37 September 22, 1977 COAL CONVERSION COSTS' AND CONFLICTS 2 j il r y INTRODUCTION Inhis April 20th energy message, President Carter indicated that one of the cornerstones of his progr am would be the under taking of a widespread conversion of our nation's industrial and utility boilers from oil and natural gas to coal. In light of the fact that from 80% to 90% of our nation's energy endowment consists of our coal reserves, this policy w ould appear to be logical. There are, however, considerable difficulties atten dant on the implementation of such a program. Existing environ mental regulations in the areas covered by the Clear Air Act and by recent surface mining legislation will make t he acquisition of additional supplies of coal and their utilization far more dif ficult than in-the past tions governing the allowable levels of suspended particulants.

This is particularly true of regula The amount of capital which will be required for expanded coal production is'staggering. For the period between 1978 and 1985, it is conservatively estimated that this cost may be well in excess of $100 billion. Another consideration is that there are serious questions as to the availability of the human re sources necessary to accomplish the goal of expanding produc tion to 1.2 billion tons annually by 19

85. There will be a tremendous increase in the demand for skilled tradesmen, miners engineers, and other occupational specialties. At present,:.it is uncertain whether they exist in sufficient numbers to accom plish such a massive undertaking as is indicated by the projected I i 2 increase in coal production. It should be noted that the coal industry will be competing for these skilled workers with other energy industries which are also attempting to expand production within the same time frame.

Addressing the questions surrounding coal conversion will be of primary imp ortance in the coming months. Because the House and Senate have not as yet come to conference, there is still some uncertainty as to the exact nature of the final ver sion of the coal conversion requirements. Whatever the final form, however, it will not change the essential nature of the problems created by this dramatic shift in our energy mix.

These problems must be solved if our nation is to fully utilize this promising energy resource. To a large degree, it will be the resolution of such concerns whic h will'determine whether the promise of coal is to become a reality AIR POLLUTION STANDARDS One of the primary characteristics of coal is that it is a singularly dirty fuel. This fact was recognized in the Presi dent's energy message by the requirement th a t all facilities utilizing coal employ what is termed "The Best Available Control Technology BACT Generally, this term is used in reference to "scrubbers These are devices which remove the sulphur dioxide from smokestack gas. Requiring the installation of these pollution control devices will be among the most controversial aspects of the re-emphasis of coal. First, they are extremely expensive. For example, it has been estimated that the cost of installing a scrubber for a coal-fired utility plant is aroun d $100 per kilowatt inefficient, often operating properly as little as 70% of the time.2 they are necessary. It has been suggested in some quarters that the use of such pollution control measures as tall stacks and intermittent production techniques would s erve as well in many parts of the country, and at a far lower cost. Regardless of what means are ultimately employed to control emissions, it is unlikely that the current standards under the Clean Air Act can be met. One of the main reasons for the diffic u lties sur rounding compliance with the standards contained in the Clean Air Act is found in the fashion in which those standards were developed. Under the language of the original Clean Air bill there was a very tight deadline for setting the allowable le vels for the six major pollutants.

To a large degree, the standards were based on the Chess study. This document5,which has'been the subject of.great controversy, remains, however, the basis for our national standard It has been argued that these standards are so stringent that they are impossible to meet, at least in some categories. This point of view has become increasingly credible with the advent of court decisions which deal with the concepts of "non-degradation, It and "non-attainment I Secondly, sc rubbers are notoriously Finally, there is some question as to whether or not 3 Non-degradation is a term used in reference to certain areas of the country which have pristine air. Many of these areas are found in the South'and Southwestern United States.

C urrent policy, following various court decisions, does not allow the development of facilities in those areas which would produce pollutants in.quantities sufficient to degrade the air quality. Due to the strictness of the national standards, this policy has amounted to a virtual ban on the construction of any major facility in these areas.

Non-attainment refers to those areas which have failed to meet the national ambient air quality standards for one of the six major pollutants. It is important to note h ere, that ex ceeding any one of the six will lead to .an area being categorized as a non-attainment area. In these areas, no facility which contributes significant amounts of the pollutant in violation of the standard-may be constructed. The impact of the se policies on coal conversion becomes evident when the extent of non-degra dation and non-attainment areas are examined.

