By April 5, 2017 Read More →

Trump ending ‘war on coal’ has little effect on utilities

War on coal

According to a number of utility companies, the war on coal had little to do with government regulations and more to do with other factors, including falling costs of alternative fuels. by Vera Tomankova.

“War on coal” fuelled by market, not regulations

Last week, President Donald Trump signed an executive order to erase former President Obama’s climate change regulations, saying the move would end the “war on coal” and begin a new era of energy production and get miners back to work.

But power generators, the biggest consumers of US coal were not sold by the message.

In a report by Reuters, the news agency said it surveyed 32 utilities in the 26 states that sued the Obama administration to block its Clean Power Plan, which was the main target in Trump’s executive order.

Most of the responders said they will not change their multi-billion plans to shift away from coal.

Many of the utility companies who participated in the Reuters survey said they have been focussing on cutting carbon emissions for over 10 years and were hesitant to change that, despite a shift in policy in Washington.

“Utility planning typically takes place over much longer periods than presidential terms of office,” Berkshire Hathaway Inc-owned Pacificorp spokesman Tom Gauntt said.

Several of the utilities also noted that costs for wind and solar power have dropped and are now often as low as coal or natural gas.  They credit government subsidies for the price drop.

According to the survey, most utilities say the reason for the shift from coal to natural gas and renewables is mainly economic.  Natural gas, which is coal’s main competitor, is cheap and plentiful while solar and wind power costs are falling.  Also, Trump’s executive order has no effect of state environmental rules and regulations and the president’s regulatory rollback may not survive legal challenges.

Another factor tamping down enthusiasm for Trump’s announcement is that big investors who are actively fighting against climate change are pressuring US utilities in which they have stakes to cut coal use in favor or cleaner fuels.

Ben Fowke, CEO of Xcel Energy told Reuters “I’m not going to build new coal plants in today’s environment.”

Xcel operates in eight states and uses coal for about 36 per cent of its electricity production.  Fowke says “And if I’m not going to build new ones, eventually there won’t be any.”

In the past year, Norway’s sovereign wealth fund, the world’s largest, has excluded over a dozen US power companies, including Xcel, American Electric Power Co Inc and NRG Energy Inc from its investments because of their reliance on coal fired power.

The fund has put another eight companies, including Southern Co and NorthWestern Corp “under observation”.


Reuters reports that of the 32 companies they contacted, 20 said Trump’s executive order will have no impact on their investment plans.  Five said they were reviewing the order and six gave no response.  Only one said it would take steps to prolong the life of some of its older coal fired power plants.

The only utility that said it could see a positive impact from the order was Basin Electric Power Corporation of North Dakota.


“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,” Dale Niezwaag, a spokesman for Basin Electric told Reuters. He added the caveat that “Trump can be a one-termer, so the reprieve out there is short.”

Another producer, Cloud Peak Energy of Wyoming, said it can see why utilities may not be too excited over Trump’s executive order.

“For eight years, if you were a utility running coal, you got the hell kicked out of you,” Richard Reavey, a spokesman for the company told Reuters. “Are you going to turn around tomorrow and say, ‘Let’s buy lots of coal plants’? Pretty unlikely.”

The order triggered a review aimed at getting rid of the Clean Power Plan which would have required that by 2030, states to collectively cut carbon emissions from existing power plants by 30 per cent from 2005 levels.

President Obama’s Clean Power Plan was the keystone of the United States’ fight against climate change.

If the Clean Power Plan had stayed in place, the US coal industry would have had to rely on export markets for growth.  Recently China has imported metallurgical coal, used in steel production, to offset banned North Korean shipments and delays suffered by cyclone-hit Australian producers.

In the United States, since 2008, advancements in shale drilling technology have resulted in lower natural gas prices and increased supply of the cleaner burning fuel. Since then, hundreds of aging coal fired power plants have been retired or retrofitted.

Coal companies like Peabody Energy and Arch Coal have fallen into bankruptcy and, last year, production hit its lowest point since 1978.

The Trump executive order seems to have little impact on the shift from coal to natural gas.  The US Energy Information Agency along with Thomson Reuters data shows US power companies expect to retire or convert over 8,000 megawatts of coal fired plants in 2017 after shutting almost 13,000 MW in 2016.

Despite the market turn, Luke Popovich, spokesman for the National Mining Association, said Trump’s efforts would not return the coal industry to its “glory days”, but he was somewhat optimistic.


“There may not be immediate plans for utilities to bring on more coal, but the future is always uncertain in this market,” Popovich told Reuters.



Posted in: News

Comments are closed.