Just a day after federal regulators nixed a major Trump administration proposal to shore up the struggling coal industry, the nation’s top energy forecaster predicted continuing, slow declines in U.S. coal production and in the burning of coal for electricity in 2018 and 2019, thanks to cheap natural gas and coal plant retirements.
The U.S. Energy Information Administration’s monthly short-term energy outlook, the first to include predictions for 2019, projected that coal production will decline from 773 million short tons last year to 759 million in 2018 and 741 million in 2019. The burning of coal for electricity — its chief use in the United States — also will decline steadily.
By 2019, the report forecasts, natural gas will provide 34 percent of U.S. electricity and coal 28 percent — leaving gas as the top fuel for U.S. electricity generation, a role held by coal as recently as 2015. In 2003, coal provided 51 percent of U.S. electricity and natural gas just 17 percent, which gives some sense of the magnitude and the rapidity of the change.
The report offers the latest evidence that while the Trump administration’s focus on energy production may advantage some fossil fuels — the report also predicts a record U.S. crude oil production of 10.3 million barrels a day in 2018, followed by 10.8 million in 2019 — it’s proving more difficult to change the trajectory for coal. That’s because it’s a carbon-intensive fuel that faces not only adverse policies but also market forces, such as the booming production of natural gas thanks to fracking.
“I think what the administration is not realizing is it’s not really regulation that’s killing coal; it’s cheap natural gas,” said Christopher R. Knittel, a professor of applied economics at MIT, in response to the EIA findings. He said studies have shown that as much as 70 percent or 80 percent of the decline in coal is the result of competition from cheaply priced natural gas.
“And, if anything, the policies of the current administration are going to exacerbate that,” he said, “in the sense that they’re opening up lands for more drilling, which is likely to generate more oil but can also generate more natural gas — which might be the final nail in the coal coffin, if you will.”
Tyler Hodge, a member of the electricity analysis team for the EIA, echoed Knittel on Tuesday. The decline of coal is “primarily driven by the sustained low price of natural gas,” he said during a call with reporters. The price of natural gas for electricity deliveries is projected to fall 2 percent in 2018, Hodge said, while the price of coal for electricity delivery should actually rise a bit. At the same time, the power industry is continuing to build more natural gas plants and retire more coal plants.
“Right now the industry is reporting to us that they’re planning to build out 20 gigawatts of new natural-gas-generating capacity, and in addition there’s a planned retirement of probably about 13 gigawatts of coal,” said Hodge. A gigawatt refers to the capacity to instantaneously and steadily generate 1 billion watts of electricity.
The news Monday certainly won’t help coal. The Federal Energy Regulatory Commission ruled against an Energy Department proposal that would have ensured additional compensation for nuclear and coal plants in some electricity markets, based on the idea that they’re crucial to grid stability and resilience. That proposal was strongly supported by the coal company Murray Energy.
Another major Trump move aimed partly at helping the coal industry — repealing the Obama administration’s Clean Power Plan — also won’t make that much of a difference for coal, said MIT’s Knittel. That same Clean Power Plan predicted that by 2030, under the policy’s changes to the electricity sector, natural gas would provide 33 percent of U.S. electricity, and coal would provide 27 percent. Yet even though the Clean Power Plan has never gone into effect and is now being repealed by the EPA, coal is already being surpassed by natural gas — and sooner.
“The fact that the Clean Power Plan went away could help on the margin,” Knittel said.
There has been one partial silver lining for coal. U.S. exports were up to 95 million short tons in 2017, from 60 million in 2016. And they’ll stay at higher levels — 80 million and 75 million, respectively — in 2018 and 2019, the EIA forecasts.
Coal-mining jobs have also ticked upward slightly during Trump’s first year in office, according to the Bureau of Labor Statistics, but not enough to reverse a major long-term decline since 2012.
“The only hope for coal, for U.S. coal, is probably exports,” Knittel said. “But the key potential growth markets for our coal are also trying to transition away from coal, and that’s China and Europe.”
This article was published on washingtonpost.com