Donald Trump’s coal policies clash with market forces
Less than a year into his tenure, President Trump has dismantled much of his predecessor’s environmental agenda and rolled back the regulatory war on coal — but analysts still say coal’s long-term future is bleak and that the administration’s friendly policies toward natural gas could speed up the decline.
The cumulative impact of all the White House’s steps so far, including this month’s formal repeal of the coal-crushing Clean Power Plan, has led to optimism in the coal industry and among Republicans on Capitol Hill. Although there has been some positive short-term signs — coal mining jobs and production have ticked up this year — analysts say Mr. Trump and Environmental Protection Agency Administrator Scott Pruitt, despite their best efforts, simply cannot ward off market forces that have been building for years.
“The reactions are limited. The potential of what the administration can do to tip the scales, it’s limited in scope,” said energy market analyst Dan Klein, managing director at Global Coal PIRA Energy Group, an analytics unit of S&P; Global Platts.
“There’s not much President Trump could do to revive the industry because we have cheap natural gas,” Mr. Klein said. “New coal units are essentially off the table so the options are fairly small.”
In fact, research shows the administration’s fossil fuel-centric energy policy — which is focused not just on coal but also on revving up oil and gas production on federal lands and loosening restrictions on private land exploration — could have adverse effects on coal.
A study from the Brattle Group, a leading consulting firm, highlighted that coal power generation over the past decade has dropped in correlation with declining natural gas prices as utilities often opt to go with gas, which is cheaper and emits less greenhouse gases.
The Obama-era EPA and its host of regulations seemingly made matters worse, though analysts generally agree that the rise of domestic gas production has had a greater effect than federal policies.
The Brattle report goes on to examine coal production and mining jobs under a baseline scenario — Obama-era policies, including the CPP, were put into place — versus Mr. Trump’s pro-fossil fuels plan.
The study, authored by Marc Chupka, a former top official at the Energy Department, projected that coal production under a baseline scenario would hit nearly 800 million tons in 2020.
Under Trump administration policies, which are likely to spur much greater natural gas development, coal production is projected to be well under 600 million tons.
Similarly, coal mining jobs would be projected to hold relatively steady at 50,000 or below under a baseline scenario; under Trump policies, they could drop to about 35,000 by 2020, according to the study.
Indeed, there are already signs that coal’s drop will continue. Earlier this month, two coal-fired plants in Texas announced that they would shut down despite everything the administration has done during its first nine months in power.
Still, it’s clear that under Mr. Trump, the federal government is for the most part letting energy markets and utilities dictate the future of coal. Republican lawmakers view that as a positive step regardless of coal’s long-term future and say it’s far better than the prior administration’s strategy of stretching the law to edge coal out of the market.
“Over the eight years of the Obama administration, the leaders of the Environmental Protection Agency created broad and legally questionable new regulations,” Sen. John Barrasso, Wyoming Republican, said on the Senate floor this month after the EPA announced plans to scrap the Clean Power Plan. “They declared war on coal and a war on American energy. Under the Trump administration, that war is over and America is back on the right track.”
Coal industry leaders say killing the Clean Power Plan was an important move and maintain that the fuel’s future would have been bleaker with such regulations in place.
“The Clean Power Plan would have caused the retirement of more coal-fueled power plants, which are needed to maintain a secure and resilient electricity grid,” Paul Bailey, president and CEO of the American Coalition for Clean Coal Electricity, said this month.
In addition to scrapping Clean Power Plan, which would have put harsh limits on emissions from coal-fired power plants, the administration has ended a moratorium on coal leases on federal lands, lifted the Waters of the U.S. rule, directed funding to clean coal research and taken a host of other steps.
Moving forward, Energy Secretary Rick Perry has proposed a subsidy system that could funnel money to utilities that keep at least 90 days worth of coal on hand at power plants.
The plan, pitched as an energy security measure, would incentivize production, at least in the short term. It is under review at the Federal Energy Regulatory Commission.