For example, take the case of suspended particulants (which are background dust). With the use of coal, a fairly high level of suspend ed particulants is likely to be emitted. This, under current policies, would be expected to preclude the construction of any major coal-fired facility in a non-attainment area for suspended particulants. As a result, this standard is likely to be a seriou s barrier to the construction of such facilities virtually anywhere in the United States. With the exception of Southern Florida and a few isolated areas located primarily in the far west, every Air Quality Control Region in the United States, including al l of Alaska and Hawaii, is in violation the ambient air quality standards for suspended particulants Furthermore, there is little hope that these areas will ever be brought into compliance. The reason for the difficulties with suspended particulants stems f rom the fact that background pollu tion is normally included in computing the amount of air pollu tion in a given region. Background pollution is that which normally occurs in the environment from natural causes. For example, there are large amounts of du st (suspended particulants generated naturally in the Great Southwestern Desert. In this instance, the dust is sufficient to violate the national ambient air quality standards.

Therefore, you could not build a major coal-fired plant in the middle of this u ninhabited desert. This problem with background pollution is not limited to suspended particulants. For example an effort to construct an oil refinery in Virginia was stopped because that .area was in violation of one of the ambient air quality standards. This would not seem to be a problem, ex cept that the reason the area was in violation was that the air contained large amounts of swamp gas generated by decaying vege tation in the Great Dismal Swamp. In fact, under the current regulations, there is no p o ssibility that the area will ever be brought into compliance Sf As a result, it is a non-attainment area.5 i 4 If coal utilization is to take place on the scale intended some sort of analysis of the national ambient air quality stan dards must be undertak e n. Questions as to. whether the' standards are realistic or whether they are even concerned with the proper pollutants must be answered. Also, some effort must be initiated to determine what sort of balance between environmental and eco nomic interests sh o uld exist. Pollution control technology is highly capital intensive. As our nation proceeds in its efforts to diversify its energy mix, such capital consumption should be carefully examined to insure that its expenditure is warranted in view of capital ne e ds in other energy-related endeavors SURFACE MINING A second area of major concern regarding the relationship of the widespread use of coal to the existing framework of environ mental legislation is found in the new surface mining law. Where as the Clean Air Act affects our ability to burn coal, the surface mining law affects our ability to mine it. It is doubtful that coal will be produced in sufficient quantities to meet the 1985 goal given the framework of the current surface mining law.

An initial impa ct of the surface mining law is that it will remove a significant portion of our coal reserves from potential production. One study has indicated that somewhere between 2 and 6.5% of total reserves will be affectedO6 these reserves represent between 6.2% a nd 20.7% of our total strippable reserves. To put these percentages in perspective they account for as much as 28.3 billion tons of coal.7 This is nearly 24 times the 1985 production goal. In addition to the reserves, which will be withdrawn from possible production, there is also concern that current production may be hampered by the law's somewhat%ambiguous language. As currently constituted the language allows for a very broad spectrum of interests to be afforded standing in the courts. As a result, par t ies which have no real interest in the operations of a given mine may be allowed to sue operators to prevent the initiation or continua tion of surface mining. It is quite possible that lengthy liti gation will cause mine operators to shut down. Examples o f this More significantly sort of oGcurrence may be found in the nuclear energ; field, where lengthy litigation caused by environmentalist suits have led to a virt;al moratorium on new-orders for nuclear facilities. Just as with nuclear power, the potenti al exists for a small group of environmental extremists to create serious and costly delays ultimately resulting in a diminishing of the ability of our nation to provide the electricity necessary to meet projected demand.

Another provision of the surface m ining law which holds con siderable .potential to reduce recoverable reserves is the provi sion that allows the owner o'f the surface land to withhold consent for mining of the subsurface. It has been estimated that this 5 provision could be responsible f o r the removal of as much as 8.5 billion tons of coal from our reserves.8 While it is true that the degree to which these reductions in reserves occur will depend on interpretations of the law, past experience with such interpretations in the courts tends t o lend credence to the con cept that the impacts will be severe. Along the same line, other areas of this law contain numerous ambiguities which may lead to regulatory or judicial decisions contrary to the actual intent of the Congress. Ultimately, such d e cisions may have a far greater effect on mining operations than any of the specific sanctions written into the statute itself. One area, however, is certain to cause considerable difficulty: the permit process. It has been suggested that the permit proces s written into the new sur face mining law is the most comp4ex application process ever designed. While this may be an xerstatement, there is little doubt that it will add considerably to the lead time in opening or expanding mine operations. One of the ma i n problems with the process is the deep involvement of the federal government in each of the steps along the way. Mine operators already complain about bureaucratic delays, and these new requirements can only add to them. While it is difficult to put a pr i ce tag on such matters there have been several attempts made at estimating what they will be. The range of estimates is tremendous, with various mine opera tors estimating that the cost of obtaining a permit to surface mine coal may rise from 20,000 to as much as $80,0

00. In a simi lar vein, there are widely disparate estimates as to the total cost which can be attributed to the surface mining legislation.

