Introduction

The coal industry has been a mainstay of Kentucky’s economy for more than a century. In eastern Kentucky in particular, mining jobs have provided good wages and opened up economic opportunities for generations of Kentucky families, bringing prosperity to some in a region with historically high poverty rates. Today, coal remains an iconic symbol of the state’s economy. However, recent and current trends tell a less optimistic story about the economic impact of and prospects for the mining industry in Kentucky.

Coal employment has been declining in the state for many years. Coal maintains a significant economic presence in some eastern Kentucky counties, but makes up only one percent of state-wide employment. Kentucky’s coal-producing counties are among the poorest in the United States. The presence of the industry has helped Kentucky maintain low electricity prices, but low prices do not correlate with stronger state economies. And the price of coal-fired power will rise as older coal-fired power plants are retired and the cost of carbon emissions is included in the price of coal.

The competitiveness of Kentucky coal is in decline relative to western U.S. coal due to higher production costs, diminishing recoverable reserves and, for western Kentucky, higher sulfur content. Greater awareness of the impacts of coal on the land and the environment brings new challenges for the coal industry. Growing concerns about climate change mean pressure on the coal industry to significantly reduce emissions — a development that will further increase production costs. While the future of the coal industry in Kentucky is uncertain, it is clear that significant change is coming. Here we provide a snapshot of the current economic impact of the coal industry in Kentucky, the competitiveness of Kentucky coal and prospects for the future.