Moody’s: EPA rule would hurt coal producers in Appalachia, West most

The Environmental Protection Agency’s (EPA) proposal to reduce carbon dioxide emissions from power plants would reduce the demand for coal, hurting coal producers in Appalachia, Montana and Wyoming the most, Moody’s Investors Service said.

Coal producers in the Illinois Basin, which is in Illinois, Indiana and Kentucky, will be hurt less than other regions, Moody’s said, according to SNL Financial.

ADVERTISEMENT
“Illinois Basin producers tend to serve larger baseload plants less affected by emission regulations, and more likely to invest in the technology needed to comply with them,” Moody’s said in a note to investors.

The credit rating firm was slightly optimistic about the coal industry in the Powder River Basin in Montana and Wyoming, saying those companies could increase their exports to offset losses from the EPA rule, according to SNL.

EPA predicted that the coal industry’s share of the electricity sector would fall to 30 percent to 31 percent by 2030 under the rule, down from its 39 percent in 2013.

Moody’s said the coal industry in the United States industry would still suffer without the regulation. Its market share in electricity is likely to fall into the mid-30s in the next decade if EPA did not issue its rule, SNL said.

“Until state-level implementation plans take shape — and assuming the rule survives legal challenges — the proposed standards will have little, if any, incremental impact on the coal producers' already stressed fortunes,” Moody's said. “In fact, the rule leaves room for coal consumption to post temporary increases in the near term, should natural gas prices spike.”