The lowest estimate comes from the TVA which reports that the cost would likely amount to 4 per ton of coal.9 the cost through 1985 would be in the neighborhood of $15.5 bil lion.10 Other estimates, which place the cost at as much as $10 per ton would raise that figure to $38.8 billion. Only one thing is certain: the cost is going to be hiqhT This woul d mean that THE GREENHOUSE EFFECT Recently a new concern has surfaced with regard to the wide spread use of coal termed "the Greenhouse Effect I' The ,phenomenon derives its name from allegations that its ultimate effect will be similar to that of the glas s in a greenhouse. It should be noted at the outset that a great deal of the statements concerning this &enomenon are based on either speculation or at best a marginal data base. As a result, it is still uncertain as to whether or not the effect will reall y occur, much less whether or not its impact will be severe This concern is centered'on what has been What advocates of the existence of the Greenhouse Effect con tend is that the immense amounts of carbon dioxide which will be generated by the widespread b urning of coal will eventually find their way into the upper atmosphere. Currently, heat radiated by the Earth is able to penetrate this upper atmosphere and escape into space. As the barrier of carbon dioxide thickens, it will -6 become increasingly diff icult for this heat to escape the effect will be to raise the mean temperature of the 'earth by several degrees.

With this increase in the mean temperature, there will sup posedly be a number of adverse effects on the world's weather patterns. Part of the reason given for this is that the polar ice caps will begin to melt the amount of moisture in the atmosphere, an d with it an increase I in rainfall. It also will affect many of the air currents which at present, cause existing weather patterns.

Since the advent of the industrial revolution, there has been a measurable increase in the amount of carbon dioxide in the atmosphere associated with the increased use of coal actual impact of this increase is speculative. Further, it will be several decades before any major impact would occur from such a phenomenon. Therefore, it is probably safe to assume that for the short run, this phenomenon should not be of great concern.

For the long run, however, some sort of study is probably in or der to determine to what degree, if any, the qeneration of carbon dioxide will inhibit the earth's ability to dissipate heat Ultimately Th is will in turn cause a rise in The THE TRANSPORTATION OF COAL There are three major modes of transportation currently em ployed to move the bulk of our nation's coal truck. In terms of proportionate share, railroads move the over whelming majority of coa l 66 12 Of the remainder, barges move 1% and trucks 11%. There is a considerable difference, however in the length of the hauls for each of the three main carriers.

Rail transport has by far-the longest hauls along our inland waterway system also hauls rel atively long dis tances, with the average being around 480 miles.l3 Trucks, how ever, are used almost exclusively for shor hauls, generally averaging in the neighborhood of 50 miles. t4 Also, trucks are employed for the most part in hauling coal to electr ic utilities.

Of the three types of transport, the most attention has been rail, barge, and Barge traffil'c focused on the railroads. This is in large part due to the dif ficulties experienced by carriers in the northeastern corrider in recent years. Quest ions as to the state of the roadbeds, the availability of hopper cars and locomotives, and as to the ability of the railroads to obtain the financing to make necessary im provements have all cast doubt on the railroads' ability to meet. coal transportatio n needs. At the same time, even critics of the railroads recognize the vital role they must play if widespread use of coal is to become a reality. It is, therefore, useful to examine the current condition of our rail system, and the capital requirements as s ociated with upgrading it to meet the transportation needs accompanying the switch to coal. -7 RAIL TRANSPORT PLANT AND EQUIPMENT Basically, there are three components contributing to the capital requirements associated with 'the improvement of our rail s ystem to carry additional coal. The first of these is the con struction of new and replacement hopper cars. These cars are virtually the only type used by the railroads to transport coal.

