by the Illinois State Library, The Center promotes reading, writing and author programs meant to honor the state's rich literary heritage. An affiliate of the Library of Congress’s Center for the Book, the site offers award competitions, a directory of Illinois authors, literary landmarks, and reading programs.