Brutal competition
President’s rhetoric unable to stem tide of closures as utilities turn to natural gas
The coal industry expects a revival, but low-cost natural gas is a roadblock.
More than any other recent president, Donald Trump came to office promising to revive coal and restore mining jobs.
Nineteen months into his term, there’s little improvement.
The industry has rebounded slightly from 2016, when cheap natural gas was crushing coal in the power market and three major producers were in bankruptcy. But a recent uptick in exports is masking a bigger problem that the White House hopes to address with its latest effort to aid coal-fired power plants: Simply put, the industry is still losing U.S. customers as utilities turn to natural gas and renewable power to generate electricity.
Trump’s “impact on the coal sector has been extremely minimal in nature despite his rhetoric,” said Andrew Cosgrove, a Bloomberg Intelligence senior analyst. “Power plant retirements are still happening and set to continue looking out through the end of his term.”
In fact, government analysts expect continuing declines, with U.S. coal production, consumption and exports all projected to decrease in 2019, according to the Energy Department.
It’s not for a lack of trying. Trump went to West Virginia — the No. 2 coal producing state — the same day his Environmental Protection Agency unveiled its “Affordable Clean Energy” proposal, a framework for replacing the Obama-era Clean Power Plan. The Trump plan could weaken pollution limits on coal-fired power plants by shifting most of the regulatory burden to states.
Analysts say the Trump proposal is unlikely to dramatically change the coal industry’s fortunes. But it dovetails with other Trump administration efforts to ease regulations that discouraged plants from using coal and made it more expensive to extract — changes that may help the industry at the margins.
The question isn’t how much better the industry is doing under Trump, said Hal Quinn, president of the National Mining Association, “but how much worse it would have been doing without him.”
Still, no one in the industry is talking about building new coal plants. Since 2010, power plant owners have either retired or announced plans to retire 630 coal plants in 43 states — nearly 40 percent of the U.S. coal fleet. American Electric Power, which has retired 7,200 megawatts of coal generation capacity since 2011, has announced plans to invest heavily in natural gas and renewables and doesn’t plan to reverse course.
“Based on economics, our plans for new generation include natural gas and renewables,” spokeswoman Tammy Ridout said.
The Trump administration is contemplating a much bigger market intervention. Under the strategy outlined in a May memo, the president would use his national security powers to force grid operators to buy electricity from specific power plants at risk of closing. The approach also would include establishing a strategic reserve of critical power generators: a stable of coal and nuclear plants that could be revved up in case of an emergency.
Such a move is opposed by both environmentalists and oil and gas producers.
American coal production rebounded during Trump’s first year in office, mostly driven by increased exports. In West Virginia, layoffs began giving way to job fairs and mining companies poaching talent from rivals right around Election Day in 2016. That was mostly because of surging global prices tied to rising coal imports in Asia — but industry backers also credit Trump.
“When the guy that lives in the big house in Washington recognizes how important coal miners are to everyone’s standards of living, it’s critical,” said Bill Raney, president of the West Virginia Coal Association.