THE FIRST 100 DAYS: Coal at a Crossroads
By T.L. Headley, American Coal Council
To state the painfully obvious, the past eight years have been difficult for the nation’s coal industry.
In 2008, coal production was booming. The industry was experiencing a shortage of miners and support personnel and was actively recruiting at high schools and colleges for people interested in the industry as a career. The future seemed bright.
That began to change on January 20, 2008, when President Barack Obama took office as the nation’s 44th president. Unlike his predecessor, George W. Bush, Obama saw coal as a problem. Concerned about climate change and the impact of coal on the environment, Obama moved quickly to begin pushing legislation and regulations that restricted the production and use of coal. It seemed that each new regulation and each new executive order increased the cost of production or restricted the use of coal.
In the ensuing years, coal companies have seen large swathes of their marketplace disappear – particularly the market for thermal coal used in power generation, as 400 coal‐fired boilers producing 60,000 MW of electricity closed down or converted to other fuels.
Domestic coal production has fallen by almost 40 percent between 2009 and 2016. Tens of thousands of coal miners and support workers lost their jobs. With rare exceptions, every year seemed worse than the last. The industry was stretched beyond the breaking point. The news media declared coal dead – a “fossil of our industrial past.”
To be clear, regulations were not the only factor in the downturn. Market competition from abundant, low‐priced natural gas, periodic large coal stockpiles on the ground, and the ongoing international economic slowdown, but the impact of the Obama‐era regulations were at the core of much of the problems.
That began to change again on January 20, 2017 when new President Donald Trump succeeded Obama. Trump has signaled a commitment to the coal industry. Recent months have seen renewed growth as markets came into equilibrium, metallurgical markets soared, and production increased. Some idled mines began to reopen, putting some miners back to work, and plans for some new mines took shape.
Today, the nation’s coal industry is at a crossroads. Coal production is up approximately 17 percent year over year (source EIA), but the question remains as to whether this is sustainable or simply a response to a temporary swing in the overall economics.
Less than three months into his term, President Trump has already taken a number of actions that have helped the industry. And he has indicated he plans for additional steps.
ACTIONS TAKEN OR PENDING:
- Agency Appointment: Scott Pruitt to head the Environmental Protection Agency
- Agency Appointment: Rick Perry to head the Energy Department
- Agency Appointment: Ryan Zinke to head the Department of the Interior
- Executive Order: 90‐day regulatory freeze (Jan. 20, 2017)
- Executive Order: Agency review to cut red tape and unnecessary regulations (Jan. 30, 2017)
- Executive Order: For every new regulation, agencies must cut two (Jan. 30, 2017)
- Executive Order: Regulatory Reform (Feb. 24, 2017)
- Executive Order: Rescinding the Waters of the United States Rule (Feb. 28, 2017)
- Executive Order: Rescinding the federal coal leasing moratorium (March 28, 2017)
- Executive Order: Ordered a review of GHG regulations (March 28, 2017)
- Congressional Review Act Resolution: Rescinding the Stream Protection Rule (Feb. 2, 2017)
- Congressional Review Act Resolution introduced in Senate (SJ Res. 21) to overturn the Cross‐State Air Pollution Rule update to National Ambient Air Quality Standards (March 2, 2017)
- Pending Budget: Cut EPA by 3,200 positions or 30 percent of its budget (March 16, 2017)
- Pending Budget: Cut funding for implementation of Clean Power Plan (March 16, 2017)
- Pending Budget: Cut support for the UN Climate Change efforts (March 16, 2017)
- Possible: Congressional Bill rescinding the Coal Ash Rule (Passed House/ Pending Senate)
- Possible: Action to reduce the further impacts of the MATS regulations
The choices of Scott Pruitt to lead the EPA, Rick Perry to lead the Department of Energy and Ryan Zinke to lead the Department of Interior were welcomed across the fossil fuel energy industry. In his capacity as Oklahoma AG, Scott Pruitt was a leader in challenging unwarranted regulation and fought against overreach by federal agencies. Mr. Pruitt is serious about cooperative federalism and has a track record to prove it. He has promised to return the EPA to its job of administering the laws as passed by Congress. He will change EPA’s focus from environmental activism at any cost to a common sense approach that balances economic and environmental consideration. Perry is the former governor of the largest energy producing state in the nation and, as governor, presided over the fastest growing economy in the nation. Zinke is a former Congressman from Montana, whose common‐sense approach to legislation will be a tremendous asset to the nation. They share a vision with President Trump of a leaner regulatory approach that protects the environment while also fostering the development of industry and strengthening the nation’s economy. This approach was outlined in the recently released outline of the Trump Administration’s proposed budget for this year.
“The American people deserve a regulatory system that works for them, not against them – a system that is both effective and efficient,” the Trump Administration wrote. “Each year, however, Federal agencies issue thousands of new regulations that, taken together, impose substantial burdens on American consumers and businesses big and small. These burdens function much like taxes that unnecessarily inhibit growth and employment. Many regulations, though well intentioned, do not achieve their intended outcomes, are not structured in the most cost‐effective manner, and often have adverse, unanticipated consequences. Many more regulations that have been on the books for years – even if they made sense at the time – have gone unexamined and may no longer be effective or necessary. The President is committed to fixing these problems by eliminating unnecessary and wasteful regulations.”
Combined with steps being undertaken by Congress, through the Congressional Review Act or through slower, regular legislative channels, the sun is beginning to shine through the regulatory cloud that has hung over the industry for the past eight years. And confidence in the future of the coal industry is beginning to build.
Still, it is important to note that this does not mean the industry will return to the levels its saw in the mid‐2000s. The closures of hundreds of coal units in the power sector won’t be undone with the stroke of a pen or by the action of Congress. Most of those plants are now gone or have been converted to use other fuels, such as natural gas. In effect, those markets are lost.
However, with a return to more normal natural gas market pricing and the repeal of costly, restrictive regulations further threatening coal mining and use, as well as a more welcoming policy environment for coal, the industry can reclaim some of its former market. Combined with President Trump’s stated goal of investing in rebuilding the nation’s infrastructure, the nation’s coal industry could be poised to take advantage of the increased demand for energy that will likely result from such projects and economic expansion.
TAKING ADVANTAGE OF OUR OPPORTUNITIES
What a difference six months can make. In October, our industry was preparing to weather another four to eight years of regulatory challenges anticipated by a Clinton administration. The forecast was a bit bleak. Today, we are well on our way to a regulatory reset and a leveling of the playing field for coal.
As this article has outlined, the Trump Administration and its allies in Congress are moving quickly to eliminate many of the regulations targeted at coal for the past eight years. This is great for the industry, for coal‐related jobs, and for our nation’s future.
Looking ahead, how do we make sure that this doesn’t happen again in four or eight years? What steps do we take now to secure our industry’s future well into the 21st Century? There is a window to find that way forward and lay the groundwork to make it reality. Some policy approaches may be found in other articles in this issue of American Coal.