A great Republican named Teddy Roosevelt once took a very public position on the coal industry by sweeping in to provide leverage for coal miners during a prolonged strike at the turn of the century. Political cartoons attacked Teddy (his glasses and mustache made him ripe for caricature) as a schoolmaster boxing the ears of coal barons.
The effect was bittersweet: coal miners working for carbon-clad peanuts received better pay, but this strike would be the watershed moment for the government sweeping in to take sides in business negotiations and arbitration.
If the Bull Moose could see the coal industry today, he would have reason to think against busting trusts. The coal industry is, by absolutely every standard, hanging by a thread. It’s easy, and by no means inaccurate, to blame Obama for his disastrous War on Coal, sold in the guise of the Clean Power Plan, that forced heaps of regulation on top of a struggling business model.
Neither the worst of Obama nor the best of Trump, however, can do as much to coal as the plummeting commodity prices. Thermal coal trades for just over a quarter of the price it did at the peak of the commodity boom.
Commodities follow the easy, if rarely predictable, laws of supply and demand, and the issue is certainly not supply. Far from it: American coal producers have compiled a list of 54 new coal mines across the country ready for exploration and development, with nine in West Virginia alone. The issue isn’t digging up coal, but rather selling it on the market.
Only ten years ago, coal was the dominant source of electricity in the United States, and it wasn’t even remotely close. In 2010, the United States generated more electricity from coal than from every other energy source on the market combined.
Today, coal sits second to natural gas, consumption of which has tripled since 1990. By 2025, renewable energy sources are projected to produce more electricity than coal, a consequence of the increased cost efficiency being squeezed out of emerging solar and wind technology.
Coal has reason to be happy that the Clean Power Plan died on President Trumps’ desk, but that’s just one victory in a losing war. With the chance to lease federal land for coal development, Trump has put the government in a position to encourage production.
Yet businesses are finding it too little and too late. The owners of the two of the country’s largest coal-fired power plants, the Navajo Generating Station in Arizona and the Killen plant in Ohio, announced they would have to shutter their doors by 2018.
Environmentalists are cheering the loss of hundreds, if not thousands of jobs, for these coal-fired plants put food on the table of American families at the expense of their golden calf, carbon emissions. As the vegans dance in glee, darker questions remain, most notably how and if the industry can survive.
Despite Trump’s pledge to retain energy, mining, and coal jobs, many other politicians are pessimistic. Despite the effect rolling back Obama’s Clean Power Plan’s will do—free up about $100 million a year in cash for coal miners and their workers, that’s still not enough to save the industry.
Senator Joe Manchin, a Democrat from West Virginia, who cannot open his mouth without mentioning coal, noted the huge challenges that still lie ahead. State and federal governments may have to step in to prop up the industry, leading to an increasingly expensive subsidy at a time when many companies are looking to making major changes.
Duke Energy is one such company who has determined they’ll invest over a billion dollars per year in the next decade to transition from coal to natural gas. The company produced 60% of its electricity from coal in 2005; today it produces just 34%, and it estimates that it will be less than a quarter by 2026.
Duke’s CEO noted that they made changes without concern for whichever president and whichever policy ruled the land. Southern Power agreed, announcing an investment of five billion dollars in solar and wind energy research and development; they too only generate about a third of their electricity from coal.
Trump is right to put coal on the agenda and work to keep thousands, if not millions, of jobs that rely on this inexpensive and practical form of fuel. But if all the president’s horses and all the president’s men have the power to put coal back together again, they’ll need to do more than gut Obama’s biggest regulations.
Regards,
Ethan Warrick
Editor
Wealth Authority
