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Trump Promised to Bring Back Coal — It’s Declining Again

These translations are done via Google Translate
Aug 21, 2018, by Jennifer A. Dlouhy, Ari Natter and Tim Loh

More than any other recent president, Donald Trump came to office promising to revive coal and restore mining jobs.

Nineteen months into his term, there’s little improvement.

The industry, which will be a focus of Trump’s visit to West Virginia on Tuesday, has rebounded slightly from a devastating 2016, when cheap natural gas was crushing coal in the power market and three major producers were in bankruptcy. But an uptick in exports is masking a bigger problem: The industry is still losing U.S. customers as utilities increasingly turn to natural gas and renewable power to generate electricity.

Trump’s “impact on the coal sector has been extremely minimal in nature despite his rhetoric,” said Andrew Cosgrove, a Bloomberg Intelligence senior analyst. “Power plant retirements are still happening and set to continue looking out through the end of his term.”

In fact, government analysts expect continuing declines, with U.S. coal production, consumption and exports all projected to decrease in 2019, according to the Energy Information Administration.

It’s not for a lack of trying. Trump is heading to West Virginia — the No. 2 coal producing state — for back-to-back campaign events Tuesday, the same day his Environmental Protection Agency is slated to advance the administration’s latest effort to help the sector: a plan to dramatically scale back Obama administration limits on greenhouse gas emissions from power plants.

The proposal offers a framework for replacing former President Barack Obama’s Clean Power Plan, which dictated specific carbon-cutting targets to states and then encouraged sweeping changes across the nation’s electric grid to satisfy them, including the retirement of coal-fired plants and the addition of renewable power.

Substitute Plan

Trump’s substitute plan instead focuses on what can be done to improve efficiency at individual power plants so they generate fewer carbon dioxide emissions per unit of generated electricity, according to people familiar with the plan who asked not to be identified before its release. It also grants states more leeway in regulating plants within their borders.

Analysts say the Trump proposal is unlikely to dramatically change the coal industry’s fortunes or lead to new domestic demand. But it dovetails with other Trump administration efforts to ease regulations that discouraged plants from using coal and made it more expensive to extract — changes that may help the industry at the margins.

The question isn’t how much better the industry is doing under Trump, but how much worse it would have been doing without him, said Hal Quinn, president of the National Mining Association. Trump has stopped the “bloodletting” that was under way under Obama and is “taking away some of the barriers, allowing us to compete,” Quinn said.

The power market has “stabilized to some extent, as opposed to the precipitous drop we saw over three or four years,” Quinn said by phone. “The market is the market, but on the policy side, what they have done is allow us to respond to the market.”

Even if Trump’s efforts haven’t generated big market gains, they have provided psychological relief for the battered coal industry.

And politically, the president’s words and actions matter more, said Marybeth Beller, a political science professor with West Virginia’s Marshall University.

Trump has “demonstrated sympathy to coal miners,” and even if coal declines under the president’s watch, he won’t suffer in West Virginia “as long as his rhetoric is pro-coal and his policies do not increase regulation,” Beller said. “The electorate’s pattern demonstrates that it supports candidates who demonstrate support for the coal industry, whether or not that support actually increases jobs.”

‘Heavy Weight’

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Trump’s enthusiasm for coal miners and steelworkers helped convey an allegiance to working-class voters who helped elect him to the White House. In West Virginia, a once reliably Democratic state, Trump won 68 percent of the vote two years ago.

Now in the White House, Trump is doing something to relieve coal miners’ blues, supporters say.

“They are still down but they don’t have a heavy weight hanging on their shoulders now,” said Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute. “They have a much better chance of competing now that the EPA Has been called off.”

Coal Plants

Still, no one in the industry is talking about building new coal plants. Since 2010, power plant owners have either retired or announced plans to retire 630 coal plants in 43 states — nearly 40 percent of the U.S. coal fleet, according to data by the American Coalition for Clean Coal Electricity, a trade group that represents utilities such as Southern Co. and producers such as Peabody Energy Corp.

American Electric Power Co., which has retired 7,200 megawatts of coal generation capacity since 2011 and announced plans to invest heavily in natural gas and renewables, said in a statement it doesn’t plan to reverse course. “Existing coal plants remain an important part of a balanced energy mix for the U.S.” spokeswoman Tammy Ridout said in an email.

But new coal plants aren’t part of AEP’s plans. “Based on economics, our plans for new generation include natural gas and renewables,” Ridout said.

The Trump administration is contemplating a much bigger market intervention that could make a difference by making the case that shoring up money-losing coal and nuclear plants is essential to national security.

Under the strategy outlined in a May memo, the president would seize sweeping authority under the 68-year-old Defense Production Act to force grid operators to buy electricity from specific power plants at risk of closing. The approach also would include establishing a strategic reserve of critical power generators: a stable of coal and nuclear plants that could be revved up in case of an emergency.

Critics are vowing to fight that action in court.

Opponents of the Trump administration’s Clean Power Plan rewrite — including former EPA officials who drafted the original regulation — say the new effort amounts to political pandering.

“They are continuing to play to their base. This is all about coal at all cost,” former EPA Administrator Gina McCarthy told reporters on a Monday conference call. “One of the reasons to be distraught about this is that it really makes false promises that we can actually return to coal as our major and compelling source for energy production, which is simply not the case. Coal is not competitive.”

Although domestic consumption continues to erode, American coal production rebounded during Trump’s first year in office, mostly driven by increased exports. While production is projected to decline slightly this year — down from 774 million short tons in 2017 to 766 million short tons — export volumes are still on track to be 71 percent higher than the 60 million metric tons shipped overseas in 2016.

Exports — especially to India and South Korea — remain the industry’s bright spot.

Trump policy changes may help domestic demand at the margin, said Jeremy Sussman, an analyst at Clarksons Platou Securities, Inc. “But the biggest driver of incremental demand will come from the export market.”

In West Virginia, layoffs began giving way to job fairs and mining companies poaching talent from rivals right around Election Day in 2016. That was mostly because of surging global prices tied to rising coal imports in Asia — but industry backers also credit Trump. Gone, they say, is the unpredictability of the Obama administration when the rules were “changing constantly and everything was impossible to comply with,” said Bill Raney, president of the West Virginia Coal Association.

“When the guy that lives in the big house in Washington recognizes how important coal miners are to everyone’s standards of living, it’s critical,” Raney said. “It’s kind of like your dad: When he thought you did something good, you feel a whole lot better about yourself.”

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