The successful campaign complained about excessive regulation and vowed to put the coal industry back on its feet.
They’re too late. Coal already lost the war. And not to Obama or regulation, either.
Coal long dominated the electric power business in the US, but in 2010, it had dwindled to 42% of the electricity generated.
- About three fourths of American coal-fired power plants had outlived their designed life span of 30 years.
- Air pollution regulations required power plants either to clean up their emissions or shut down.
- Cheap natural gas persuaded companies to switch to gas rather than update aging coal plants.
- Renewable sources like solar and wind had begun to make significant inroads into the electricity business.
But while coal consumption by American companies fell, demand for coal elsewhere in the world led to a boom in coal exports. Coal remained cheaper than gas in Europe, so European companies bought coal despite European policies that favor low-carbon electricity. Asian demand for American coal surged at the same time.
It seemed, therefore, like American coal had a bright future.
The coal industry itself claimed that health hazards of coal had been exaggerated and that technology existed to mitigate them. It further claimed that renewable energy was risky both technologically and financially.
After all, coal had all its subsidies and tax breaks. Renewables, lacking such a safety net , made a poor investment choice according to the coal industry.
Did you get that? For all the complaints that renewable energy companies can’t survive without subsidies, neither can any of the fossil fuel industries. And coal receives very generous subsidies.
Gloomy long-term outlook for coal
A coal-friendly administration in Washington and small increases in the price of natural gas will not likely reverse the recent decline in coal production and the decline in coal prices.
Any regulatory relief from Trump’s stance on coal will not offset the flight of capital from coal or raise employment prospects.
The long-term outlook for coal remains gloomy through midcentury. Utilities will continue to shut down coal-fired plants and replace them with other fuels. As demand shrinks, look for a decrease not only in coal production, but also the number of companies that mine it.
Not even exports make the picture for the coal industry any brighter. At least not in the near term.
Exports of US coal reached their peak in 2012, 125.7 million short tons, and have declined each year since then. By 2016, that figure had fallen more than half, to 60.3 million short tons.
Almost 80% of coal exported in 2016 by the US went to ten countries, and exports declined in nine of them. Most of the decrease resulted from market conditions that favored other coal exporting countries. If conditions turn, American coal exports could begin to rebound.
Coal giants in bankruptcy
Peabody Energy, the largest American coal producer, declared bankruptcy under chapter 11 in April 2016.
It joined the second largest, Arch Coal, which declared bankruptcy in January.
Alpha Natural Resources, the fourth largest company, emerged from bankruptcy in July 2016, after having been under production since August 2015.
Coal companies in bankruptcy have continued to mine coal.
In fact, companies that are or have been bankrupt sometime in the past four years account for about 44% of the coal mined in the US.
Coal production in 2016 reached its lowest level since 1981, when a major strike occurred. The coal industry employs about 66,000 people, the lowest number since data collection began in 1978.
Despite whatever the Trump administration does to reverse the “war on coal,” the electric industry is not likely to return to coal. The administration can create a regulatory environment favorable to coal. It can’t force anyone to invest in it.
Gas, which carries fewer environmental and health risks, is cheaper than coal. Renewable energy, especially wind and solar, will soon be cheaper than any fossil fuel. Advances in storage of electricity have erased the objection that wind and solar are intermittent.
So if you favor coal, don’t take heart from Trump’s stance on coal. If you favor more environmentally friendly fuels than coal, don’t be scared by it. Technology and the market launched the war on coal. And won.
“Clean” Energy / Coal Cares/James River Coal, 2011.
U.S. coal exports and imports both decline in 2016 as U.S. remains net coal exporter / Elias Johnson, Smart Grid Cluster News. March 14, 2017
US coal industry to decline even further in 2017—IEEFA / Cecilia Jamasmie, Mining.com. January 19, 2017
Why does Old King Coal still rule? / Lisa Palmer, Slate. November 2, 2012
Coal worker. Photo by Khushie singh (Own work) via Wikimedia Commons
Surface coal mine. Public domain from Wikimedia Commons
Path around ash pit. © Copyright M J Richardson and licensed for reuse under this Creative Commons License