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Bucking the National Trend

With its increased production, Illinois now ranks 4th among all coal-producing states in the country. Coal lies beneath more than 37,000 square miles of the state’s surface – or about 2/3 of Illinois. Recoverable reserves at producing mines have been estimated to be 2.5 billion short tons, greater than those of any other state east of the Mississippi River.

Despite stiff competition from natural gas and renewables like wind and solar, market demand for Illinois coal continues to rise. This is due to its relatively low production cost; high energy value and the improved ability of coal-fired power plants to burn Illinois’ high sulfur coal. In fact, Illinois coal mines produced 57.9 million tons of coal in 2014, representing a 58% increase in production over the prior 5 years.

While production in Illinois is booming, markets in other areas, like Appalachia, are shrinking. 

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Having played out recoverable reserves in Appalachia, big coal companies, like Murray Energy, Foresight Energy, Alliance Resource Partners, Peabody Energy, and Arch Coal have been focusing their efforts on mining Illinois’ high-energy coal, where increases in production represent one of the few growth stories for the coal mining business.

Will a Coal Tax Reduce Jobs and Production?

Economic studies and the experience of 22 other states show that a severance tax does not impact production or result in job loss. This means hard-working miners keep their jobs, and communities receive funds to invest in environmental clean-up, education, job training, and infrastructure for a self-sufficient economy.

Wages and transportation have more of an impact on production than a change in tax rates.  In the case of coal, demand and production are predominantly determined by domestic and foreign markets, not taxes.

 – Evan Hansen, President, Downstream Strategies