Washington (Platts)--18Feb2010/720 pm EST/020 GMT

The top lobbying group for US freight railroads on Thursday warned government policy makers against implementing greenhouse gas laws or regulations that would reduce the country's use of coal, saying such measures would hurt the economy and cost jobs.

The Association of American Railroads estimates the current proposals in Congress and the Environmental Protection Agency could cut the industry's rail revenue by as much $3 billion.

"We believe as America addresses carbon capture, addresses carbon dioxide, it must do so in a way that doesn't drive coal out of the picture," Ed Hamburger, the group's president, said at a Washington news conference.

Railroads annually haul more than 70% of the coal produced in the US and revenue from coal accounts for nearly a quarter of the industry's annual revenue.

Hamburger said current projections about coal use under greenhouse gas regulation schemes could threaten up to 7,500 of the industry's nearly 150,000 jobs. The reduced coal use would result in between $8 billion and $10 billion worth of infrastructure being idled in both eastern and western coal basins.

"Steel in the ground running to places like Gillette, Wyoming, and Beckley, West Virginia, could not easily be used for other purposes," Hamburger said.

The association supports the Obama administration's recent formation of an inter-agency panel to fund carbon capture and sequestration projects nationwide. It also is seeking congressional support to reimburse the industry for lost coal business under proposed greenhouse gas regulations.

"Our first preference would be to support funding for clean coal technology," said John Gray, AAR vice president for policy and economics, calling the federal reimbursements "a last resort."

--Peter Gartrell, peter_gartrell@platts.com