Saturday, February 25, 2017

Will the US Coal Industry Be Revived?

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Is a revitalized coal industry in the foreseeable future?
NBRbizrpt
Published on Nov 17, 2016
Although coal production has experienced a prolonged slump, President-elect Donald Trump vowed to bring the industry back to its former glory. And that promise has resonated with some voters.
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Despite impending plant closures, coal’s death could be ‘greatly exaggerated’
By Johnny Kampis
February 24, 2017 
This Sept. 4, 2011, file photo shows the main plant facility at the Navajo Generating Station, as seen from Lake Powell in Page, Arizona. Communities in the Navajo and Hopi Nations are bracing for what they say will be devastating economic fallout after the owners decided to close the coal-fired power plant in 2019, leading to the loss of hundreds of jobs, including at a coal mine that supplies fuel for the plant.
As another coal-fired power plant prepares for closure, an energy expert tells Watchdog the owners may be acting too hastily.
Facing financial pressure due to the historically low prices of natural gas, the owners of the Navajo Generating Station in Page, Arizona, recently voted to cease operations at the end of a lease that expires in December 2019. If an agreement can’t be reached on the removal of the plant and reclamation of the land with the Navajo Nation, the plant could close as early as this year.
Those owners including several government agencies and public utilities, such as the U.S. Bureau of Reclamation, Arizona Public Service Corporation, NV Energy and Tucson Electric Power. That means these taxpayer-supported entities are picking energy winners and losers.
Marlo Lewis, a senior fellow at the Competitive Enterprise Institute who studies energy issues, said it’s possible “coal’s death will prove to be greatly exaggerated.”
“The usual suspects crow that coal can’t come back, it can’t compete with gas,” he told Watchdog.org. “I believe it’s too early to tell.”
The Navajo Generating Station is operated by Salt River Project, which announced the impending closure on Feb. 13.
“The utility owners do not make this decision lightly,” Mike Hummel, deputy general manager of SRP, said in a statement. “NGS and its employees are one reason why this region, the state of Arizona and the Phoenix metropolitan area have been able to grow and thrive.”
The closure will be a devastating blow to the Navajo and Hopi people. About 500 people work at the plant, 450 of them members of the Navajo. Another 330 are employed at the Kayenta Mine about 80 miles away, almost all of them Navajo or Hopi people. That mine is the sole fuel source for the plant.
Tribal leaders for both the Hopi and Navajo people wrote to U.S. Sens. John McCain and Jeff Flake and Congressman Tom O’Halleran prior to the announcement, pleading with those Arizona members of Congress to help keep the plant open.
Navajo Nation president Russell Begaye and council speaker LoRenzo Bates called the plant a “vital economic engine” for the tribes, the city and the state. They cited a study from Arizona State University that said the state stands to lose $18 billion in gross state product if the plant doesn’t continue operating until 2044, the original planned closure date for NGS.
Hopi chairman Herman G. Honame wrote that coal revenue produces more than 85 percent of the Hopi Tribe’s general fund, which is used to fund essential government services. He also noted the tribe has an unemployment rate greater than 60 percent.
“These closures would have a dire impact on the Hopi as well as other local and state economies,” he wrote.
The impending closure of NGS is part of an anti-coal trend that reached a fervor pitch during the Obama administration.
Five other coal-plant closures have been announced since November. The list includes:
A.B. Brown in Mount Vernon, Indiana, which will close in 2024
F.B. Culley in Newburgh, Indiana, which will also close in 2024
Stuart Station in Aberdeen, Ohio, set to close in 2018
Killeen Station in Wrightville, Ohio, also slated for closure in 2018
Roanoke Valley in Weldon, North Carolina, with a closure date still to be determined
Lewis told Watchdog that Obama’s policies were designed to put a stranglehold on coal, even if economic conditions changed.
He said that even though President Trump promised to roll back many of Obama’s environmental regulations, it will take time for the impacts to be felt.
LEWIS: Coal could still rebound, especially if the federal government gets its thumb off the industry.
“Trump promised to take the feds’ thumbs off the scales,” Lewis said. “It’s only now starting to happen.”
Last week Trump signed legislation to kill the Office of Surface Mining’s Steam Protection Rule.
That rule, finalized in December, was designed to protect waterways from coal mining waste, but the coal mining industry argued it would be too costly to implement and would hurt employment in an already struggling sector.
Trump called it “another terrible job killing rule” as he signed the document to overturn it.
Begaye pleaded earlier this week for the Trump administration to step in and save NGS.
“This dilemma provides an opportunity for the Trump administration to live up to its promise to the American people that it will stand behind the coal industry,” he said.
Johnny Kampis is National Watchdog Reporter for Watchdog.org. Johnny previously worked in the newspaper industry and as a freelance writer, and has been published in The New York Times, Time.com, FoxNews.com and the Atlanta Journal-Constitution. A former semi-professional poker player, he is writing a book documenting the poker scene at the 2016 World Series of Poker, a decade after the peak of the poker boom. Johnny is also a member of the Investigative Reporters & Editors network. jkampis@watchdog.org
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Trump's big plan for the coal industry just got even harder
Tuesday, 22 Nov 2016
President-elect Donald Trump faces an uphill battle fulfilling his promises to revive the U.S. coal industry. The battlefield became even more pitched when Canada said it would speed up its effort to reduce its coal consumption.
America's neighbor to the north was the fifth-largest market for U.S. coal in 2015. Its pledge on Monday to get off coal sooner than expected will only pile more pressure on a U.S. industry that has seen nearly half of its production fall into bankruptcy due to falling demand, lower prices and a global oversupply of coal.

