Anglo American coal bidders down to three, say sources
The final bidders are down to Yancoal Australia, Stanmore Resources and Peabody Energy.
Remember that big coal-mining comeback promised by President Donald Trump? Well, employment in the sector did go up by 400 jobs in November to an estimated 53,200, the highest level since February 2016. The number has been oscillating in a narrow band around 53,000 since April, though, and in the grand scheme of things, even the 2,500 coal-mining jobs added since Trump took office in January 2017 really don’t amount to much.
Employment in coal mining peaked in the U.S. in 1923, at 862,536. Most of the decline since then has been about increasing productivity: Mining companies kept digging more and more coal out of the ground but did it with fewer and fewer people. They accomplished this in large part by shifting the core of the industry from Appalachia to the western U.S., where less-labor-intensive surface mining predominates.
For the past decade, though, something else has been at work: Coal use in the U.S. has been plummeting.
That chart includes Energy Information Administration forecasts for 2018 and 2019. If they’re right about 2018 — and they’re likely to be pretty close given that eight months of data are already in — it will be the smallest amount of coal used in the U.S. since 1979.
On coal, Trump has picked a battle that he almost certainly cannot win, all while devoting substantial administration resources to fighting it.
The reason the U.S. is burning so much less coal is that, as overall electricity use has plateaued over the past decade, we’ve increasingly been getting that electricity from natural gas, wind and solar.
A regulatory crackdown on coal-plant emissions by President Barack Obama’s administration — the “war on coal” you may have heard about — played a role in that shift. So did subsidies for wind and solar power. But the boom in U.S. natural gas production enabled by hydraulic fracturing and horizontal drilling seems to have been the biggest driver. And now that the transition away from coal-fired power generation has happened, it’s awfully hard to see what could reverse it.
Most coal-fired power plants in the U.S. were built from the late 1960s through the mid-1980s. That is, they’re getting old. And as they wear out — Bloomberg NEF projects that 20 coal plants will shut down this year, the second-highest total ever — utilities are replacing them not with new coal-fired power but with natural gas and renewables. Even without subsidies, new wind and solar facilities are already cheaper on a levelized-cost-of-energy basis than new coal-fired plants, according to Bloomberg NEF, which expects new solar and wind energy to be cheaper than electricity from existing coal plants by 2028 and 2031, respectively. Natural-gas-generated electricity is more expensive than the coal-fired variety, but natural-gas-fired power plants not only emit fewer pollutants and less climate-warming carbon dioxide than coal plants do but also are much more compatible with renewables because they can be quickly fired up when the winds die down or the sun sets.
That there has nonetheless been a modest uptick in coal-mining employment since 2016 can be chalked up to exports, which have been rising for the past two years and are expected to keep doing so. While the U.S. and other developed countries have been turning away from coal, the developing world has not. U.S. coal exports to India, for example, are up more than tenfold since 2008. But with major coal reserves present all over the world and shipping costs high relative to energy content, coal has its limits as an export commodity. The export gains so far this year haven’t been enough to offset declines in domestic consumption, with estimated 2018 U.S. coal production through Dec. 1 down 1.9 percent from the same period a year before. Given the EIA forecast of an even bigger domestic consumption drop in 2019, and signs of a slowdown in global economic growth, it seems likely that production will fall again next year, and at some point employment will have to follow.
There’s only so much a president can do about such economic and technological forces.
This has not been one of those “vaporware” issues where Trump promises bold action but never follows up. His Energy Department has been trying, so far unsuccessfully because its power is limited by the semi-independent Federal Energy Regulatory Commission, to force electricity consumers to subsidize coal and nuclear power generation in the name of “grid reliability.” His Environmental Protection Agency, run by a former coal industry lobbyist, has proposed multiple regulatory changes to ease emissions rules for coal plants.
These steps could slow coal’s decline in the U.S., which is of course worth something to coal miners and the shareholders of coal-mining companies. They are not wrong to think that the president is on their side on this issue. But the results are likely to keep falling far short of the big coal revival that the president promised again and again on the campaign trail in 2016 — and proclaimed was happening last year based on a misreading of employment data. On coal, Trump has picked a battle that he almost certainly cannot win, all while devoting substantial administration resources to fighting it.
Why has he done this? I’m guessing that the president’s by-now-well-established disdain for experts and facts has been key. This disdain has of course worked out reasonably well for him so far — sometimes the experts are wrong, and brazenly ignoring facts actually turns out to be a great way to dominate the media discourse. But in coal as in other matters, one gets the sense that reality may be turning out to be a more formidable opponent than the president has counted on.
(By Justin Fox)
