Natural gas supply and price, along with lower electric demand and the growth of renewables, have been far more responsible for the decline in the U.S. coal industry than environmental regulations, according to a new study by Columbia University’s Center on Global Energy Policy and the Rhodium Group, a New York consulting firm. That means that President Trump’s pledge to bring back coal jobs may be hollow.
According to the study—“Can Coal Make a Comeback?”—“Increased competition from cheap natural gas is responsible for 49 percent of the decline in domestic U.S. coal consumption.” Lower-than-expected demand accounts for 26% of the decline, and the growth of renewables caused 18%. That means that regulations cut coal consumption by no more than 7%.
The study observes that the U.S. coal industry was thriving six years ago, “with demand recovering from the Great Recession and global coal prices at record highs along with the stock prices of U.S. coal companies.” Today, the industry has collapsed “with three of the four largest U.S. miners filing for bankruptcy along with many other smaller companies.”
The analysis also found, “Changes in the global coal market have played a far greater role in the collapse of the U.S. coal industry than is generally understood. A slow-down in Chinese coal demand, especially for metallurgical coal, depressed coal prices around the world and reduced the market for U.S. exports. More than half of the decline in U.S. coal company revenue between 2011 and 2015 was due to international factors.”
While the industry was booming as recently as 2011, coal mining jobs have been “on the decline for decades—from a peak of more than 800,000 in the 1920s to 130,000 in 2011.” The pace of the decline has picked up in the past six years, prompting Trump’s pledge to end the “War on Coal” during his 2016 campaign and a March executive order calling on agencies to review Obama-era regulations that may have led to a loss of mining jobs.
Is the Trump administration’s focus on bringing coal back, along with mining jobs, likely to work? The Columbia-Rhodium Group study suggests it is doubtful. “Implementing all the actions in President Trump’s executive order to roll back Obama-era environmental regulations could stem the recent decline in U.S. coal consumption, but only if natural gas prices increase going forward. If natural gas prices remain at or near current levels or renewable costs fall more quickly than expected, U.S. coal consumption will continue its decline despite Trump’s aggressive rollback of Obama-era regulations,” the study finds.
In the best case—higher gas prices—coal might see a modest recovery back to 2013 production levels of a billion tons a year. Under the worst case—steady or falling gas prices—production could fall to 600 million tons/year. That works out to a range of 70,000 coal mining jobs in 2020 and 64,000 in 2025, “lower than anything the U.S. has experienced before 2015.”
—Kennedy Maize is a long-time energy journalist and frequent contributor to POWER.