Where Now?

By T.L. Headley, American Coal Council

Prior to the election of Donald Trump as president this past November, many people were busy writing the coal industry’s obituary. Contrast that with what is transpiring in 2017 – the coal industry has experienced a significant increase in year-over-year production, many laid-off coal miners are returning to work, and demand for coal has improved. Those obituaries were more than a little premature.

According to the Department of Energy’s Energy Information Administration (EIA), year-to-date 2017 coal production stands at 482 million short tons (MMst), a 14 percent increase over the same period a year ago.

The increase is linked to higher consumption in the electric power sector and a rise in coal exports. In its Short-Term Energy Outlook (STEO), EIA reported electric power sector consumption for the first half of 2017 at 316 MMst, up over 5 percent from the same 2016 period. And during the first six months of 2017, the U.S. exported 43 MMst according to EIA, which was more than 50 percent higher than coal exports over the same period last year.

EIA’s STEO forecasts total 2017 coal production to be up nearly 60 million tons to 786 MMst. EIA currently projects total 2017 electric power sector consumption at 692 million tons, up 15 MMst. And while EIA expects growth in coal exports to slow in the coming months, exports for all of 2017 are forecast at 70 MMst, 17 percent above the 2016 level.

The improved market conditions are welcome news, and the Trump administration has taken a number of steps to support coal and improve the industry’s future ability to compete in the marketplace. Among these steps were signing legislation to rescind the stream rule under the Congressional Review Act. EPA Administrator Scott Pruitt is dismantling the Obama administration’s Clean Power Plan, and postponing deadlines for the Effluent Limitations Guidelines for the power sector. Interior Secretary Ryan Zinke has lifted the federal coal-leasing moratorium and rescinded the prior administration’s royalty valuation rule. However, much of the damage of the past eight years may be permanent without other policy changes. Closure or the announced closure or conversion of 581 coal-fired power generation units, over 100,000 MW of capacity, has been tracked by the American Coalition for Clean Coal Electricity (ACCCE). As of the summer of 2017, retirements of 65,000 MW had already occurred. ACCCE’s tracking shows that EPA regulations were indicated as a factor for 80 percent of these retirements.

So where does the nation’s coal industry go from here?

An important step forward is action for retention of the nation’s remaining existing coal fleet. Appropriate valuation of coal’s attributes as a fuel source for reliable power generation and its contributions to the resiliency of the power grid would support that.  Policy levers include incentives or subsidies to retain coal capacity or a temporary reprieve from coal unit closures. One need look no further than the 2014 polar vortex to understand the importance – it was coal units that facilitated uninterrupted power supply during this extreme weather event.