Depending on when they were built, hopper cars can carry anywhere fr om 55 to 100 tons of coal. At current levels, the cost of constructing one is around $30,000 and their average life span is 30 years. In recent years, there have been some reports of shortages of these cars. These shortages, however, have been the result of inefficient allocation rather than actual physical deficits. It should be noted, that other commodities are also carried by these cars, and compete for them to a degree.

Due to current poor allocation, there is considerable flexi bility in the current t urnaround time experienced by hop er cars carrying coal. Currently, the average is thirteen days.f5 It is believed that this time can be reduced to a considerable degree and as a result, significant increases in the volume of coal trans ported can be expe r ienced without correspondingly large increases in the number of hopper cars in existence. Regardless of the im provements in hopper car utilization, however, some new car capacity will have to be'added. Further, a considerable number of cars will have to b e purchased to replace those which are reaching the end of their useful lives. One aspect of hopper car utilization, which has not been fully considered,-is the transportation of lime and limestone for the scrubbers (which will be employed to meet the env ironmental regulations concerning coal use An average of one ton of limestone must be provided for each four tons of coal.

Most of this lime and limestone will be transported by truck, but the railroads will still have to carry a certain amount of it.

The movement of lime and limestone does not lend itself to the use of unit trains as does the movement of coal utilization of hopper cars for this purpose will be less efficient than in the case of coal Therefore, the It is possible, by extrapolating from an actuarial curve of the age of existing hopper cars, to make a determination of future hopper car needs. If one assumes that the turnaround#'t,ime can be reduced from the current thirteen days to 6.1 days, there will be a need for 35,100 additional cars to carry coal. These are cars over and above those currently owned by the class 1 carriers utilities, and other coal carrying interests.l6 There will also be a requirement for 2,494 new cars to carry lime and limestone. 17 The railroads will need to acquire 1 57,038 hopper cars to replace those which are currently-carrying coal and which will reach the end of their useful lives,l8 and will have to replace 9,915 cars to maintain the capacity to carry limestone.19 that these figures are for the period of 1978 th rough 19

85. This means that the railroads will have to obtain a total of 209,247 hopper cars between 1978 and 1985 to move the coal projected for production over this period. The cost of these cars, assuming It should be noted -8 a %30,000 per unit purcha se price, will be $6.3 billion in 1977 dollars.

Hopper cars are not, of course, the only consideration. The railroads must also acquire the locomotives to move them As a rule, these are 2,400 horsepower diesel units, costing around 500#000 each. Roughly 4 ,230 of these units w.ill'be required to Some 265 will be required to carry limestone.21 This means that there will be a total of 4,495 locomotives needed by 1985, at an approximate cost of 2.2 billion carry the additional coal under the new energy initia tives. 20 Some observers havexpressed concern over the ability of the railroads to obtain sufficient new and replacement cars and engines due to lack of capacity in the industsy to construct them.

While it is true that few railroads have in-house capacity.at pre sent, there is little information to support this contention.

Without expanding current capacity, the manufacturers of hopper 1 cars could easily handle the additional demand ble problem may be in the area of castings due to the numerous closings o f small foundaries. In the case of engines, domestic producers feel confident that they can meet the demand for the additional equipment. Rolling stock has enjoyed an extemely low default rate, so the financing of such equipment should be no real problem. Where they may be some problem is in the area of track renovation. The major problem concerning the upgrading of track is focused on the lines which serve the Midwest. These are commonly referred to as the "Granger" lines stemming from the fact that they w ere initially constructed to handle pri marily agricultural traffic. These lines have suffered con siderable neglect. Also, many of them are in relatively poor financial condition. As a result, they are likely to experience considerable difficulty in obta i ning the initial financing for track repair. Once their track is upgraded, however, it is likely that the advent of coal will turn them into paying lines The only possi Most of the coal carrying lines in the northeast corrider are in fairly good shape. Th e "Chessie" system, which includes the.Chesapeake and Ohio, is amonq the most profitable lines in the country and, s'ince it already carries a large amount of coal7 it is equipped with the heavier track necessary for unit trains.

Conrail, which would also carry a large percentage of the coal traffic in the northeast, is also in fairly good shape. Conrail received a $2.1 billion subsidy from the federal government to improve its roadbeds, and will do so with or without the advent o f coal I The total amount of capital necessary for renovation outside of Conrai1"is difficult to estimate. A study by Tom Dyer Asso ciates in Boston8 Massachusetts.estimated the cost of renovation at more than $8 billion. Other estimates have placed the co st at as much as $12 billion. A more accurate picture with regard to coal may be obtained by looking at the Ex Parte 305 reports.