Canada
2
2016
4
6
Netherlands
India
Brazil
S. Korea
2.51
Canada
1.82

To be sure, Canada's appetite for U.S. coal was already declining. The chart above also shows India's growing consumption offset the decline in exports to Canada.
But among the top five U.S. coal export markets, only India and the Netherlands purchased more supplies last year. And imports through the first six months of 2016 fell in each of those top destinations, except Brazil. Large year-to-date declines in the Netherlands, South Korea and India have dwarfed the Brazil bump.


Canada
5
2016
10
Netherlands
India
Brazil
S. Korea
6.72
Canada
U.S. coal exports fell 24 percent overall in 2015 and have fallen another 32 percent through the first half of 2016.
Trump is vowing to put coal miners back to work by rolling back regulations, offering tax breaks to invest in infrastructure and ending a moratorium on mining on federal land enforced by President Barack Obama. He would also cancel Obama's Clean Energy Plan, which would force power plants to capture more greenhouse gases.
However, those changes would not address the core problem faced by the U.S. coal industry, which is that it can't compete on price with surging U.S. natural gas production.
President-elect Donald Trump faces an uphill battle fulfilling his promises to revive the U.S. coal industry. The battlefield became even more pitched when Canada said it would speed up its effort to reduce its coal consumption.
America's neighbor to the north was the fifth-largest market for U.S. coal in 2015. Its pledge on Monday to get off coal sooner than expected will only pile more pressure on a U.S. industry that has seen nearly half of its production fall into bankruptcy due to falling demand, lower prices and a global oversupply of coal.
To be sure, Canada's appetite for U.S. coal was already declining. The chart above also shows India's growing consumption offset the decline in exports to Canada.
But among the top five U.S. coal export markets, only India and the Netherlands purchased more supplies last year. And imports through the first six months of 2016 fell in each of those top destinations, except Brazil. Large year-to-date declines in the Netherlands, South Korea and India have dwarfed the Brazil bump.
U.S. coal exports fell 24 percent overall in 2015 and have fallen another 32 percent through the first half of 2016.
Trump is vowing to put coal miners back to work by rolling back regulations, offering tax breaks to invest in infrastructure and ending a moratorium on mining on federal land enforced by President Barack Obama. He would also cancel Obama's Clean Energy Plan, which would force power plants to capture more greenhouse gases.
However, those changes would not address the core problem faced by the U.S. coal industry, which is that it can't compete on price with surging U.S. natural gas production.
The route to "market equilibrium" for an ailing U.S. coal industry is further industry consolidation and more mine closures, the International Energy Agency said last week in its annual World Energy Outlook. After the industry shrinks through the early 2020s, the remaining U.S. companies will emerge as solvent and more fit to compete, according to the IEA's forecast.
It is critical for Trump to defy the odds, because he has not articulated a Plan B for coal country. His campaign rival, Hillary Clinton, laid out a plan to invest $30 billion to retrain workers in coal-producing regions so they could work in other fields.
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Coal Plants Are Shutting Down, With or Without Clean Power Plan
Jack Fitzpatrick
May 3, 2016  
The coal industry’s decline has been a long time coming, thanks to an aging fleet of power plants. True, the Supreme Court’s pending decision on the legality of the administration’s carbon-cutting Clean Power Plan could dramatically speed coal’s demise. But it’s happening nonetheless.
In 2015, 94 coal-fired power plants closed, with the combined net summer capacity of 13,556 megawatts, according to data from the Energy Information Administration. To put that in context, the country lost roughly the same total capacity of all of Kentucky’s electric sector coal plants that year.
Another 41 coal plants are scheduled to close in 2016, with a combined net summer capacity of 5,326.5 megawatts. That’s slightly greater than all of Colorado’s electric sector coal plants.
Those figures don’t account for combined heat and power coal plants, which recycle the heat generated from burning coal and use it for another industrial purpose. These plants aren’t exactly booming, but they face less opposition from environmental interests than straightforward electric sector coal power plants because they use the energy more efficiently.
These closures are happening regardless of whether the Clean Power Plan, or any more regulations, move forward.
