Communities at Risk from Closing Coal Plants

This post compares economic and demographic characteristics of communities where coal-fired power plants have recently retired or are scheduled to retire.

  • Between 2009 and 2025, 174 coal-fired power plants retired or plan to retire one or more generation units, reducing coal-fired power generation capacity by 18 percent nationally.
  • Lost coal-fired power plant jobs largely will be offset nationally as new natural gas and renewable energy facilities are built. The economic impacts, however, will be felt acutely locally. Some communities and workers are exposed to greater risks than others due to their poverty status, language barriers, and isolation from larger job centers.
  • Plant closures may provide economic opportunities associated with plant decommissioning, water and environmental reclamation, and diversification. Identifying communities and workers at greater risk will help focus limited transition resources.

Coal-fired power plants are closing across the U.S. Since 2009, 142 plants have retired generators or closed entirely, reducing coal-fired power generation capacity by 13 percent nationally. These retirements help explain a sharp decline in U.S. coal demand for electricity generation, which fell from a peak of 975 million tons in 2010 to 738 million tons in 2015, a 24 percent decline.

Coal-fired power plants are closing due to several market and regulatory forces. Low-cost natural gas and rapidly falling costs of renewable energy sources are outcompeting coal, whose costs are rising.

New air quality regulations limiting mercury and other air toxics emissions from coal-fired power generators (the MATS Rule) also have played a role in accelerating the timing of plant closures, particularly for older, less efficient, and more-costly coal-fired plants. States, utilities, and consumers also are pursuing their own goals for cleaner, low-cost energy.

These factors mean that as coal-fired power plants close, the electricity generating capacity is not replaced with new coal-fired power plants, but with natural gas and renewable energy sources that are less expensive to build and operate. Renewable sources made up about two-thirds of all new power capacity constructed in the last two years.

Coal-fired power plants will continue to retire, but reported data suggest the pace of retirements will slow from recent years. Planned retirements could accelerate, however, if natural gas prices remain low and if renewable energy costs continue to decline.

The recent announcement that the Navajo Generating station likely will close due to competition with cheap natural gas is the latest example of additional capacity retirements not yet captured in Energy Information Administration (EIA) data utilized in this report.

Community Characteristics Indicating Risks Associated with Closing Coal-Fired Power Plants

Among communities where coal-fired power plants have or are scheduled to retire, some will experience greater hardship than others due to a variety of factors. For example, rural communities isolated from larger urban markets, with high rates of poverty, or with a large numbers of residents with language barriers are likely to more acutely feel the loss of a major employer.

The interactive dataviz below illustrates four economic and demographic characteristics that can identify communities where the impact of coal-fired power plants retirements might cause greater hardship.

Indicators of Economic Vulnerability

Large industrial facilities, including coal-fired power plants, are important employers. Wages in the energy and electricity generation sector tend to be higher than the average wage in many communities where they are located. And power plants often operate for decades, providing relatively stable employment opportunities.

Losing these stable, well-paying jobs can have large impacts on communities and workers. The scale of those impacts depend at least in part on the characteristics of the plant itself and the community where it is located, including the size of the plant, the number of workers laid off, and the community’s broader economic characteristics.

Coal-fired power plant retirements have little impact on the overall U.S. economy as coal-sector job losses are relatively small and are being outpaced by new jobs created as new natural gas and renewable energy facilities replace retired coal-fired generating capacity.

Many of these new energy facilities and jobs, however, will not locate in the same communities where coal-fired plants are shuttered, and some communities where coal jobs are lost will face significant economic hardship.

A community’s vulnerability to risk of a plant closure (or the departure of any large employer) is correlated with several characteristics: the degree of isolation from metropolitan and global markets (measured as travel time to cities with populations more than 50,000), and the level of education (measured as the percent of the adult population without a college degree).

These characteristics may point to places where the retiring coal-fired plant play an out-sized role in the local and regional economy, where there are relatively few other job opportunities for laid-off workers, and where it may be more difficult to attract and grow other types of jobs, particularly those that rely on advanced education.

Indicators Related to Demographic Vulnerability

Communities with a higher number of people at risk due to their race, ethnicity, or poverty status may experience greater risks associated with coal-plant retirements, including unemployment, persistent poverty, and other negative social impacts. These communities may also have lower levels of social and financial capital necessary to secure resources for plant decommissioning, environmental reclamation, and economic development.

