A publication of the Indiana Business Research Center at IU's Kelley School of Business
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Indiana's Coal Mining Industry

Thea Evans

The debate over energy has intensified in Indiana with the upcoming finalization of the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan. By the year 2030, the plan proposes to cut power-sector carbon emissions by 30 percent from 2005 levels.

Achieving these significant decreases in emissions will require changes to both the generation and consumption of power in Indiana. This article seeks to inform the debate on the future of energy in Indiana by taking a closer look at the current role of coal in Indiana’s energy sector and its impact on local and state economies.

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The Energy Sector in Indiana

What powers Indiana? Coal is the overwhelming answer (see Figure 1). In fact, Indiana is the nation’s second-largest overall consumer of coal—behind only Texas—and it’s the largest consumer of coal by the industrial sector.

Much of the coal is used for electricity generation, with coal-fired power plants producing 87 percent of Indiana’s electricity in 2014 compared to the national average of 40 percent, according to the U.S. Energy Information Administration.

Figure 1: Indiana Energy Production Estimates

Trillion BTUs vs Year

Source: U.S. Energy Information Administration

Indiana Coal Production

Indiana is the nation’s eighth-largest producer of coal, yet production is not enough to meet demand. Indiana imports approximately 40 percent of the coal it consumes.1 Figure 2 provides a compelling view of coal production across the state, as well as the spread of coal reserves and mining locations across southwestern Indiana.

Figure 2: Coal Production by County, 2014

map

*Includes active and closed mines
Sources: Indiana Geological Survey, Indiana Coal Council, U.S. Bureau of Economic Analysis, United States Geological Survey

While total state production has risen steadily over the past 10 years, coal production has varied greatly by county over time as mines are depleted and new mines begin production (see Table 1).

Table 1: Coal Production by County (thousands of tons)

County 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Sullivan 84 172 972 2,054 2,780 5,962 9,936 10,880 12,152 11,552
Gibson 15,176 15,690 14,898 15,403 12,919 11,562 10,583 9,546 10,672 9,913
Knox 4,076 5,100 4,869 5,264 5,045 4,761 5,044 4,543 5,461 6,372
Warrick 1,288 1,187 1,403 1,352 2,399 2,279 3,332 4,330 4,930 5,895
Pike 4,854 4,507 3,934 3,660 3,929 4,281 3,949 3,406 3,066 2,604
Daviess 3,537 3,334 3,451 3,544 3,492 2,812 2,688 2,326 2,058 1,243
Dubois 0 75 641 838 1,124 1,204 1,128 867 1,160 1,223
Clay 1,378 815 549 602 710 597 539 18 78 294
Greene 3 0 0 0 0 0 31 13 21 87
Vigo 3,846 3,835 3,514 3,330 3,558 1,562 36 90 22 <1
Spencer 217 0 0 0 0 0 0 0 0 0
Total 34,460 34,716 34,231 36,047 35,996 35,020 37,266 36,019 39,620 39,184

Source: Indiana Coal Council

Mining’s Share of Indiana’s Economy

The mining industry, excluding oil and gas, has long comprised less than 1 percent of Indiana’s total real gross domestic product (GDP). The data are available only at this aggregated industry level, which includes coal mining, metal ore mining, and nonmetallic mineral mining and quarrying industries. Even considering the rising share of real GDP from 2009 to 2012, Figure 3 shows that the coal mining industry made up less than 0.6 percent of Indiana’s real GDP in 2012.

Figure 3: Mining (Except Oil and Gas) Industry’s Share of Indiana Real GDP

Share of Indiana real GDP vs Year

Source: U.S. Bureau of Economic Analysis

Coal mining may not generate a large share of the state’s real GDP, but the industry has a considerable effect on local economies. Figure 4 displays the total number of coal mining industry employees for the state and for coal producing counties in yellow, and the coal mining industry employment share in red.

The coal mining industry plays a particularly important role in the economies of Pike and Sullivan counties where more than 15 percent of the workforce was employed in coal mining in 2013, compared to the state average of 0.13 percent.

Figure 4: Coal Mining Employment and Employment Share, 2013

Coal Industry Employees (left axis) vs Coal Industry Employment Share (right axis)

Sources: U.S. Energy Information Administration and the U.S. Bureau of Labor Statistics (Quarterly Census of Employment and Wages)

Conclusion

Coal is important in Indiana: the state relies on coal for electricity generation and use in the industrial sector. Statewide, Indiana receives relatively small direct economic impacts from the coal mining industry, but there is considerable impact in the areas where it is mined. Indiana may be a top 10 coal-producing state, but due to the concentration of reserves in the southwest part of the state, coal mining remains a highly localized industry.

Note

  1. Source: U.S. Energy Information Administration, “State Profile and Energy Estimates: Indiana,” March 2015, www.eia.gov/state/analysis.cfm?sid=IN.