These are reports filed by each railroad and includes the amount -9 of deferred maintenance for each line. While there is some inconsistency in the reporting, they probably constitute as clear a picture as any of the minimum work necessary to carry the additional coal. This figure is around $3 billion. In summary then, the total cost of improving our railroad system to cope with the additional coal which will be :produced if the energy goals are met will be $11.5 billion. This-figure 'rep- resents $1.3 billion for new hopper cars and $5-billion for replacement hopper cars for a total of $6.3 billion 2.2 bil'lion for new locomotiv e s 3 billion for track renovation. Surpris ingly, this enormous capital investment is actually the smallest portion of the total investment which the widespread use of coal will require boiler conversion and surface mining legislation. Without this investm e nt, however, increased coal use will simply be impossible Much h.igher costs will come from such areas as FUEL CONSUMPTION FOR COAL TRANSPORTATION One aspect of increased coal consumption which has not been widely considered is the amount of petroleum whi c h will be con sumed in the course of transporting the coal. The energy effi ciency of the three main modes of transporting coal vary widely with barge and rail transportation approximately equal, and with trucks being far more energy intensive. Barges con s ume from 540 to 680 btu's per ton-mile, railroads from 536 to 791 btu's per ton-mile and trucks from 2,518 btu's per ton-mile to 2,800 btu's per ton-mile. 22 This makes trucks roughly four and one half times as energy-intensive as either barge or rail. Tr u cks, however, are necessary for certain types of hauls, and their use will likely continue. If the current shares of tonnage do not change substantially with increased use, then the total ,additional petroleum required to transport the additional coal wil l be the equivalent of 38.5 million barrels of oil per year. The aggre gate cost of this between 1978 and 1985 will be in the range of 2.6 billion dollars in current terms. More important than the cost is the possibility that our coai transportation system could be vulnerable to disruptions caused by interruptions of our oil supply SLUDGE REMOVAL An aspect of coal which xfectsboth transportation and the environment is sludge removal. One of the by-products of smoke stack gas scrubbers is a viscous substance commonly referred to as sludge. This substance contains calcium, sulphur compounds fly ash and.a.number..of other pollutants which are removed prior to the smoke entering the atmosphere. Sludge is referred to in two fashions, wet.and dry. The only differe n ce between the two substances not surprisingly, is that dry sludge has had most of the water removed. The disposal of sludge is becoming a major problem as scrubbers are installed on an increasing number of -10 facilities. It is estimated that an average s crubber on a 1,000 megawatt electric plant generates one foot-acre of sludge each eight h0urs.~3 45 million tons of sludge generated each year by 1985,24 and an estimated 300 million tons per year by 1998.25 ing of this substance have been estimated at an ywhere from 58 ig6 to $22.10 per wet ton.27 Commonwealth Edison is current1 experiencing a cost of $17.10 per wet ton for sludge disposal.

