COAL’S FUTURE REMAINS BLEAK
Industry has seen only modest gains in jobs and production this year - much of it from a temporary uptick in foreign demand
WASHINGTON: A year after Donald Trump was elected president on a promise to revive the ailing US coal industry, the sector’s long-term prospects for growth and hiring remain as bleak as ever.
A Reuters review of mining data shows an industry that has seen only modest gains in jobs and production this year - much of it from a temporary uptick in foreign demand for US coal rather than presidential policy changes.
US utilities are shutting coalfired power plants at a rapid pace and shifting to cheap natural gas, along with wind and solar power. And domestic demand makes up about 90 per cent of the market for US coal.
“We’re not planning to build any additional coal facilities,” said Melissa Mchenry, a spokeswoman for American Electric Power, one of the largest US utilities. “The future for coal is dictated by economics … and you can’t make those kinds of investments based on one administration’s politics.” Coal plants now make up 47 per cent of AEP’S capacity for power generation, a figure it plans to shrink to 33 per cent by 2030.
The situation highlights the limitations of presidential policy on major industries and global economic trends. As some energy experts have said all along, the forces that will make or break mining are well beyond the powers of the Oval Office.
A White House official did not respond to a request for comment.
Trump has likely done all he can do to help the industry, said Luke Popovich, a spokesman for the National Mining Association, which represents major US coal companies.
“The government is no longer against us,” he said. “We now only have market forces to contend with.” Trump has taken action on many promises he made to coal interests in states that helped him win the election.
The president started the process of killing former President Barack Obama’s Clean Power Plan, meant to reduce carbon emissions from power plants; ended an Obama-era moratorium on coal leasing on federal lands; ditched limits on dumping coal waste into streams; and started withdrawing the United States from the Paris Climate Agreement.
Now Trump’s Energy Secretary, Rick Perry, is attempting to push a rule through the independent Federal Energy Regulatory Commission that would subsidize power plants that store at least a 90-day supply of coal on site. The goal is to extend the life of some coal burning power plants, a move Perry says will make the electric grid more reliable.
While the full impact of Trump’s coal policy could take years to understand, the changes so far are unlikely to boost domestic demand, energy analysts and utility officials said.
Trump has cast the coal industry as a victim of burdensome regulation.
The industry has lost more than 40 per cent of its work force in less than a decade and seen production drop to its lowest levels since 1978. Its share of the power market has fallen to less than a third from about half in 2003.
“We’re going to bring the coal industry back 100 per cent,” Trump said at a rally in Virginia in August of 2016.
So far, progress has been limited.
US coal production is on track to rise more than 8 per cent in 2017 over the previous year, to 790 million tonnes, according to the Energy Information Administration. But 2018 output is expected to decline.
The number of coal miners has also risen slightly to 51,900 in October, up about 2,200 since November 2016 - but down about 70 per cent from a 1985 peak, according to the Labor Department.
On November 1, Trump cited the modest production increases in a Tweet, saying, “It is finally happening for our great clean coal miners!” But these increases are largely attributable to demand for US coal from Asian steel mills after temporary outages from their usual suppliers in Australia, according to James Stevenson, a coal analyst at IHS Markit.
During the first six months of 2017, Asian countries took in 7.5 million short tonnes of US coal, up 97 per cent over the same period in 2016, according to the EIA.
That demand will soon fade, Stevenson said.
“We are not going to get a repeat of 2017,” he said of the spike in exports.
Forecasts from utilities and the US government reveal little reason for hope of a sustained coal rebound.
Utilities are expected to shut down more than 13,600 megawatts of coal plant capacity in 2018. That follows a loss of nearly 8,000 MW this year and 13,000 MW in 2016, according to EIA and Thomson Reuters data.
Earth moving equipment sits by a coal pile at the Century Mine in Beallsville, Ohio.