Lilly made a presentation at the Platts Coal Properties and Investment Conference in Fort Lauderdale, Florida, where he told the 200-strong audience the outlook for the coal industry was much brighter than a few years ago.

He said with the economy rebounding from the 2002 recession and the weather generally normal, supply and demand for coal were in a delicate balance. "Even a problem at a single large mine can drive up the spot price for coal significantly."

Lilly said installation of scrubbers at many existing coal-fired power plants would create new market opportunities for northern Appalachian coal producers, whose coal has a higher energy content but is also higher in sulphur than some coals.

"I am not saying that installing scrubbers will increase the coal burn," Lilly said. "But it will open up markets for the higher sulphur, higher Btu coals that could not be previously served because plants without scrubbers couldn't burn the higher sulphur coal and still meet the emission standards."

Lilly said recent federal regulations on the interstate transportation of sulphur dioxide and nitrogen dioxide, as well as a new federal rule regulating mercury issued this week, would further accelerate the installation of scrubbers on existing coal-fired power plants.

"It is abundantly clear that all of us who make our living in the coal industry will benefit from the clean-up of existing power plants.”

Lilly urged the Government to adopt policies that create an environment of certainty to encourage further investment in technology.

"Will this patchwork of regulations amount to a coherent, sensible policy for coal? Time will tell, but it would be better if Congress were to pass the Clear Skies Act. That would create a stable statutory and regulatory environment for coal, the fuel most responsible for creating low-cost, reliable electricity for the country.”