The interactive map above uses two demographic characteristics that may signal communities where the impacts of a plant closure will be felt more acutely and have more lasting impacts on the local population. Communities with relatively higher rates of family poverty (measured as the share of families living below the poverty line), and lower levels of language proficiency (measured as the share of the population that speaks English “not well”) may indicate where a community is more exposed to risks associated with economic disruptions.

Community Transition Planning

The challenges associated with economic disruptions have intensified for many workers and communities due to structural changes in the U.S. economy in recent decades, including a major shift away from employment in mature natural resources sectors and manufacturing.

Rural communities often are more dependent on these declining sectors and are less able to diversify into growing sectors that rely on access to metropolitan markets and an educated labor force. These changes in the U.S. economy make transitions away from coal-fired power generation more difficult for skilled, but less well-educated workers, and for rural communities.

Plant closures may provide opportunities, however, for community dialogue and potential economic benefits. There often are significant costs and opportunities associated with plant decommissioning, water and environmental reclamation.

In addition, resources may be available for worker retraining, community services and infrastructure, and economic diversification efforts. Communities that have initiated an energy transition planning process may be better able to secure resources from utilities and plant owners, state government, foundations, and federal resources to leverage these opportunities.

Identifying which communities are at greater risk of adverse economic, social, and health outcomes will help direct these resources to communities where assistance is most needed. Transition plans also can identify the strategies and resources that are most effective in helping workers and communities affected by coal-fired power plant closures.

Data and Methods

Plant Retirements:
The Energy Information Administration (EIA) surveys all power plants with a combined nameplate generation capacity of 1 megawatt (MW) or greater. Power plants often have more than one generating unit. The survey reports generator-level specific information about existing and planned generators, including generation capacity, ownership, and planned retirements or additions.

Economic and Demographic Characteristics:
This report uses federal data from the U.S. Census American Community Survey (ACS) to compare the socioeconomic characteristics of communities where coal-fired power plants are located.

These data are reported at the Census Tract scale. The geography for each plant is defined as all Census Tracts intersected by drawing a one-mile radius around each plant. Census Tracts are small, relatively permanent statistical subdivisions of a county or equivalent entity that are updated prior to each decennial census. The primary purpose of census tracts is to provide a stable set of geographic units for the presentation of statistical data. Census tracts generally have a population size between 1,200 and 8,000 people, with an optimum size of 4,000 people.

Headwaters Economics has several free and easy to use tools to generate reports with socioeconomic information for communities across the U.S. at several different geographic scales, from Census Tracts to states.

This report uses data available in the Populations at Risk (PAR) tool. PAR reports use the ACS to provide social, health, and economic data along with race, age, gender, poverty, and other socioeconomic measures.

The four variables sourced from ACS used in this report are defined below. PAR provides additional information about each variable and citations to academic research that explain the how each variable is useful in describing or identifying at risk populations:

Education is defined as the percent of the population that is 25 years and over with no college degree. Educational attainment is used as a proxy for overall socioeconomic circumstances of individuals and communities. Individuals with college degrees earn on average 84 percent more than individuals with only a high school degree. Cities with more highly educated workers have higher wages on average for well-educated and less-well educated workers. On average, counties with higher education rates also experienced lower rates of job loss during the recent recession.

Language is defined as individuals five years or older who “Speak English not well.” The value is the result of self-rated English-speaking ability questions in the American Community Survey. Many aspects of life in the U.S. assume basic fluency in English. Thus, people with limited language skills are at risk for inadequate access to health care, social services, or emergency services.

Poverty is defined at the share of families living below the poverty line. ACS defines a family as a group of two or more people who reside together and who are related by birth, marriage, or adoption. ACS uses a set of income thresholds that vary by family size and composition to define who is poor. If the total income for a family or an unrelated individual falls below the relevant poverty threshold, then the family or an unrelated individual is classified as being “below the poverty level.” Families in poverty may lack the resources to meet their basic needs. Their challenges cross the spectrum of food, housing, health care, education, vulnerability to natural disasters, and emotional stress.

Isolation is defined as travel time to the nearest metropolitan area or to a regional airport with convenient daily air connections to major airline hub cities. Access to markets via transportation infrastructure, in particular airports, is important to economic development opportunity, including growth in employment, wages, and income.