When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America’s “war on coal”.
According to Trump, it will also usher in a new era of energy production and put miners back to work.
But the biggest consumers of U.S. coal, power generating companies remain unconvinced.
However, 32 utilities with operations in the 26 states sued former President Barack Obama’s administration to block its Clean Power Plan, the main target of Trump’s executive order.
The bulk of them had no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel would keep falling in spite of Trump’s efforts.
The utilities gave many reasons, mainly economic: natural gas, coal’s top competitor is cheap and abundant, solar and wind power costs are falling; state environmental laws remain in place; and Trump’s regulatory rollback may not survive legal challenges.
Meanwhile, big investors aligned with the global push to fight climate change such as the Norwegian Sovereign Wealth Fund had been pressuring U.S. utilities in which they owned stakes to cut coal use.
“I’m not going to build new coal plants in today’s environment,’’ Chief Executive Officer of Xcel Energy, Ben Fowke said which operates in eight states and uses coal for about 36 per cent of its electricity production.
“And if I’m not going to build new ones, eventually there won’t be any.” Trump’s executive order triggered a review aimed at killing the Clean Power Plan.
The Obama-era law would have required states by 2030, to collectively cut carbon emissions from existing power plants by 30 per cent from 2005 levels. It was designed as a primary strategy in U.S. efforts to fight global climate change.
The U.S. coal industry, without increases in domestic demand, would need to rely on export markets for growth.
Shipments of U.S. metallurgical coal, used in the production of steel, have recently shown up in China following a two-year hiatus in part to offset banned shipments from North Korea and temporary delays from cyclone-hit Australian producers.
Coal had been the primary fuel source for U.S. power plants for the last century, but its use had fallen more than a third since 2008 after advancements in drilling technology unlocked new reserves of natural gas.
Hundreds of aging coal-fired power plants had been retired or retrofitted.
Huge coal mining companies like Peabody Energy Corp and Arch Coal fell into bankruptcy, and production 2016 hit its lowest point since 1978.
The slide appears likely to continue: U.S. power companies now expect to retire or convert more than 8,000 megawatts of coal-fired plants in 2017 after shutting almost 13,000 MW in 2016, according to U.S. Energy Information Administration.
Luke Popovich, a Spokesman for the National Mining Association, acknowledged Trump’s efforts would not return the coal industry to its “glory days,” but offered some hope.
Several utilities also cited falling costs for wind and solar power, which is now often as cheap as coal or natural gas, thanks in part to government subsidies for renewable energy. (Reuters/NAN)
