President Donald Trump came into office with a pledge to help the coal sector. Sure enough, the United States, in the year 2017, produced and exported record amounts of coal to countries all over the world. According to the figures published by the U.S. Energy Information Administration, U.S. coal exports surged by 60 percent in 2017 to 97 million tons. But has this really helped the U.S. coal industry? Let’s find out.
America’s Dwindling Appetite for Coal
Despite the increasing demand for U.S coal all over the world, coal consumption in the U.S. is steadily declining. While, many people blame the environmental regulations in the U.S. for this decline, the truth is that the environmental and climate regulations have played only a minor role in the decline of the coal industry. It’s the other factors that hurt the U.S. domestic coal demand, like:
- Low natural gas prices: Natural gas production in the U.S. has increased over the past few years. The increased flow of natural gas onto the market has helped bring its prices down, thereby encouraging power companies to make more use of natural gas.
- Cheap renewables: The declining cost of solar and wind power has also damaged the coal industry.
- Stagnant electricity demand: People are using less electricity than they used to because of improvements in the energy efficiency of buildings and appliances.
- Old coal plants are on the verge of retirement
Only 3.5 % of the U.S. coal industry’s decline can be attributed to environmental and climate regulations that were imposed before 2016.[s1]
This nullifies Trump administration’s claims that it was due to Obama Administration’s climate and environmental regulations that the coal industry saw a decline.
Demand for U. S coal in foreign lands – a reason to rejoice?
Although the domestic coal consumption declined slightly from 2016 to 2017, the decrease in domestic demand was offset by demand for U.S. coal in foreign shores.
The United States mainly supplies two types of coal – one that’s burned in power plants to generate electricity, and the other which is the high-quality coal that is used by the steel mills to turn iron into steel.
- U.S. exports surged in both categories last year, especially coal used in power plants saw a great rise in demand last year.
- U.S. coal was in great demand in places such as Poland and Spain, where the governments are promoting coal-fired electricity. Countries including South Korea, Japan and India also purchased big amounts of U.S. coal to meet their growing electricity demands.
- In Asia only, some 220 gigawatts of new coal-fired power generation is under construction.
- High-sulfur coal found in Northern Appalachia and the Illinois Basin is in high demand in India’s industrial sector. This has provided a solid base to the U.S. coal producers in one of the world’s fastest-growing coal markets. If India’s demand for U.S. coal expands outside its industrial sector, the U. S. coal sector is surely going to have a reason to rejoice.
No doubt, the recent rise in the export demand has brought temporary relief for the industry which lost a big amount betting on exports in 2013. Experts suggest, it is unlikely to reverse coal industry’s long-term decline due to the following reasons:
- Exports accounted for only about 12 percent of 2017 coal production.
- Majority of U.S. coal production is consumed domestically and 90% of it is used to generate electricity. But coal’s importance is shrinking in the domestic market.
Is curtailing environmental regulations the solution?
In a bid to boost fossil fuel use and bring back jobs in the coal industry, President Trump signed an executive order in March 2017 to rescind climate regulations imposed by Obama administration, like the ‘Clean Power Plan’.
While the coal sector in the U.S. is in desperate need of revival, there are many who are criticizing Trump’s decision to bring back coal jobs by curtailing environmental regulations. They say it’s not the regulations but the market forces that played a role in the decline of coal.
What’s the solution?
Even if the global demand for coal becomes stable, risks will always be there for people with a stake in coal. In such a scenario, the following steps can be taken:
- Decision makers need to regularly evaluate whether to shift to other power sources
- There is a need to invest in more carbon capture technology projects and explore options to make coal plants more efficient and reduce emissions, especially in places considering a carbon tax.
- Power generators should be given more flexibility to develop strategies for power generation based on grid reliability, economics, and fuel diversity.
The shift from the coal presents a great opportunity for the U.S. to reduce overall healthcare costs, premature mortality, facilitate economic development in regions that desperately need it, and meet the greenhouse gas reduction goals for the better health of the country and the entire planet.
[s1]Columbia University Report