July 3, 2017 - The coal industry is poised for a small comeback this year on expectations natural gas prices will rise, according to U.S. Energy Department (DOE) forecasts.
“While U.S. total electricity generation is expected to decline almost 1% this year, the share of coal-fired generation is forecast to increase,” reads a short-term outlook from the Energy Information Administration, which is DOE’s statistical arms.
Coal’s share of electricity generation is expected to increase from 30 percent in 2016 to 31 percent in 2017 before falling again in 2018. The short-term rise and fall of coal-fired electricity is largely driven by changes in natural gas prices.
“After declining for two years in a row, U.S. coal production is set to increase 4% during 2017 due in part to growth in coal-fired electricity generation,” EIA reported. Though coal production could fall again as more coal-fired power plants shut down in the coming years.
It’s good news for President Donald Trump who promised to revive the coal industry by rolling back onerous regulations, but it’s a boom that could be short-lived if fundamental policy shifts don’t happen quickly enough.
Utilities plan to shutter 45 coal-fired generating units through 2028 due to environmental regulations, state green energy mandates and competitively-prices natural gas.
Trump promised to repeal President Barack Obama’s “Climate Action Plan,” the centerpiece of which was a regulation putting carbon dioxide emissions limits on new and existing power plants — the Clean Power Plan.
The Environmental Protection Agency (EPA) rule is expected to force more coal plants to prematurely retire. Trump is expected to withdraw the rule, which EIA projects could level out coal’s share of electricity production.
Already, some optimism is seeping back into coal country, though most energy analysts don’t see that many coal mining jobs coming back to regions, like Appalachia where mining costs are higher relative to other mining regions.
Trump recently signed a bill to repeal an Obama-era stream regulation that critics say would have locked up 64 percent of U.S. coal reserves. Coal miners supported the rule’s repeal.
But there’s another problem.
Coal’s demise started before Obama-era climate regulations. The EPA’s 2012 mercury rule, for example, is a major factor behind many coal-fired power plant closures in recent years.
EPA’s mercury rule went into effect in 2015 — that year saw a record-level of coal -fired generation shutdown. A slew of coal-fired generation also shut down in 2016 since many plants got a one-year extension from EPA to comply with the mercury rule or close.