Legal & Regulatory

Even with Trump, America’s Coal Age Ends in 2016

Now that the political conventions are over and Americans must choose between two presidential candidates, the rhetoric around coal’s future continues to heat up. What neither candidate is telling you, however, is that no matter who is elected in November, no matter what the makeup of the next Congress is, America’s coal age is over. The answer lies not in policy, but in geology, physics, and market forces.

After the November election, certainly no one expects a future President Hillary Clinton to increase America’s coal burn. In fact, her energy policy not only envisions fully implementing Obama’s Clean Power Plan but also specifically outlines how to help Appalachia and other coal-mining regions move beyond production and prepare for a post-coal economy while continuing to transition the nation towards a natural gas– and renewables-dependent future. So it’s no wonder that coal supporters are campaigning against her. If she wins, they lose—or so they think.

Will Trump Save Coal?

Donald Trump, on the other hand, has called climate change a hoax and has promised to “save” the coal industry by scrapping environmental regulations, dropping the Clean Power Plan, and withdrawing from the recent Paris COP 21 Climate Agreements. As late as July 28 at a rally in Scranton—once the heart of eastern Pennsylvania’s long-dead anthracite coal industry—Trump promised to put coal miners back to work “They want to close the mines down. It’s sad,” he said, mentioning a conversation with miners in West Virginia. As he campaigns, he always rails against Obama’s “War on Coal” and the regulations that are supposedly killing it.

On a national level, according to the Washington Post, the newly adopted GOP platform “tosses aside an environmental regulatory structure built on congressional legislation and judicial rulings over more than four decades, dating to the creation of the Environmental Protection Agency under President Richard M. Nixon.” But as far as coal goes, here’s the sum total of what the GOP says: Coal is “an abundant, clean, affordable, reliable domestic energy resource,” adding, “Those who mine it and their families should be protected from the Democratic Party’s radical anti-coal agenda.”

Trump’s choice for running mate certainly feels like a major boost to the coal industry and helps undergird Trump’s conservative leanings. Mike Pence, the current governor of Indiana (the nation’s 8th largest coal producer), is a huge coal supporter and has vocally opposed Obama’s “attacks” on the industry. He has helped lead the charge against Obama’s Clean Power Plan, and Indiana is one of 25 states suing to overturn it.

No Clear Future for Coal

But what’s completely lacking is a way to actually make America’s coal industry great again.

Current market statistics are telling. By all accounts, 2016 will likely be the first year that natural gas surpasses coal as America’s number-one generation fuel. Coal production has fallen rapidly from an all-time high of 1.172 billion tons in 2008 to 896 million in 2015—the lowest level since the mid-1980s (Figure 1). According to the EIA, as of July 23, coal production has plummeted another 26.3% year-over-year, sinking to levels perhaps not seen in half a century. While there is a glut of gas production and fracking reserves only increase, coal production—despite massive known deposits nationwide—is decreasing rapidly. With the fracking genie out of the bottle, how do coal and its supporting industries expand?

 

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1. Coal mines in the Eastern U.S. are struggling as costs increase and economic deposits are mined out. Courtesy: Lee Buchsbaum

 

Trump’s energy policy frequently criticizes Obama and warns how Clinton will further his policies. But how will Trump actually “save the industry”? Appalachia’s coal reserves have mostly been depleted. Advanced technologies, mechanization, and even a revival of mountain-top removal can only shave a few pennies off the dollar when coal goes head to head with increasingly abundant natural gas. So where and how can Appalachian coal recover its markets? What about cheaper coal from the Midwest and the Powder River Basin?

The Gas Juggernaut

A fundamental market truth is that over the last 15 years, the Bush-Cheney Administration, U.S. banks, the oil and gas industry, Democratic governors, the Obama Administration, and even the Clinton-led State Department have pushed fracking and natural gas development to unsurpassed levels. Natural gas has expanded at the expense of coal. The oil and gas industry today is losing money because of a production glut and a lack of markets—markets that are still held domestically by coal.

One of the serious challenges for Big Coal is that, as companies emerge largely debt free from bankruptcy, how can they grow their businesses? No matter what Trump promises, there are virtually no new coal-fired power plants in the pipeline domestically. Even if he finds a way to scrap all of the regulations, it would be years before another coal plant is built. And even if someone wanted to build one, what bank is going to fund it? The industry requires certainty, and there is no certainty around coal’s future.

Another problem for Big Coal is that Trump’s major energy advisors are pro-natural gas and fracking. His chief energy adviser, who largely crafted Trump’s energy policies, is Rep. Kevin Cramer (R-N.D.), a two-term representative and former North Dakota utility regulator. Moreover, rumor has it that, if elected, Trump’s first choice for Energy Secretary would be Harold Hamm, the oil and gas tycoon who built much of his fortune on fracked gas. In an interview with Midwest Energy News, Cramer, far from rallying the troops in the War on Coal, called the battle between natural gas and coal a product of market forces.

As such, he warned, “I don’t think it would be appropriate to save coal at the expense of the consumer. If natural gas as a competing fuel is more economically feasible, then that’s to the benefit of the market.”

Clearly, Cramer accepts that gas has an advantage. The real question is, What is government’s role in the gas vs. coal war going forward? Said Cramer, companies should be able operate freely—he sees no reason “to drive coal out of business with regulation.”

However, he said, “If the market does that, so be it.”

—Lee Buchsbaum (www.lmbphotography.com), a former editor and contributor to Coal Age, Mining, and EnergyBiz, has covered coal and other industrial subjects for nearly 20 years and is a seasoned industrial photographer.

 

 

 

 

 

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