Trump moves to save USA coal
As President Trump looks to rejuvenate the USA’s coal industry, Khai Trung Le investigates recent claims, opportunities and closures.
In Donald Trump’s first address to Congress since becoming president, he stated that he was ‘going to stop the regulations that threaten the future and livelihoods of our great coal miners,’ referring to the Obama administration’s Clean Power Plan. Since his election, Trump's rhetoric has continually focused on fighting against Obama-era environmental regulations that have made coal operations more costly. However, with reasons surrounding the decline of coal plenty and complex, how much can Trump's resolve reinvigorate the industry?
End the war
Among moves to appease the coal industry, the US Department of the Interior announced on 25 February that coal, oil and gas companies would no longer need to comply with a recent federal accounting system for minerals extracted on federal land. The original ruling, targeted at preventing companies from underpaying the US Government by selling coal to subsidiaries at artificially low prices, was deemed 'among the most egregious [of] punitive regulations' of the Obama administration by Cloud Peak Energy President, Colin Marshall. No longer requiring coal companies to comply with the regulation will save companies millions in additional royalties.
Buoyed by optimism, Corsa Coal and Ramaco Resources are among coal producers planning to open new mines in 2017. Corsa will be opening a new site in Pennsylvania in Q2 2017, while Ramaco will follow on from its first mine in West Virginia, opened in December 2015, with two more sites to open this year in Central Appalachia.
New mines are not the only sign of rejuvenated confidence. Warrior Met Coal reopened its No. 4 mine in Brookwood, Alabama in August 2016, creating up to 200 new jobs, and AK Coal Resources is exploring increasing production in its Pennsylvania site.
Dan Byers, Senior Director for the Institute for 21st Century Energy, US Chamber of Commerce, said, 'Trump instinctively gets energy. It's hard to think of another issue he's given more attention to since he's been in office.' Trump looks to be making good on his campaign pledge to ‘end the war on coal’.
Rust belt blues
One of Trump’s early acts was the reversal of the Stream Protection Rule (SPR), aimed at reducing the impact of coal mining on surface and groundwater, fish and wildlife by preventing companies from practices that would permanently pollute streams. Republican senators including Rand Paul claim that the reversal has preserved 77,000 jobs, a statistic taken from a 2015 report from environmental and health sciences consulting firm, Ramboll Environ, a staunch opponent of the SPR. Speaking at the Spring Coal Forum, Michael Nasi, partner with Dallas-based environmental law firm Jackson Walker, said, 'If all the president does is stop doing regulations like this, he's going to do an incredible job.'
Opponents of Trump's decision point to a November 2016 report from the Interior Department's Office of Surface Reclamation and Enforcement, Regulatory impact analysis of the stream protection rule, which states the SPR was 'expected to reduce employment by 124 jobs on average each year due to decreased coal mined while an additional 280 jobs will be created from increased compliance activity on average each year'.
Elsewhere, coal interests continue to downsize. Owners of the Navajo Generating Station, the largest coal plant in western USA, announced plans to shutter the plant in 2019 – more than two decades ahead of schedule. The five-strong consortium, led by Salt River Project (SRP), declared early closure on expiry of the lease rather than an Environmental Protection Agency (EPA)-mandated 2044 deadline with a statement on the SRP website citing ‘the rapidly changing economics of the energy industry, which has seen natural gas prices sink to record lows and become a viable long-term and economical alternative to coal power’.
The statement continues, ‘Electricity produced at the Navajo Generating Station is currently more expensive than electricity purchased on the wholesale spot market’, mirroring recent analysis from the Central Arizona Project (CAP), the single largest end user of power from the Navajo plant. The CAP purchased US$81.2 million of power from Navajo in 2016, but would have saved US$38.5 million by purchasing at standard market rates instead of the coal plant.
Dayton Power and Light has also announced that it would close two large coal plants in Ohio in 2018, and Duke Energy has closed 12 plants over the last five years.
Beautiful, clean coal
Ahead of incidents including the removal of the climate change page from the EPA website and executive orders reversing Obama-era environmental policies, the most recent verification of Trump’s views on climate change comes from a interview with Counsellor Kellyanne Conway in September 2016. At the time his campaign manager, Conway clarified, ‘[Trump] believes that climate change is naturally occurring,’ as opposed to man–made, but evaded confirming whether his oft-voiced view of climate change as a hoax perpetrated by China still stood.
However, the coal industry itself seems ready to take greater environmental responsibility. Richard Reavey, Vice President for Government and Public Affairs at Cloud Peak Energy, said, ‘We can’t turn back time. We have to accept that there are reasonable concerns about carbon dioxide and climate and something has to be done about it. It’s a political and social reality and it has to be dealt with.’
Coal opponents have long campaigned against its poor environmental credentials, and Trump's long–held stance on the illegitimacy of climate change is shown in his focus on removing environmental regulations. However, the lack of action on the impact of automation on coal sector jobs and availability of cheap natural gas may be a blind spot in his commitment to the proliferation of coal.
The potential rejuvenation of coal will follow a successive year of decline. Jobs in the USA coal sector fell by 18,000, to 69,500, between 2015–16. Coal production fell 18% within this period to its lowest level since 1978. For all of the noise around loosening regulations and support from the highest branches of government, the US Energy Information Administration predicts a 4% increase in the country's coal production in 2017, unchanged in 2018, and just a 0.8% growth in worldwide consumption by 2021. ‘Dying industries will come roaring back to life,’ Trump declared in February. Whether that is true remains to be seen.