alan krupnick is the co-director of Resources for the Future’s Center for Energy and Climate Economics in Washington, DC.
Ending Washington's “war on coal” and bringing jobs back to Appalachian mines has been a recurring theme of the Trump campaign — one that apparently resonated in West Virginia and Kentucky, once-Democratic states where Trump piled up huge margins on November 8. But a close look suggests that the coal industry’s long slide has little to do with government policy and that the president-elect will have little or no leverage to slow it down, let alone reverse it.
Just the Facts Please
The existence of a war on Appalachian coal by Democrats or anybody else is mostly hype, unless you believe that markets can wage war. Total U.S. coal production has been on the decline since 2008 but began shifting West far earlier. In 1949, 92 percent of U.S. coal was mined east of the Mississippi; by 2011, that figure was approaching just 40 percent. As a result, coal production in Montana and Wyoming continued to grow through 2011, while production east of the Mississippi (think West Virginia, Kentucky, Pennsylvania and Illinois) peaked in 1990.
The explanation for the market swoon has a little to do with environmental regulation and much with economics. Western coal is cheaper, in large part because it is strip-mined (rather than deep mined), allowing a worker in Montana's Powder River Basin to produce an average of 29.3 tons per hour compared to 1.6 tons in southern Appalachia. The role of pollution regulation in Appalachia’s decline is real, but relatively modest: western coal is more desirable to power plants because it contains much less sulfur than eastern coal. Note, however, that the current regulations requiring sulfur dioxide containment can hardly be blamed on Democrats; they were signed into law by President George H.W. Bush a quarter-century ago.
Coal’s primary adversary (eastern and western) is cheap and versatile natural gas. The fracking revolution reduced natural gas prices by almost two-thirds between 2008 and 2015. One result has been a sharp decline in coal’s market share in electricity generation, from around 50 percent to 32 percent in about a decade. The fact that gas burns cleaner and requires smaller utility investment in pollution control equipment is icing on the cake. Finally, as wind power and solar energy’s share of electricity generation rises, gas wins again because gas turbines can be quickly put online when the wind dies or the sun doesn’t shine. Coal boilers, by contrast, are designed to run all the time.
In fact, coal’s liabilities cast an even longer shadow. Mining the stuff is notoriously dangerous, while the local environmental damage associated with acid drainage, mountaintop removal and mine tailings is exceptionally costly to manage. What’s more, coal-fired power plants are relatively inefficient thanks to aging — they average 54 years old.
In theory, the Trump administration could narrow the cost advantage of natural gas a bit by failing to enforce existing emissions standards under the Clean Air Act. But study after study shows that the cost of meeting EPA’s ambient air quality standards are far exceeded by the benefits — primarily to human health. Perhaps more important to the possibly research-averse Trump administration, survey after survey shows that the public is solidly behind efforts to protect air quality. And unlike greenhouse gases, which damage the planet slowly and almost imperceptibly, the local pollutants from coal-fired power plants are difficult to ignore.
Survey after survey shows that the public is solidly behind efforts to protect air quality. And unlike greenhouse gases, which damage the planet slowly and almost imperceptibly, the local pollutants from coal-fired power plants are difficult to ignore.
Trump to the Rescue?
All that said, if the Trump administration is determined to do battle to bring coal jobs back to Appalachia, what tools could it muster? A useful thought experiment — but an inconceivable one as real policy — would be to bar coal mining on federal lands (the source of 40 percent of current production and almost entirely located in the West). The impact, which we can extrapolate from models created by ICF International, a consulting firm, would certainly give a boost to Appalachian coal. However, it is smaller than you might expect. That’s because part of the gap left by a federal shutdown would be filled by low-cost coal from private land in the West and in other parts of the United States — and, of course, by accelerating the inexorable shift to natural gas. While such a policy is purely fanciful — mine owners and workers in the aforementioned Powder River Basin would have a thing or three to say about it — the mind experiment does illustrate how hard it would be to create jobs in this rapidly failing sector.
A somewhat more plausible approach would be to increase demand for coal by increasing coal exports — say, through approval of a specialized export terminal on the West Coast. Somewhat more plausible, perhaps, but hardly a game changer. Even if the White House were able to fast-track development — a big “if” since states and localities in the Pacific Northwest have rejected five of six proposed export terminals, with the sixth facing legal challenges — the terminal would not help Appalachia significantly because its mines would still be half a continent farther away from the docks than the Powder River Basin. Besides, world coal demand is expected to be flat at best in the next few decades, as China switches to natural gas and renewables in order to contain local pollution and meet its obligations under the Paris climate accord.
Wait, this all gets worse. Delivery on other Trump campaign promises would more than offset any direct positive impact the administration might make on eastern coal production. For starters, the Trump team’s focus on stimulating production of all fossil fuels would work against coal, since success would make natural gas even more competitive with coal. In the same vein, if Trump decides to wage economic war on Mexico, he risks cutting off a large and growing source of demand for our natural gas — demand that has almost quadrupled since the fracking revolution. And that would lower the price of gas to power plants at home, accelerating the woes of Appalachian coal.
Heads Gas Wins, Tails Coal Loses
Appalachian coal companies seem to understand the bad news better than Appalachian voters — and have more options to manage the damage. The watchword for Big Coal (or what’s left of it) is “ride the horse in the direction it is going,” largely by diversifying. For example, Consol Energy, the Pittsburgh-based coal company, made more money in fracking for natural gas last year than in mining coal. One can only hope that the new president will see the need to give Appalachian miners the resources to begin a comparable transition to a sustainable means of survival.