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Trump declares end to "war on coal," but utilities aren't listening

Wednesday, April 5, 2017 - 13:29

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Surrounded by miners from Rosebud Mining, US President Donald Trump (center) signs the Energy Independence Executive Order at the Environmental Protection Agency (EPA) Headquarters in Washington, DC, March 28, 2017.

[WASHINGTON] When President Donald Trump signed an executive order last week to sweep away Obama-era climate change regulations, he said it would end America's "war on coal", usher in a new era of energy production and put miners back to work.

But the biggest consumers of US coal - power generating companies - remain unconvinced.

Reuters surveyed 32 utilities with operations in the 26 states that sued former President Barack Obama's administration to block its Clean Power Plan, the main target of Mr Trump's executive order.

The bulk of them have no plans to alter their multi-billion dollar, years-long shift away from coal, suggesting demand for the fuel will keep falling despite Mr Trump's efforts.

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The utilities gave many reasons, mainly economic: Natural gas - coal's top competitor - is cheap and abundant; solar and wind power costs are falling; state environmental laws remain in place; and Mr Trump's regulatory rollback may not survive legal challenges.

Meanwhile, big investors aligned with the global push to fight climate change - such as the Norwegian Sovereign Wealth Fund - have been pressuring US utilities in which they own stakes to cut coal use.

"I'm not going to build new coal plants in today's environment," said Ben Fowke, CEO of Xcel Energy, which operates in eight states and uses coal for about 36 per cent of its electricity production. "And if I'm not going to build new ones, eventually there won't be any."

Of the 32 utilities contacted by Reuters, 20 said Mr Trump's order would have no impact on their investment plans; five said they were reviewing the implications of the order; six gave no response. Just one said it would prolong the life of some of its older coal-fired power units.

North Dakota's Basin Electric Power Cooperative was the sole utility to identify an immediate positive impact of Mr Trump's order on the outlook for coal.

"We're in the situation where the executive order takes a lot of pressure off the decisions we had to make in the near term, such as whether to retrofit and retire older coal plants," said Dale Niezwaag, a spokesman for Basin Electric. "But Trump can be a one-termer, so the reprieve out there is short."

Mr Trump's executive order triggered a review aimed at killing the Clean Power Plan. The Obama-era law would have required states, by 2030, to collectively cut carbon emissions from existing power plants by 30 per cent from 2005 levels. It was designed as a primary strategy in US efforts to fight global climate change.

The US coal industry, without increases in domestic demand, would need to rely on export markets for growth. Shipments of US metallurgical coal, used in the production of steel, have recently shown up in China following a two-year hiatus - in part to offset banned shipments from North Korea and temporary delays from cyclone-hit Australian producers.

RETIRING AND RETROFITTING

Coal had been the primary fuel source for US power plants for the last century, but its use has fallen more than a third since 2008 after advancements in drilling technology unlocked new reserves of natural gas.

Hundreds of aging coal-fired power plants have been retired or retrofitted. Huge coal mining companies like Peabody Energy Corp and Arch Coal fell into bankruptcy, and production last year hit its lowest point since 1978.

The slide appears likely to continue: US power companies now expect to retire or convert more than 8,000 megawatts of coal-fired plants in 2017 after shutting almost 13,000 MW last year, according

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