Between 1978 and 1985, it will cost $2.2 billion to dispose of the sludge generated by coal-fired facilities.29 some commercial use will be discovered for the substance in the long run, but if not, it will present a major problem for genera tions to come According to FEA data, there will be an estimated The costs of dis I Hopefully BOILER CONVERSION The entire thrust of the re-emphasis of coal is aimed at encouraging industry and electric utilities to burn this fuel I instead of oil or natural gas. In 1978, t ese users will consume approximately 1.8 bi ion barrels of and 8.2 trillion cubic feet of natural gas d Eliminati o n-:of this portion of our total demand for these fuels would obviously be of great assistance in coping with the shortages so frequently predicted. Also, both oil and natural gas have an alternative use as petrochemical feedstocks. It has been suggested t h at this use is of such great importance for future generations that they are actually too valuable to burn. Regardless of the merits of this argument, it is a fact that additions to reserves have been diminishing under the current system of price controls . It would, therefore, ap pear that: shortages are quite possible As our dependence on foreign oil increases so does our vulnerabi-rity to embargo logic behihdcoal conversion is apparent. What is not certain however, is whether or not we can accomplish wid e spread conver sion within the time framework generally advocated. Constraints of capital, manpower, and manufacturing capacity may hamper ef forts to convert. To a large degree, the extent to which these constraints are alleviated will determine the succe s s of this program I The One of the current problems in assessing the feasibility of coal conversion is that it is, as yet, .not clear which version of the program will be enacted. The House-passed measure is far more stringent than that passed by the Sena t e. Both differ in substance from the Administration's original proposal. In the Senate version, boilers with a capacity of 250 million btu's or better would have to convert from burning oil or natural gas to coal. There are currently, roughly, 2,200 boile r s with a 250 btu or better capacity in the United States,32 of which are currently fired by oil or natural gas. Some of these are what is termed "coal convertible however, the overwhelming majority are not. Most of those which do possess the capability of converting to coal were originally coal-fired and were later -11 converted to burn oil or gas. For the most, these are older units with a mean age in the range of 20 to 22 years34 out of a useful life of 30 years. The boilers which were'built to burn oil o r natural gas are far more recent for the most part with a mean age of 12 to 15 years and similarly to the coal-fired units a useful life of 30 years. The cost of boilers in this category ran from $2 million to $4 million when they were installed. In the i nstance of the coal fired boilers, their aqe mitiqates against conversion of the existing facility it will be far more 'economical in the long run to replace them For most-companies In the case of the newer boilers which were originally built to burn oil o r natural gas, it is simply impossible to convert them to burn coal so they too will have to be replaced. Because of the requirement that all new coal-fired facilities use scrub bers, the cost of replacement facilities wi'll be much higher than the origin a l price of the units being replaced. A 250 million btu boiler currently costs around $10.5 million to including pollution control equipment. This does not consider the added facilities which will have to be constructed to store coal, and to remove sludge produced by the scrubbers. There is also a cost associated with the unamortized capital which re sults from the curtailed life span of the units being replaced.

Assuming that two-thirds of the units to be replaced were origi nally built to burn oil or natu ral gas (this is probably low and the remainder were the older units which were originally coal-fired, then the cost of the unamortized capital would be slightly over 1.8 billion. The cost of replacing 1,452 units excluding unamortized capital would amoun t to $15.5 bil lion In addition to converting industrial boilers, utilities will also have to convert to coal under current legislative proposals.

The conversion of utility boilers is of considerable concern, as many of them have recently converted to burn ing oil and gas from burning coal as a result of EPA regulations. In some instances facilities which have only recently completed the conversion from coal are going to have to begin reconverting back to coal.

In many cases, additional problems will be enc ountered due to the fact that many of the companies which converted from coal sold the land which had served as coal storage or converted it to other uses. They will now have to obtain additional property, or re convert property to re-install such facilit i es. Another space problem is associated with the required scrubbers. These devices are extremely large, and some utility stations do not have room to install them. One instance reported in Virginia described the quandry a'utility operating under a convers ion order found itself in when it became apparent that the only way it could obtain ade quate land to install a scrubber would be to purchase surrounding homes and tear them down.

At present, there is no way in which the cost of acquir'ing additional land to make provisions for the storage of coal can be computed. It will depend largely on local factors which vary so greatly from area to area, and even from facility to facility that -12 it will likely never be known the capital utilities will require 'for t he conversion'of their equipment. Edison Electric Institute has estimated that the' total cost of conversion will be in the 'range 'of 40 billion. This fig ure includes the cost of installing pollution control equipment What can be 'computed, however, is M AN POWER One of the major concerns regarding all aspects of increased coal utilization focuses on the question,of whether or not adequate human resources exist to accomplish the stated objectives. Miners boiler makers, engineers, and other skilled trades a nd technical specialties will be needed in increasing numbers that they will be available to the extent necessary to complete the conversion within the stated time framework. One area which is especially doubtful is found in the area of mine expansion to increase production to the desired 1.25 billion tons annually by 1985, there will be a requirement for 214,000 additional miners.

