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 "wa
r on
coal", usher in a new era of energy production and put miners back to
work.
But the
biggest consumers of U.S. 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 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 Trump's efforts.
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 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 U.S. 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
percent of its electricity production. "And if I’m not going to build new
ones, eventually there won’t be any."
REUTERS
RECOMMENDS
Window closing
for Republican stealth assault on regulations
After
Australian cyclone, coking coal spikes as China chases U.S. supplies
Of the 32
utilities contacted by Reuters, 20 said 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 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."
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 percent from 2005 levels. It was
designed as a primary strategy in U.S. efforts to fight global climate change.
The U.S. coal
industry, without increases in domestic demand, would need to rely on export
markets for growth. Shipments of U.S. 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 U.S. 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: U.S. 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 to U.S. Energy Information Administration
and Thomson Reuters data.
Luke Popovich,
a spokesman for the National Mining Association, acknowledged Trump's efforts
would not return the coal industry to its "glory days," but offered
some hope.
"There
may not be immediate plans for utilities to bring on more coal, but the future
is always uncertain in this market," he said.
Many of the companies
in the Reuters survey said they had been focused on reducing carbon emissions
for a decade or more and were hesitant to change direction based on shifting
political winds in Washington D.C.
"Utility
planning typically takes place over much longer periods than presidential terms
of office," Berkshire Hathaway Inc-owned Pacificorp spokesman Tom Gauntt
said.
Several
utilities also cited falling costs for wind and solar power, which are now
often as cheap as coal or natural gas, thanks in part to government subsidies
for renewable energy.
In the
meantime, activist investors have increased pressure on U.S. utilities to shun
coal.
In the last
year, Norway's sovereign wealth fund, the world's largest, has excluded more
than a dozen U.S. power companies - including Xcel, American Electric Power Co
Inc and NRG Energy Inc - from its investments because of their reliance on
coal-fired power.
Another eight
companies, including Southern Co and NorthWestern Corp, are "under
observation" by the fund.
Wyoming-based
coal miner Cloud Peak Energy said it doesn't blame utilities for being lukewarm
to Trump's order.
"For
eight years, if you were a utility running coal, you got the hell kicked out of
you," said Richard Reavey, a spokesman for the company. "Are you going
to turn around tomorrow and say, 'Let's buy lots of coal plants'? Pretty
unlikely."
REAUTERS
0 Comments