Can Trump live up to his promises to coal country?
The president-elect has promised to 'bring the coal industry back 100 percent.' Market forces suggest differently.
In coal country, the presidential election offered a stark choice: the candidate who acknowledged that clean energy policies would put coal companies out of business, or the candidate who promised a revival of mining towns’ lifeblood. For many, it wasn’t much of a choice at all.
"We're going to get those mines open," Donald Trump told a crowd in Charleston, W. Va., in May, adding, "And for those miners, get ready. Because you are going to be working your asses off."
Donald Trump swept up in states like West Virginia, Wyoming, and Kentucky, winning upward of 70 percent of the vote and turning the region a deep shade of red, with Republicans taking control of Kentucky’s legislature for the first time in nearly a century.
Climate experts see calamity ahead: the president-elect, who has called climate change a "hoax," has appointed a prominent climate denier to oversee his transition team’s policy on the matter, and promises to strip away President Obama’s legacy of fossil-fuel regulations and clean-energy accords, threatening to reverse elemental progress made in slowing the heating of the planet.
But economists say that even mining interests' alternate version of progress should look like fall far short of what the candidate had promised on the campaign trail, as a tide of natural gas remains likely to keep coal from retaking its former prominence in energy markets.
"There is not much a future Trump administration can do to protect coal producers, who have mostly been the victim of economic forces rather than politics and the Obama administration's 'war on coal,' " wrote Reuters market analyst John Kemp.
The Obama administration has made no secret of its intention to phase out coal, pursuing policies that include a moratorium on coal leasing from federal lands and a Clean Power Plan that would significantly curb emissions on coal-fired plants. The president has proposed allotting $1 billion in 2017 to wean mining areas off of an industry that has been their economic and cultural spine for a century, but critics allege the White House has shown little interest in promoting the kind of economic diversification that would necessarily be a total transformation of the region. So mining country has placed its bets with the candidate who promises a return.
"I'm for Trump," said Dwayne Riston, a miner from Powellton, W. Va., in an August interview with The New York Times. "Way I see it, if he wins, we might at least stand a chance of surviving."
Coal production been on a downward zigzag since Obama entered office, noted InsideEnergy in May, and the past few years have seen it go into a free fall, with several of the worst weeks for coal ever coming in 2016. Market analysts point to Obama-era regulations in explaining coal's dive in the markets, too.
"There's still a long-term threat from natural gas and solar, but the real killer to coal is climate change regulation, and if that's eased, then it will be more competitive," Vic Sperandeo, a Texas-based trader who runs the commodities-focused Trader Vic Index, told MarketWatch this week.
The long-term money will probably stick with natural gas, though. That's not just it's cheaper, writes Mr. Kemp for Reuters. It's also a nimbler way to fire power plants: gas-fired plants are quicker and cheaper to build, and they take much less time to go operational than coal-fired plants. And they’re a safer bet given the swing of the political pendulum.
"Coal-fired plants take up to four years to build and have an expected life of around 40 years so anyone constructing a new plant must take a very long-term view about energy policy," he writes.