America’s coal producers greeted Donald Trump’s election as “a little spark of hope,” as West Virginia Coal Association President Bill Raney put it to the state’s Gazette Mail newspaper. But that hope is almost certain to evaporate, multiple reports suggested, under the intractable realities of cost and competition.
“There is not much a future Trump administration can do to protect coal producers, who have mostly been the victim of economic forces rather than politics and the Obama administration’s ‘war on coal,’” Reuters market analyst John Kemp wrote in one comprehensive analysis.
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There is no question that America’s coal country is hurting. “The nation’s three major coal-producing regions experienced the sharpest declines in production in 29 years for 2015,” Salt Lake City’s KSL.com writes, “and are on pace this year to hit declines even more severe. Coal consumption saw a 23% decrease in the first seven months of 2016, compared with 2015.” Employment in coal mining fell by 12%, to “the lowest levels since the U.S. Energy Information Administration began tracking the statistic in 1978.” A string of bankruptcies and investor flight have confirmed the industry’s declining health.
Trump’s campaign made big promises to the sector. His administration would “lift the restrictions on American energy,” he said, and “allow this wealth to pour into our communities.” He boasted that such a policy would be “all upside: more jobs, more revenues, more wealth, higher wages, and lower energy prices.”
But most of that promise, as well as the idea that coal’s decline is down to a supposed war on coal by the current U.S. administration, is misplaced, Kemp and others point out.
“The shift from coal to gas began long before the Obama administration,” the Reuters analyst notes. “Since the early 1990s, almost no new coal-fired power plants have been built, and most new units have been designed to burn gas. As coal units built in the 1960s and 1970s reach the end of their design lives, the alternative is between expensive refits and upgrades or retiring them and replacing them with more profitable gas units. Given the low cost of gas, it is not surprising plant operators are rapidly switching their fleet away from coal to gas.”
That shift is likely only to accelerate if Trump acts on campaign promises to loosen regulations blamed for holding back the exploitation of shale gas using hydro-fracking—potentially spurring a surge in production that would drive gas prices down further.
Utility Dive even saw an additional threat to U.S. coal in Trump’s promise “to spur $1 trillion in private sector infrastructure spending with $140 billion in tax credits. That could lead to more pipeline infrastructure and more natural gas-fired power plants,” it wrote.
Meanwhile, green energy’s combination of price point and lower environmental side-effects is rendering U.S. coal a less attractive option in the country’s main export markets. Noting China’s installation of more than 20 gigawatts of renewable power generation in the last two years, the Montana Missoulian’s Russ Doty observes that the investment “demolishes assumptions that increased coal sales to China will prop up bankrupt U.S. coal companies.”
While “President-elect Trump can help the U.S. coal mining industry at the margin,” Reuters’ Kemp concludes, “unless gas prices rise significantly he probably cannot save it.”
