Trump’s executive order won’t bring back coal jobs. Regulations aren’t what killed them.

Obama’s Clean Power Plan Isn’t Why Coal Is Struggling, and Killing It Won’t Bring Back Miners’ Jobs

Obama’s Clean Power Plan Isn’t Why Coal Is Struggling, and Killing It Won’t Bring Back Miners’ Jobs

A Closer Look at the New Energy Economy
March 28 2017 3:38 PM

A Cruel, False Promise on Coal

Trump thinks gutting Obama’s Clean Power Plan will bring back mining jobs. But regulations aren’t the source of coal’s decline.

Crews dismantle PacifiCorp's coal-fired Carbon Power Plant on February 1, 2017 in Helper, Utah.
Crews dismantle a PacifiCorp coal-fired power plant on Feb. 1 in Helper, Utah.

George Frey/Getty Images

President Trump has signed an executive order that would roll back much of President Obama’s Clean Power Plan and generally direct the federal bureaucracy to put its head in the sand with regard to climate change. The Clean Power Plan, which compels plants producing electricity to reduce their carbon emissions, is seen by many as the main front in the war on coal. For Trump, gutting the plan is a fulfillment of his promise to miners in Appalachia and the West to revive coal’s role in the economy and put them back to work.

It’s a cruel and typically false promise. Even if coal production comes back, the jobs probably won’t. Like every other industry, coal invests heavily in productivity and automation, so that it can do more with fewer people. More broadly, though, the directive reveals an outdated understanding of the role, image, and actual competitive position of coal in today’s marketplace and business culture. An executive order won’t magically persuade a range of actors to use a dirty and comparatively expensive fuel to create electricity when they have other, better options.

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This isn’t to say the Clean Power Plan doesn’t matter and that its dismantling won’t have consequences. But given what else is going on in the world, it might not matter as much as we think.

Coal is generally mined for one purpose in the United States: We burn it to make electricity. (Producing electricity accounts for 90 percent of U.S. coal consumption.) But in both relative and absolute terms, coal is losing out in market share. In 2007, coal-fired plants accounted for 48.5 percent of U.S. electricity generation. In 2016, it was only 30 percent. Coal plants, many of which were built in the mid-20th century, are being phased out, closed, and shuttered for a variety of reasons. Between January 2015 and January 2017, some 34.75 gigawatts of coal-fired capacity—about 11 percent of the total—was shut down. Yes, increased regulation is a factor. But coal has lost most of its market share to a cheaper, cleaner-burning, domestic fossil fuel: natural gas. In 2016, for the first time, natural gas accounted for more electricity production than coal. No executive order will affect the appeal of natural gas.

Even without the Clean Power Plan, the forces arrayed in the markets and the culture against coal remain significant.

Pretty much every utility has a so-called integrated resource plan, a road map of how it will supply electricity for the coming decades while complying with existing regulations and taking into account potential changes in the operating environment. These are decisions and plans that last for several decades—and across several presidential administrations. But utilities begin to act on them right away. Generally speaking, all of these plans call for utilities to rely less on coal and more on natural gas and renewables.

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Trump’s executive order won’t cause utilities to rip up their plans in part because the federal government is only one of the constituencies to which the utilities answer. Regardless of what the Clean Power Plan prescribes, governors and regulators in many states—especially giant states where people live—have decided they simply don’t want their utilities to burn coal. New York Gov. Andrew Cuomo, for example, has pledged to end the use of coal in his state by 2020. Trump’s executive order won’t reverse the mandates and other policies that states deploy to discourage coal use.

Coal has also been losing market share in part because some of the biggest power users in the country—large companies—have decided they don’t want their operations provided by fossil fuels like coal. So companies such as Google, General Motors, Apple, and Amazon are contracting directly with renewable power companies and committing to buy power for 10 or 20 years. Trump’s executive order won’t reverse those decisions or this trend.

Natural gas remains the biggest direct competitor of coal. And given the current low market prices of the stuff, it’s difficult for the operators of many old, rickety coal plants to make money. These are businesses, after all. Dayton Power & Light, in the coal state of Ohio, just announced plans to shut down two plants because it did not believe they would be “economically viable beyond mid-2018.” Trump’s executive order won’t magically boost the price of natural gas.

Coal is also losing market share to renewables like wind and solar. For decades, the presumption has been that electricity created from renewable sources is more expensive than that produced by coal or natural gas. But in the past decade, wind and solar have reached critical mass and reaped the benefits of continuous improvements, efficiencies, and scale. The upshot: Solar and especially wind can now offer utilities massive volumes of power at prices that are close to (or even below) coal-fired electricity, and with none of the nasty externalities like pollution and coal waste. (This chart shows how the prices utilities are paying for wind power has decreased.) And that process is still continuing. Moody’s Investors Service recently reported that about 20 percent of the nation’s coal capacity is at risk because it can be displaced by cheaper wind-generated electricity. Texas, for example, has built so much wind power that there are times when wind accounts for up to half of the electricity on the grid in the Lone Star State. Guess what Trump’s executive order won’t reverse?

The people who make decisions about what kind of fuel to use to create electricity are effectively making 10-, 20-, and 30-year decisions about prices, risks, and regulation. And in that time frame, it’s reasonable to conclude that governments will take action on climate change, that a price on carbon is a possibility, and that the price of renewables and energy storage will continue to decline. It’s hard to say how a governor, a utility executive, or the executive responsible for procuring power at Amazon is going to conclude that Trump’s executive order is a license and directive to build a new coal power plant—or to halt the process of shutting an existing one.