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A new analysis from credit rating agency S&P predicts cities in areas like Southern Illinois must get ready for “credit challenges” as money moves out of coal.
As investors, both in public and private sectors, make an effort to invest in things like renewable energy, S&P said coal-reliant areas could experience added budget pressures due to a loss of not only tax revenue should a mine or coal-fired plant close, but the also the local tax base after workers leave the area for other opportunities.
“In S&P Global Ratings’ opinion, reliance on coal-related revenue and economic activity, absent diversification, may result in long-term credit deterioration for some U.S. government entities,” the report said.
Specifically to Illinois, the authors pointed out that coal accounts for less than 1 percent of the state’s GDP and the state doesn’t collect a severance tax on coal. This, the authors said, would ensure that the decline of the coal industry in Illinois would have a minimal effect on the state’s overall economy.
Southern Illinois, however, would be one of the more intensely-affected regions.
“In localized areas where there is a power plant closure, where there is a mine closure, that can have a more negative economic impact in that area,” credit analyst Timothy Little said.
U.S. coal production is in decline, with half of those operating in 2008 having been since shuttered, but Illinois’ coal production has bucked that trend, according to S&P.
“Over the past decade (2007-2018), production increased 52% compared to declines or flat production in the nine other major coal-producing states and a 34% decline in coal production nationally,” the report said, attributing that increase to strong export demand and relative ease of extraction compared to other areas.
The report’s ominous warning is due, in part, to a larger movement of ethical investing referred to as environmental, social, and governance, or ESG, initiatives that focus on sustainability factors among other issues.
“The ESG components to our ratings are just as important as some of the financial metrics that are key,” S&P analyst Kurt Forsgren said.
posted by Rich Miller
Wednesday, Oct 2, 19 @ 10:20 am
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The property tax lost if power plants in Joppa, Marion, Marissa, and/or Baldwin were to close would be catastrophic to local school districts.
Comment by dr. reason a. goodwin Wednesday, Oct 2, 19 @ 10:39 am
Coal has gone the way of buggy whips. Southern Illinois needs to go a different direction in order to thrive.
Comment by A Jack Wednesday, Oct 2, 19 @ 10:52 am
==Southern Illinois needs to go a different direction in order to thrive.==
Please provide the direction, or options you’ve considered…
Comment by A guy Wednesday, Oct 2, 19 @ 11:13 am
Do “buggy whips” control 40% of transportation in Illinois?
“Coal supplies over 40 percent of the state’s electricity. But both nuclear and coal are imperiled by the state’s renewable electricity mandate which requires that at least 25 percent of electricity comes from renewable energy after 2025, of which the majority is mandated to be wind power. Renewable mandates increase the costs of running nuclear and coal plants.”
https://www.instituteforenergyresearch.org/uncategorized/illinois-an-energy-and-economic-analysis/
Comment by Lucky Pierre Wednesday, Oct 2, 19 @ 11:27 am
===Southern Illinois needs to go a different direction in order to thrive.==
Please provide the direction, or options you’ve considered…=
Vistra just shut down 4 central Illinois coal fired plants. Seems like pretty sound advice for Southern Illinois. Any direction but coal would probably be a good idea.
Comment by JS Mill Wednesday, Oct 2, 19 @ 11:33 am
=Please provide the direction, or options you’ve considered…=
www.weforum.org/agenda/2018/02/countries-behind-global-renewable-energy-growth/
Not exactly an obscure idea and it doesn’t have the unintended consequence of black lung.
Comment by Pundent Wednesday, Oct 2, 19 @ 11:35 am
Lucky- your source is a Koch funded propaganda group. It’s pretty bias, but so are you.
Comment by Ike Wednesday, Oct 2, 19 @ 11:43 am
When you can’t handle the message, attack the messenger.
As Mark Twain famously said “reports of my death have are greatly exaggerated”
The estimated coal reserves in Illinois are the second-largest after Montana, and the state’s coal mines account for 6% of U.S. coal production.
https://www.eia.gov/state/print.php?sid=IL
Illinois Basin coal production among the top 25 producers was flat in the second quarter from the year-ago period despite low export thermal coal prices and logistical issues that plagued exporters in the region.
The basin’s 25 best-producing coal mines produced about 24.1 million tons during the recent period, a 0.8% increase from the year-ago quarter, according to data compiled by S&P Global Market Intelligence.
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/53757105
Comment by Lucky Pierre Wednesday, Oct 2, 19 @ 12:15 pm
Southern illinois will be decimated, not by the lack of coal jobs, but the loss of base load coal fired units. This folks is serious.
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 12:46 pm
=Southern illinois will be decimated, not by the lack of coal jobs, but the loss of base load coal fired units. This folks is serious.=
So instead of waxing poetically about the “good old days” maybe we should seize the moment and look at ways that we can revitalize Southern Illinois as the clean energy capital of the Midwest.
Comment by Pundent Wednesday, Oct 2, 19 @ 12:51 pm
Pundent. I am not that up on all clean energy, but my small solar unit that powers my man cave
e runs out of juice after three days of cloud cover. I understand that wind energy never runs out. Is that correct?
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 12:57 pm
@A Guy. Southern Illinois also has plenty of oil and natural gas deposits. And there are a lot of trees. I am not an environmentalist. But when you see a company such as Peabody emerging from bankruptcy, but still bleeding cash, you know that coal’s time is over.
Comment by A Jack Wednesday, Oct 2, 19 @ 1:01 pm
…because Trump said he was going to save the coal industry.
