Trump’s Futile Efforts to Save the Coal Industry
With hard-hatted coal miners looking on, President Trump signed a bill on Thursday, February 16, undoing an Obama-era coal mining rule. The bill effectively neutralized the Office of Surface Mining’s Stream Protection Rule.
Obama enacted the rule to protect streams and rivers from coal mining waste. Trump’s action is a follow-up to his “Trump Digs Coal” campaign slogan. Trump called the original legislation a “job killer.”
However, Trump’s repeal of Obama’s bill won’t save the coal industry. And investors need to be aware of what’s coming.
The Move Away From Coal
The reality is, coal is dirty. It’s the dirtiest fossil fuel on the planet and a major contributor to air pollution.
And utilities have stopped building new coal-fired plants. Dealing with coal’s pollutants is just too expensive.
Even if Trump manages to keep Obama’s Clean Power Plan from passing, existing EPA emissions regulations have utilities looking elsewhere for power plant fuels.
(And they are not looking toward the nuclear sector. I just wrote an article about that. If you missed it, you can read it here.)
The real problem for coal miners and the companies they work for is declining demand for coal.
After signing another energy-related bill on February 14, Trump quipped, “[We’re] bringing back jobs, big league. We’re bringing them back at the plant level. We’re bringing them back at the mine level. The energy jobs are coming back.”
However, talk is cheap, as the old saying goes. The reality is thousands of coal jobs are going away and not coming back.
This is happening at power plants that are closing and the mines that serve them. Just in the last three weeks, the owners of three of the biggest coal-fired plants in the U.S. said they were shutting them down.
One of them is the Navajo Generating Station. Outside of Page, Arizona, it is the largest coal-fired power plant west of the Mississippi.
It’s closing because the group of utilities that owns it can get less expensive power elsewhere. The source? Natural gas-fired power plants.
One of the biggest customers of the Navajo Generating Station is the Central Arizona Project (CAP). Its system of pumps and canals supplies water to Tucson and the Greater Phoenix area.
Last year, CAP purchased $81.2 million in power from the Navajo Station to run 15 large pumps in its system. However, it realized it could have purchased the same power on the open market for $38.5 million less.
CAP officials are pushing for an early closure of the Navajo Generating Station. They feel they are subsidizing a losing deal…
Converting the plant to run on natural gas isn’t financially viable. The closest gas is 43 miles away.
And Navajo Generating Station isn’t the only coal-fired plant on the chopping block…
East of the Mississippi, Dayton Power and Light (DPL) Corporation, owned by AES Corp. (NYSE: AES), is closing two power plants in 2018. Its long-term plans will put an end to coal-fired power generation.
The two plants, Stuart and Killen, have a combined capacity of 2,093 megawatts and will close in mid-2018. In addition, DPL will divest its ownership shares in three other coal-fired Ohio power plants it co-owns with other utilities.
To help offset the loss in power, DPL plans to procure up to 300 megawatts of solar and wind generation. It expects to have those projects developed and integrated into its grid no later than 2022.
This doesn’t just protect jobs that might otherwise be lost. It also shifts DPL’s stable of generation resources slightly toward renewables.
Last year, the solar industry added 51,000 jobs. That’s far more than the coal industry lost.
However, you won’t see that mentioned in Trump’s energy plan. It will be interesting to see how long Trump supports coal in the face of a decline for the dirtiest fossil fuel.