Coal still facing stiff competition from low-cost shale gas
PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
President-elect Donald Trump’s promise to revive the U.S. coal industry made him wildly popular in coal country, and his election is now fanning hope in that his administration can reverse the fuel’s long decline in America.
In an interview, Robert Murray, CEO of Murray Energy Corp., on Wednesday praised Mr. Trump’s election as “very good for America, for that woman raising a family on one income, for our retirees on fixed incomes and for manufacturers of American products which all rely on low-cost electricity.”
But a renaissance for coal and the high-paying unionized jobs that mining once created in more than a dozen states may prove out of reach, even with presidential backing.
By all appearances, coal looks to be well on its way out in North America, though it remains a growing energy source in developing parts of the world. In the U.S., coal miners have lost $30 billion in market value this decade, and the sector has shed over 30,000 jobs since 2009.
Analysts say the main culprit for coal’s decline is natural gas, which has flooded the market since the development of hydraulic fracturing, or fracking, undercutting coal. This year is the first in recorded memory when gas will make up a bigger part of the grid than coal.
On the surface that seems unlikely to change, as Mr. Trump has also promised to liberalize fracking. “The market will remain the market,” says Andrew Moore of Platts Coal Trader. “And cheap natural gas will continue to threaten the coal industry.”
Coal miners will have a tougher time selling into a grid which has been steadily converting to natural gas, with power plants switching fuel sources, sometimes irrevocably. On Tuesday, the Energy Information Administration said U.S. coal production was expected this year to fall to its lowest level in nearly four decades, while natural gas would “increase in 2017 as drilling activity picks up and new pipelines connect supplies to demand centers.”
Mr. Murray said he is resigned to gas remaining “the top competitor to coal. So be it. That’s good for America. But we do need to eliminate the subsidies for the makers of windmills and solar panels.”
Absent Chinese-style state support, the biggest help Mr. Trump could give coal miners would be to roll back Obama-era environmental regulations on mining and burning coal. Those regulations, and President Barack Obama himself, are widely blamed in America’s coal country—centered in Appalachia, Wyoming and Illinois—for the wave of bankruptcies, mine closures and layoffs the industry has suffered through this decade.
Weakening regulations on emissions would make it easier and cheaper for companies to mine, and less expensive for power plants to burn coal, helping coal companies to stay profitable. In addition, a Trump-nominated Supreme Court justice could cast a deciding vote to overturn the Clean Power Plan, which is currently held up in a lower court.