In this age of growing gravitation away from manual trades, it is somewhat questionable that sufficient numbers of individuals desir ous of following such a trade can be recruited. Further, there are tremendous costs associated with such a large expansion of this segment of the labor force. On average, it-costs approximatelv 32,000 to train and equip a coal minerTC-This 'means t h at $6.848 billion of capital would have to be generated to provide enough per sonnel to get the coal out of the ground. This, however, is not the only cost for personnel. There will also be a requirement for 54,000 engineers, technicians and other salarie d personnel. Assum ing that half of these personnel are graduates of four-year col leges, and the remainder are only required to have two year degrees the cost of their tuition alone, at present levels would approach 5 billion nel around $7.4 billion. Manp o wer availability in other coal re lated areas seems to be somewhat better than in the mining indus try. According to the American Boiler Manufacturers Association current capacity is adequate to produce approximately 1,000 boilers per year As the industry has been somewhat depressed in recent years, it is believed that persons who have been furloughed from plants will provide a sufficient pool of manpower to meet any rea sonable conversion program A similar situation exists in the hop per car industry, whe r e current capacity exists to produce in excess of 60,000 cars per year. 37 less than 210,000 cars, there should be no problem in producing them as fast as they are needed It is doubtful The National Coal Association has estimated that in order This would p lace the total costs o'f training person Since total car requirements are slightly In short, the only serious short-term manpower problem asso ciated with coal conversion appears to be in the area of securing adequate personnel for expanded mining operati o ns. Other areas eithe'r already have surplus personnel or do not envision problems in obtaining them 13 CONCLUSION It is worthwhile to stop and summarize the total require ments for expansion of coal utilization for the period between 1978 and 1985 Depend i ng on the level of production achieved, we can antici pate a demand for between 10.3 and $14.3 billion to upgrade our rail system and obtain additional hopper car and locomotive capac ity. Mining operations will require between $18.7 and $27 billion to pu r chase equipment for expansion, and the impact of the surface I mining law will amount to between $13.6 and $17.4 billion. Sludge I removal will cost industry and utilities anywhere from 84 to 3.6 billion. Converting utility boilers will cost $40 billion a n d replacing the 1,452 industrial boilers of 250 million btu capacity and above will run between $12.2 and $19.2 billion An additional 105,480 barrels of oil per day will be required to move the additional coal, at an aggregate cost of between 2.3 and 2.9 billion between 1978 and 19

85. Unamortized capital from boiler conversion in the industrial sector will cost at least 1.6 billion and could cost as much as $2 billion. Finally, man power training and recruitment costs for additional coal production will r un between $6.5 billion and $8.3 billion, dependinq on the level of production achieved mates, high, middle and low are as follows I The total costs for the three esti High $134.7 Billion Middle 117.4 Billion Low 106.4 Billion While there will be many fac t ors affecting the ability of industry to generate the immense amounts of capital required for expanding coal production, perhaps the most important is the legis lative environment If producers fear the advent of unreasonable or contradictory laws, as evid e nced by the conflict between the concept of mandatory conversion, and certain. aspects of the Clean Air Act, it is likely that investment will be seriously cur tailed. Conversely, in an environment which recognizes the fact that a balance between competin g goals must'be established flourish. Ultimately, it will be the-legislative environment so that economic growth can take place, investment should I which determines the success or failure of our attempts to con I :vert to coal.

Milt Copulos policy Analyst FOOTNOTES 1. This figure, obtained from the Edison Electric Institute is generally accepted throughout .industry. as a standard rule of thumb 2. See "Summary Report Flue Gas Desulfurnization Systems November-December 1976 This is a study of operating scr u b bers conducted by PEDco-Environmental Inc. under contract with the Environmental Protection Agency. PEDco prepares biweekly reports on scrubber performance 3. See "Proceedings of a Public Conference on Sulfur Oxides in N.E. Ohio" November 18-19, 1976 at John Carroll University in Cleveland Ohio. At this conference, R. E. Waller, of the Department of Health and Social Security in London stated However despite a vast amount of effort and expenditure's its (CHESS) execu5ion and interpretation left so much t o be desired that the results and conclusions are largely dis counted outside the U.S.; and recently there has been much criticism of the interpretations of the results even there 4. See February 1976 Environmental Protection Agency publication EPA-450/1-1 -76-001 6. See "Energy and Economic Impacts of HR 13950 Surface Mining Control and Reclakation Act of 1976", prepared for the 94th Congress by ICF Inc. under contract number EQ-6A-0016, dated January 1, 19

77. While this report deals with an earlier versio n of the law, the sections regarding reserves basically than HR 13950, the estimates are, if anything, conservative were the same. Further, as the new law is more stringent I 7. Tbid Y 9. This estimate was made by the Tennessee Valley Authority of all cos t s associated with the new surface mining law. It includes such factors as increased permit costs, paperwork etc. Other estimates are far higher 10. This cost estimate was extrapolated using Bureau of Mines projections of surface mined coal and assuming th a t the TVA 4 per ton cost of the 'surface mining bill was accurate 11. In this instance, Bureau of Mines projections were also used with a higher per ton cost estimate of'the surface mining law 12. Library of Congress, Congressional Research Service public a tion number 95-15 titled "National Energy Transportation Volume I Current Systems and Movement."

