President Trump said he would bring back coal. Has he? Let’s take a look.
Coal production in the United States was up 6 percent in 2017, according to the U.S. Energy Information Administration. That would sure seem a sign of “promise kept,” right?
On the other hand, Forbes magazine — not exactly a tree-hugging publication — recently headlined one report this way: “Coal collapsing faster under Trump.”
So what’s the truth?
Actually, both are true. It just depends whether you’re looking short- or long-term. Coal’s short-term prospects are brighter than they were under President Barack Obama, but its long-term prospects are now grimmer.
How can this be? The answer is that the free market — normally something conservatives champion — is dooming coal long-term and not even an enthusiastically pro-coal president can change that.
Coal matters to us for lots of reasons, not the least of which is this: We have six counties in far Southwest Virginia whose economies have been tied to coal, and their economic collapse — which has turned into a demographic collapse — is something the whole state is going to have to deal with.
Coal has also become a political symbol, used in different ways by both left and right. Let’s try to strip those symbols of their power, though, by looking at some actual statistics.
While coal production is up, it’s not necessarily because of anything Trump has done. It’s certainly not up because he pulled out of the Paris Climate Accord.
American coal production is up only because foreign demand for American coal is up. Domestic demand for U.S. coal actually declined in Trump’s first year in office. But exports surged by 61 percent. The problem for American coal producers is that those exports constitute a small part of their business — about 12 percent. Still, those exports were up — primarily to Asia and Europe.
Some of that spike is a temporary phenomenon. The U.S. Energy Information Administration tells us: “U.S. coal exports to Asia increased as China, Japan, and India looked to offset disruptions to their supplies of Australian coal caused by Cyclone Debbie in April 2017.”
But the rest is driven by growing economies in Asia and Europe. There’s lots of irony to be found there.
Europeans have been among the loudest in their condemnation of Trump for exiting the Paris agreement, yet Europe’s consumption of American coal also went up 44.5 percent.
On the other hand, coal exports to Asia more than doubled — which underscores how at least part of the American economy is tied to the economic health of countries that Trump has tried to distance himself from by saying no to the proposed TransPacific Partnership trade deal. The biggest consumer of American coal is now India. That means the economy of Southwest Virginia is really tied to decisions made in New Delhi.
Still more irony: Foreign Policy magazine reports that much of U.S. coal headed for Asia and Europe is going to feed steel mills — from which those countries then hope to export steel beams or other products to the United States. The tariffs Trump slapped on steel imports could have the effect of putting some American coal miners out of work — by reducing demand for American coal. Of course, Trump hopes it will result in an increase in demand at American steel mills, but that’s not necessarily an automatic result.
The big point here: The world’s economy is interconnected and complicated. Before a president monkeys with one part of it, he ought to be sure he knows what the effects downstream will be.
In any case, all that is short-term — which is fine if that’s all you’re concerned about. Here’s the long-term, though: Forbes reports that retirement of coal plants is accelerating. In fact, the magazine reports that the number of coal plants projected to be retired has more than doubled in the past year, a rate faster than energy industry analysts had expected. Trump’s decisions to pull out of the Paris deal and scrap the Clean Power Plan have made no difference whatsoever — because the free market has a mind of its own.
Forbes quoted one analyst who explained the situation this way: “The fundamentals of the economics of coal have gotten worse, with costs going up, while the competition for coal — that is, gas, wind and solar — has all gotten cheaper. So it’s getting to the point where huge swings are forecast.”
And exports aren’t going to be able to make that up. For one thing, some of our main coal customers overseas are also investing heavily in renewables. They see American coal simply as a “bridge” fuel while they get those solar and wind farms online.
Most American coal — 88 percent — is used domestically, and the big domestic consumers are starting to close up shop. These are the long-term trends community leaders in the coal counties are paying attention to — and their constituents ought to be.
We see this locally: Both Appalachian Power and Dominion Energy are scaling back their use of coal and adding more renewables — not as fast as environmentalists want, but the trend lines are unmistakable. Appalachian has already retired all its coal plants in Virginia (although it has many elsewhere). Dominion has said four of its coal units could be retired by 2025.
That’s left a pro-coal Trump administration scrambling to try to reverse these market trends. One option: He may invoke a 1950 defense law to order utilities to buy more coal (and nuclear energy). Usually it’s Democrats who want to use the power of government to meddle in the marketplace; here it’s Republicans. Still, the marketplace will have the final say: Those utilities will surely pass on the higher costs of buying coal to consumers. And nothing Trump can do can reverse the larger trends.