Our commitment to environmental care is an ongoing and essential part of our business. We’re proud of our award-winning reclamation practices and our strong environmental compliance. We also are dedicated to driving progress in advanced coal technologies. That’s because we’re committed to making coal an increasingly clean and responsible energy resource that continues to meet the world’s environmental and economic objectives.
Arch Coal held 17 air quality permits indirectly through our mining subsidiaries in 2009 and 2010. These permits are required by federal and state regulating agencies. Of these 17 permits, we had a perfect 2010 compliance rate over 58,378 hours. In 2009, we exceeded air quality standards just once, which resulted in a 99.998 percent compliance rate.
Arch Coal is working on a number of initiatives to reduce air emissions generated from coal-powered electricity. We collaborate with our customers to help them meet Clean Air Act standards and have invested more than $50 million since 2007 to drive progress in emerging clean coal technologies (as noted on page 23).
We’re also growing our reserve base to meet the needs of both domestic and international customers. More than 70 percent of our coal reserves are comprised of a cleaner burning, low-sulfur coal quality. While we expect more improvement in the future, power plant emissions already have decreased by 67 percent since 1970, even as coal-based electricity use has increased by 150 percent over that time span.
Just as technology has been the answer to reducing sulfur dioxide (SO2), nitrous oxides (NOx) and particulate matter in the atmosphere in the past four decades, technology is the answer to reducing carbon dioxide (CO2) emissions as well.
Rapid increases in CO2 emissions in emerging Asia further underscore the need for clean coal technologies. China is now the largest emitter of CO2, and the developing world has surpassed the developed nations in total emissions. Clearly, we will need global solutions to address climate concerns.
To put the world on a path to stabilize greenhouse gas concentrations in the atmosphere at 450 ppm – the level identified by the United Nations’ Intergovernmental Panel on Climate Change (IPCC) as necessary to avoid the worst potential impacts of climate change – the world will need to invest $11.6 trillion in the energy sector over the next two decades, according to the International Energy Agency. Roughly 15 to 20 percent of that investment will need to be made in the power sector, with more than $500 billion of the total devoted to carbon capture and storage (CCS) technologies. Clearly, that is an enormous figure – and the cost will only increase if we don’t begin to bolster our level of investment soon.
That’s why Arch Coal is helping accelerate efforts to commercialize advanced coal technologies and continue America’s global leadership in clean energy solutions. Arch Coal is a founding member of the National Carbon Capture Center, a public-private partnership with the U.S. Department of Energy. Located in Alabama, this research center brings together science and technology experts to advance low-carbon solutions in an active power plant. We also invest in ongoing university research initiatives with the Consortium for Clean Coal Utilization at Washington University in St. Louis and the School of Energy Resources at the University of Wyoming.
In addition, we adhere to the requirements of the Clean Water Act – regularly monitoring, reporting and complying with regulatory standards at all levels of our operations. Moving forward, more stringent water discharge limits will require additional advances and investment in water recycling initiatives and treatment technologies to reduce our consumption and protect the water habitats downstream of our operations.
Our mining complexes rely on a mix of surface water, groundwater and public water supplies. We attribute our increased water recycling in 2010 (see chart on page 16) to our enhanced water treatment and reuse at our preparation plants as well as the increased volume of water required for additional coal tons produced year over year.
In addition to direct efforts at our operations to reduce our impacts on water resources, we proactively assist with water projects that benefit neighboring communities in six states.
According to the Utah Division of Wildlife Resources, Utah is the second driest state in the country, receiving an average of less than 12 inches of annual rainfall. With three of our mines located in Utah, we often help improve water accessibility so that wildlife, livestock and agriculture can better survive the tough climate. Dugout Canyon employees manage a water collection and distribution system that irrigates 14 acres of alfalfa, wheat, sunflowers and native grasses. This system also serves area wildlife. During droughts, Sufco Mine employees voluntarily haul water to more than 2,000 cattle that graze nearby. And, we’ve installed water guzzlers on U.S. Forest Service lands to catch and store drinking water for birds and small mammals year-round.
Arch Coal’s subsidiaries include land reclamation in every phase of our mine plans, which are closely regulated by the Surface Mining Control and Reclamation Act (SMCRA). We carefully include a range of environmental plans throughout the life of each mine and treat each reclamation project uniquely. Because of this careful planning, and as verified by the regulatory inspectors, we restore each affected mining area to a condition equal to or better than its original condition for the intended land use. Oftentimes, land that we’ve reclaimed is indistinguishable from surrounding terrain within just a few growing seasons. We have implemented and continued programs that help support indigenous wildlife and habitat. We received final bond releases for more than 4,800 restored or protected acres in 2009 and 2010. Moreover, Arch continued its tree-planting initiatives, planting more than 100,000 trees last year in West Virginia alone.
In 2009 and 2010, Arch delivered its best environmental compliance years on record – far outpacing our industry peers. Our compliance record over the past six years (see chart on page 15) demonstrates our deep commitment to continuous improvement. Our operations are targeting A Perfect Zero – zero environmental violations and zero safety incidents. In 2010, 11 mines and facilities achieved zero SMCRA environmental violations.
Beyond compliance, we’ve received a number of national and statewide awards based on our proactive efforts. For example, our Coal-Mac mining and preparation complex in Holden, W.Va., received a 2010 National Award for Excellence in Surface Mining from the U.S. Department of the Interior for its overland conveyor belt line and pumping project. The conveyor moves nearly 3 million tons of coal annually for rail transport, eliminating the burden on public roads and reducing diesel fuel usage. The seven-mile slurry pipeline adds an extra layer of environmental protection with real-time monitoring and flow control through fiber optics.
Our commitment to preservation extends to every project, even when things don’t go according to plan. In 2009, construction crews from Mountain Coal’s West Elk mine identified a hawk’s nest while re-grading a steep, unstable U.S. Forest Service road. We realigned the road to preserve the hawk’s natural habitat – and crews repurposed fallen Aspen trees found nearby to protect against future erosion. The Colorado Division of Reclamation, Mining and Safety recognized our efforts with a state reclamation award in February 2010.
Our recycling program includes solid and liquid waste, such as oil, scrap metal and tires.
In fact, the Colorado Department of Public Health and Environment presented West Elk with Colorado’s Pollution Prevention Award for its proactive methods for reducing wastes. West Elk encourages employees to suggest more efficient ways to reduce, reuse or recycle materials, and upgraded the mine office, shop and other buildings to more energy-efficient lighting. West Elk negotiates with shippers to use more efficient packaging materials, uses low-flow faucets and showerheads and conserves upland reservoir water.
The U.S. coal industry generates nearly a quarter of the nation’s electricity from just six square miles of coal extraction in the Powder River Basin each year. Efficient use of resources is a priority throughout our operations. For example, our Black Thunder mine produces 200 times more energy than it consumes.
We are focused on energy consumption and reduction at all of our operations. We reduced our energy consumption by more than 10 percent on a per ton basis in 2010 compared to 2009. These changes can be attributed to efficiencies gained in higher production levels as well as process improvement initiatives targeting greater energy efficiency.
Looking ahead, our energy stewardship will continue to proceed hand in hand with our environmental leadership.
While Arch’s subsidiary operations delivered our best environmental compliance to date in 2010, we consider these achievements simply a solid foundation to continue working toward a perfect performance record. We will work to measure and disclose additional environmental data over time as we strive for continuous improvement.