FOOTNOTES (Continued 13. 14. 15 16 17 18. 19 20 21 22 23 24 25 26 27 17 Ibld -I I b id Ibid Peat, Marwick, Mitchell and Company Final Report, Railroad Freigh t Car Requirements for Transporting Energy, 1974-1985 prepared under contract to the Federal Energy Administration Environmental Protection Agency and .Department of Transporta tion.

This estimate is based on the assumption that 12.5% of the total volume of lime and limestone required for flue gas desulfurization will be carried by rail. Currently roughly 7% of all lime and limestone is carried by rail, however problems with location of limestone quarries, and local siting restrictions will cause a slight increase in rail transport.

Library of Congress, "National Energy Transportation, Volume I, 01 cit. c Ibid Peat, Marwick, Mitchell and Company op cit.

Ibid Library of Congress "National Energy Transportation, Volume I op cit.

This figure is based on an estimate made by the Tennessee Valley Authority.

This estimate is based on data from the Federal Energy Administration 9: Ibid This estimate comes from a study which is currently being conducted by Aerospace Corporation under contract to the Federal Energy Administration.

The estimate used here comes from the National Association of Electric Companies The association has received data from its members indicating that the cost of sludge removal.1 from $10 per wet ton to $22.10 pe r wet ton. These estimates likely reflect local conditions which are likely to vary considerably in terms of transportation requirements and costs I I 28 bid.; FOOTNOTES (Contined 29. This estimate is based on Federal Energy Administration data concerning the amount of sludge which'it anticipates will be generated by 1985 flecting the mean of reported costs and FEA estimates A disposal cost of $10.55 is assumed, re 30. This is based on Federal Energy Administration Data 31. Ibid 32 This estimate is based o n information supplied by the American Boiler Manufacturers Association 33. Ibid 34. Ibid 35. Ibid 36. Based on National Coal Association Data 37. Peat, Marwick, Mitchell and Company Cs I' z 0 H I3 U 0 p PI 2 2 0 U w n 2 PI x w X I3 2 n w B 4 H U VI 4 VI B VI 0 u I4 0 I3 a z II II II II 0 W 0 N 0 m m II P II P m 0 m N 03 N II w II rl II a N w rl II m m w P rl rl a II II II II In In N N 0 N 03 w II e II rl In rl N 0 rn rl P N II I N w rl II rl a- II a rl rl. II rl w I4 n E c c m k m rl rl 0 n I- rnP 03m mrl r l w IO am PF; mo rl -4 rl rl 4 c H a II II II I- 00 0 N W rn m II 0 II 03 0 N rl W N II w rl w rl II 0 II rl II a- ll m W 0 m rl rl a- c 5 a rl Id c 4 a m u a a, N -4 c, k 0 5 c 0 -4 m k a, rl l-i 0 k c, a, PI b c c 0 rl 0 p s E k a 0 U 2 4 0 a rlc mo .rl -rl wm c,k ma, 73 ac eo HU E: m rl m c 0 -4 c I4 a a 4 iil x w k a a c a b a 7 a c A z rl VI II II N II 0 II I1 N II II II II I1 I- 0 I- rl W N rl m rl 12 N N rl N I- 00 In m In m I- N m In N I X i N in 00 00 m N 00 0 N N d I- rl N In m rl a 5 n tP c -4 a c I 2 0 4J z 0 H t3 u 3 CI PI 2 2 8 8 2 E 2 0 u H rn z x w X t3 CI w H u 0 cn cn 4 VJ I3 cn 0 u a I a II 00 I1 W II a a fd W m tr 00 rl 00 W W N 00 I- N W 12 rl 12 0 W N 0 m m N rl N m In N a m 0 N W 12 N 0 rl d 0 4J 0 c h rl I rl a- a cn c rl 0 u 00 0 rl N m N m a rl 00 a m In rl 00 0 rl P rl rl N rl 0 rl 12 00 m 12 rl N I- W m b rl m I- rl rl N In rl v) a a a a, 4J 0 z v mrl rlo a.

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