Reality Check: Bringing Back Coal Not in the Cards
November 12, 2016
And yet here is Trump, by his promises at least, insisting that coal mining is going to come back with all those glorious jobs. It just isn’t I’m afraid, economics is stronger than politics here. I’ve made this point before, back in May in fact:
The third reason is the killer: economics. Fracking has made natural gas cheaper than coal for power generation. Thus new generations of power plants are going to be gas ones, not coal. And refurbs and life extensions of coal plants aren’t going to happen for the same reason. There’s just not going to be anything like the same market for thermal coal in the future.
We’re not going to use as much coal in the future and the coal that we will use isn’t going to come from the Appalachian mines. Trump simply isn’t going to bring back all those mining jobs. They’re gone, gone forever. Just like those assembly line jobs in electronics. And pining for the lost blue collar jobs isn’t going to help in the slightest. The thing to do now is to work out what other task that same labor can do.
And the same point is being made today at Reuters:
Donald Trump’s election has thrown an apparent lifeline to beleaguered coal producers but he may not be able to do much to revive the fortunes of the industry.
The U.S. coal industry has been a victim of the shale revolution and the enormous quantities of cheap gas that have been unleashed by hydraulic fracturing and horizontal drilling.
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”.
In May, President-elect Donald Trump stood on the stage at the Charleston Civic Center in West Virginia, put on a miners helmet and pretended to shovel coal.
“If I win we’re going to bring those miners back,” Trump said at the rally. “…These ridiculous rules and regulations that make it impossible for you to compete … we’re going to take that all off the table, folks.”
With Trump’s election and Republicans controlling both chambers of Congress, many in Kentucky are now waiting to cash in on the Republican promise of more coal jobs.
U.S. Sen. Majority Leader Mitch McConnell, though, wasn’t making any promises Friday.
“We are going to be presenting to the new president a variety of options that could end this assault,” McConnell said at the University of Louisville. “Whether that immediately brings business back is hard to tell because it’s a private sector activity.”
The interim president of the Kentucky Coal Association was more direct about the future of coal mining in Eastern Kentucky.
“I would not expect to see a lot of growth because of the Trump presidency,” Nick Carter said in an interview. “If there is any growth in Eastern Kentucky, it will be because of an improved economy for coal.”
Experts agree that environmental regulations placed on the coal industry contributed to a rapid decline of the coal industry over the past few years, but there have been other, more important economic factors at play.
“The issues, particularly in the eastern part of Kentucky, are more than the increase of regulations,” said Ken Troske, Sturgill Professor of Economics at the University of Kentucky.
One of those issues is a decrease in demand for coal.
Carter said the low price of natural gas contributes to the lack of demand for coal. As the energy industry builds new power plants, it’s more likely to build plants that run on natural gas because the price isn’t as high.
So how will Trump and McConnell help ailing communities where high-paying coal jobs have evaporated?
McConnell’s solution isn’t a stimulus plan, although he expects to continue working with the Appalachian Regional Commission, an agency that funnels federal money to economically struggling coal communities.
“A government spending program is not likely to solve the fundamental problem of growth,” McConnell said. “…I support the effort to help these coal counties wherever we can but that isn’t going to replace whatever was there when we had a vibrant coal industry.”
Renewable energy was the biggest source of new power added to U.S. electricity grids last year as falling prices and government incentives made wind and solar increasingly viable alternatives to fossil fuels.
Developers installed 16 gigawatts of clean energy in 2015, or 68 percent of all new capacity, Bloomberg New Energy Finance said in its Sustainable Energy in America Factbook released Thursday with the Business Council for Sustainable Energy. That was the second straight year that clean power eclipsed fossil fuels.
The biggest growth came from wind farms, with 8.5 gigawatts of new turbines installed as developers sought to take advantage of a federal tax credit that was due to expire at the end of 2016; Congress extended it in December.
During his campaign Trump also promised bring back coal jobs. That could be a tougher task. Even the Trump insider admitted that the candidate might have “oversold what he can do” concerning coal jobs. The closure of coal-fired power plants and the decline in domestically consumed coal has more to do with low natural gas prices than it does with the Environmental Protection Agency, he said.
In fact, if Trump follows through with his pledge to spur $1 trillion in private sector infrastructure spending with $140 billion in tax credits that could further erode coal’s place in the nation’s generation mix by removing regulatory hurdles to the fracking of natural gas from tight shale formations. That, in turn, could lead to more pipeline infrastructure and more natural gas-fired power plants, especially if climate change regulations, such as the EPA’s Clean Power Plan, are challenged, which appears to be likely.
Trump’s emphasis on infrastructure, while most likely focused on public works such as roads and bridges, could also extend to transmission lines, especially in the western parts of the nation where many power lines are under more direct federal control.
Even if business as usual prevails for much of the power sector — there could even be an uptick in the financing pipeline or transmission deals — there could still be some pain. There will be “enormous casualties among climate change activities,” the Trump insider said. But, he added, “Trump doesn’t want to turn his back on climate change.”
Trump likes nuclear power, and he may push the zero emission attributes of nuclear plants, but, the insider said, there is little that can be done to reverse the economic challenges that nuclear power faces which, like coal-fired generation, are largely the result of low priced natural gas, which has driven down wholesale power prices.