Tuesday, November 29, 2016

The (Non) Future of Coal

More elite experts, explaining why Donald Trump cannot possibly keep his promises to the working class people who voted for him:
All year, Donald Trump has been promising to rescue the US coal industry by repealing various Obama-era pollution rules and ending the “war on coal.” And all year, analysts have pointed out that he probably can’t stop the collapse of the coal industry — since coal’s woes go far beyond the Environmental Protection Agency.

But if you want a perfect example of why Trump will struggle to bring back coal, just look at Michigan.

Last weekend, the CEO of Michigan’s largest electric utility reiterated that his company is still planning to retire eight of its nine remaining coal plants by 2030 — whether or not Trump tries to repeal President Obama’s climate policies. “All of those retirements are going to happen regardless of what Trump may or may not do with the Clean Power Plan,” DTE Energy’s Gerry Anderson told MLive.com’s Emily Lawler.

Anderson’s reasoning was simple. Coal is no longer the economic choice for generating electricity, due to relentless competition from cheaper (and cleaner) natural gas and wind power. In Michigan, a new coal plant costs $133 per megawatt hour. A natural gas plant costs half that. Even wind contracts now cost about $74.52 per megawatt hour, after federal tax credits. “I don't know anybody in the country who would build another coal plant,” Anderson said.
This fits with what the TVA announced last year, that they would finish closing 26 of their 59 coal-fired plants by the end of 2016, far ahead of any Federal requirement. They offered the same reason: natural gas is cheaper and cleaner.

Not only are natural gas plants cheaper, they can be much smaller, and therefore nimbler, leaner, more dancing in the chaos, whatever trendy business buzzword you prefer. It simply makes no sense for any company to sink a billion dollars of capital into a huge coal-fired plant when the future market looks both unprofitable and highly uncertain.

So coal production will continue to fall, and coal mining employment will fall even faster, since companies are responding to falling demand by closing the most labor-intensive mines first.

And all of this is happening before a single provision of  Obama's Clean Power Plan comes into effect. In fact we may fulfill the overall goal of that plan – a 30% cut in emissions from generating power by 2030 – next year. It certainly might be true that having Obama's plan hanging out there is part of the calculus that makes new coal-fired plants look dubious to utility executives, but since there is bound to be another Democratic president eventually, just repealing Obama initiatives won't remove that uncertainty.

These are the headwinds that Trump and his voters are running into: both the environmentalism of the left and the free capitalism of the Paul Ryan Republicans are pushing America away from coal, and it would take a massive government commitment to push back effectively.

4 comments:

G. Verloren said...

I'm confused why you keep pointing out and emphasizing that many of the people stating coal is impossible to save are "elite experts".

You seem to agree with their assessment and find their reasoning not just sound, but largely self evident - and yet you keep framing them in terms and phrases that most populist leaning people in our society would understand to be coded condemnations. "The people who keep saying we can't save coal are 'elite experts' - id est, they're pompous, out of touch, fatcat politicians like Crooked Hilary™ pushing their secret liberal agenda on us honest salt of the earth Real Americans™ because they think they're better than us and want to turn is all into gay hippie communists! Don't believe anything they say, they're corrupt and control the lying media! Coal isn't dying - trust me, we're going to make coal great again! "

Shadow Flutter said...

The global demand for coal is increasing, and will probably continue to do so for the next 20 years, although at a decreasing rate. The fate of coal will be determined by China and Asia, not the U.S.

John said...

I have posted here many times about my own belief that coal is not the future of energy, and that Trump cannot keep his promises about coal, manufacturing jobs, or anything else. I am, pretty much, a full member of the coastal elite that Trump's core voters seem to resent so much. I am just trying to understand what is going on in America by juxtaposing what Trump's partisans believe with what they hear from estalishment spokesmen.

G. Verloren said...

@John

Fair enough. Contrast and apparent contradiction are sometimes a little hard to separate out from each other is all. Thanks for the clarification, it is much appreciated.