Comment by Not worried.... Wednesday, Oct 2, 19 @ 1:02 pm
We still have a lot of old mine property sitting here doing nothing. Someone could use these locations for wind power. In areas where it’s open the wind blows very well. Either wind or solar on these vacant, lifeless plots. And yes, natural gas could be big around here. Not quite time to put coal to bed forever, but right now is the time the region needs to transition and shift before we are left behind. But attitudes in this region need to shift too.
Comment by Alex Ander Wednesday, Oct 2, 19 @ 1:25 pm
Lucky - if you want to be seen as creditable, than use creditable sources. Trying to compare yourself to Mark Twain is laughable. Martyr’s complex.
Comment by Ike Wednesday, Oct 2, 19 @ 1:26 pm
If we can literally shovel a trillion or more dollars in tax cuts mostly to those who need it the least, and for nothing but the same old supply side economics that does not produce results that even begin to warrant the cost, we as a country surely could invest in middle class workers harmed by changing or dying large-scale industries like coal.
Comment by Grandson of Man Wednesday, Oct 2, 19 @ 1:36 pm
The heck with the workers(not really), what are we going to use instead of base load coal?
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 1:43 pm
Southern IL coal mines are going to produce for many years to come but they are in slow decline because their product is in slow decline. Southern Illinois coal plants will all be gone within 5 years because they aren’t needed for reliability and they are more expensive than alternatives like gas, renewables, and subsidized power from bordering states. Vistra can’t make a profit when cheaper power is imported from MO, a state that still has monopoly utilities.
Comment by National League Wednesday, Oct 2, 19 @ 1:45 pm
NL. You are spot on. But five years?
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 1:46 pm
Blue Dog, you asked what we’re going to use instead of baseload coal: we’ll use pretty much what we’re using now with a slight transition towards renewables over the next decade. During the next 5 years we’ll use a small amount of coal from Illinois-based plants and unless the market is completely reformed, they will shut down by 2025. We’ll use gas generated electrons from Illinois-based plants (for the next several decades), imported electrons from surrounding states (primarily coal and gas with some nuke and renewables), 900 MW of nuclear from the Clinton plant (until at least 2027) and a growing amount of renewable energy from Illinois-based plants paired with batteries.
The only interesting thing is how fast battery costs come down. If it’s rapid, more renewables. If it’s slow, less renewables. We need the batteries to increase reliablity and people don’t want to have their electric bills soar. There’s plenty of land in southern Illinois for the construction of renewables like wind and solar.
Comment by National League Wednesday, Oct 2, 19 @ 1:57 pm
=The heck with the workers(not really), what are we going to use instead of base load coal?=
https://cleantechnica.com/2016/03/02/base-load-power-is-a-myth-used-for-defending-the-fossil-fuel-industry
You really could learn this yourself.
Comment by Pundent Wednesday, Oct 2, 19 @ 2:03 pm
NL. Yes. It appears SIPC can buy imported electric cheaper than it can produce. Bummer. Too bad Lively Grove got built.
Pundent. Sparsely populated areas, that have already invested in base load coal will have huge hurdles financially to overcome. My experience tells me clean energy investments will be paid for by the consumer. Southern illinois is not flush with people who have tons of money.
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 2:18 pm
= My experience tells me clean energy investments will be paid for by the consumer. Southern illinois is not flush with people who have tons of money.=
All the more reason to let these Southern Illinoisans participate in and reap the benefits of a clean energy economy. Alternatively we can bury our heads in the sand and continue to bemoan the loss of good paying jobs because the world has evolved.
If the argument was that we have to continue to hang on to inefficient industries and hazardous occupations because an investment had been made we’d still be mining asbestos.
Comment by Pundent Wednesday, Oct 2, 19 @ 2:40 pm
Ironic that all the coal and other fossil fuel supporters don’t seem to want to let capitalism work…they want (and get) massive handouts and tax advantages from the government.
Comment by d. p. gumby Wednesday, Oct 2, 19 @ 2:49 pm
D.p. its good to know solar and qind are subsidy free.
I am not advocating that we shouldnt be develiping cleaner fuels. It must be gradual or the consequences will be horrendous.
Comment by Blue Dog Dem Wednesday, Oct 2, 19 @ 3:07 pm
Illinois mines about 80-90% of the coal we did when the 1990 Clean Air Act amendments were passed, but due to mechanization of the industry we do it with about 25% of the workers. The “War on Coal” is being won…by the machines.
Comment by Senator Clay Davis Wednesday, Oct 2, 19 @ 4:30 pm
I agree with Alex Ander @ 1:25 =. “Not quite time to put coal to bed forever, but right now is the time the region needs to transition and shift before we are left behind.”
It is time to transition away from coal and increase our production and use of clean energy. This will help our environment and our economy.
Comment by Anonymous Wednesday, Oct 2, 19 @ 4:37 pm
Posted @ 4:37 pm.
Comment by Enviro Wednesday, Oct 2, 19 @ 4:37 pm
=It must be gradual or the consequences will be horrendous.=
=The “War on Coal” is being won…by the machines.=
Save the machines (exclamation point).
Comment by Pundent Wednesday, Oct 2, 19 @ 4:53 pm
Renewable Energy is the future. Coal is the past. 5 of the 15 remaining coal plants in Illinois announced closing dates last month. Big Money doesn’t invest in a dying industry. The leadership question is whether we are willing to forgo the marginal profits of $40/Ton of coal and preserve our beautiful Southern Illinois forests
Comment by Biker Wednesday, Oct 2, 19 @ 7:02 pm
Agree that we need to transition away from coal gradually. It’s going to happen no matter what anyway. The problem I see is that coal areas of the state are not competitive with neighboring states due to Illinois high taxes. The whole region could go into freefall.
Comment by Rudiforte Thursday, Oct 3, 19 @ 8:43 am