The country’s coal fleet is shrinking and aging. The median-aged coal plant in the United States was built in 1972, according to the EIA. The vast majority (91 percent) were built in the 1980s or earlier. Those older plants make up 697 of the total 765 utility-level coal plants. The average retirement age of coal plants in 2015 was 58 years old, which indicates that much of the country’s coal fleet is facing its demise in the relatively near future.
When Were America's Coal Plants Built?
2010s
2000s
1990s
1980s
1970s
1960s
1950s
1940s
17.1%
22.7%
23.3%
26.9%
Decade            Coal plants still operating
2010s   21
2000s   17
1990s   30
1980s   131
1970s   206
1960s   178
1950s   174
1940s   8
Six states  — California, Hawaii, Idaho, Maine, Rhode Island and Vermont — no longer have coal-burning power plants other than combined heat and power facilities. (Idaho, for example, has four small generators, all owned by the Amalgamated Sugar Company, which uses the heat to refine its sugar.) Massachusetts, Oregon and Washington have plans to close their remaining coal plants by 2025. Connecticut, Delaware and South Dakota each have only one remaining coal plant.
Most of the states that are totally free of coal or are heading in that direction tend to be liberal. But the red states aren’t far behind. Alabama is slated to close eight coal-fired generators by 2019; those closures comprise 11 percent of the state’s coal-fired capacity. Four generators in Kentucky are scheduled to close by 2017; they comprise 10 percent of the state’s coal-fired capacity. In Tennessee, the youngest coal-fired power plant was built in 1973, which means its lifespan is waning.
Demand for coal is dropping, too. Ohio, Pennsylvania and Indiana each saw electric sector demand for coal drop the most between 2007 and 2015, falling by 49 percent, 44 percent and 37 percent, respectively, according to the EIA.
Active Coal-Power Capacity By State (not including combined heat and power)
Few new coal plants are in the works to replace those that are being shut down. The EIA only lists three proposed electric-sector coal plants scheduled to open by 2021. The Sierra Club is tracking a total of 17 proposed coal plants with various potential start dates, but those include coal-to-liquid fuel plants, which don’t serve as a direct replacement for closed electricity-generating power plants.
Even if all the proposed electric-sector coal plants eventually open, far more plants are scheduled to close.
Environmentalists are loath to tamp down their warnings about the state of the climate, but they admit they are coasting when it comes to opposing coal plants. With an aging fleet, it takes less effort now than it did 15 years ago to lobby against investments in new coal plants or new technology on old plants, said Bruce Nilles, senior director of the Sierra Club’s Beyond Coal campaign.
Nilles’ campaign has opposed new coal plants since the early 2000s.
The earliest objections to coal plants weren’t about carbon emissions and climate change. Opponents instead focused on toxins that could have an immediate and direct impact on people’s health, Nilles told Morning Consult. “The tangible concern was, ‘This is going to mean asthma attacks for my kids.’ That was a visceral and real thing at public hearings.”
Since then, the public’s focus has shifted more toward climate change. Even now, though, much of the economic pushback against coal plants has come from regulations focused on other issues than carbon emissions. The Obama administration’s regulations on the disposal of coal ash and its Mercury and Air Toxics Standards rule were ‘groundbreaking’ in the fight to curb emissions. Those rules are responsible for more of a decline in coal plants than the Clean Power Plan will induce if it is upheld, Nilles said.
For coal proponents, the Clean Power Plan is not their biggest headache. They point to a wide range of existing regulations that hamper their businesses. The American Coalition for Clean Coal Electricity attributes 410 scheduled coal plant closures, totaling 66,967 megawatts, to various Environmental Protection Agency policies other than CPP.
That doesn’t mean the Clean Power Plan isn’t important, but the trajectory of coal production shows that the life and death of coal in the U.S. doesn’t depend on it. The CPP is important for environmentalists because it addresses carbon emissions. That sets a precedent for regulating greenhouse gases in addition to other pollutants, such as mercury, that have a more direct impact on human health.
“It’s a suite of rules, and the Clean Power Plan is obviously the latest, and in many regards, a marquee rule, because it said to utilities that you can’t ignore carbon,” Nilles said. “So its value is enormous in that it has already changed the debate.”
For environmentalists, a shift in conversation about the broader goals of reducing carbon emissions is never a bad thing. But it’s hardly the whole story of coal’s decline.
jfitzpatrick@morningconsult.com // @jackfitzdc
Jack covers energy policy and politics for Morning Consult.
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