Trump on Energy: Does Coal Have a Brighter Future in the Coming Administration?

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Coal Country and coal investors are delighted with Donald Trump's election as president. Hopeful statements were issued by coal companies and coal organizations following November 8, and coal stock prices have shot up over the last week.

The stock of Peabody Energy Corporation (OTC:BTUUQ) (St. Louis, Missouri), jumped the day after the election, adding $5 a share November 9 and adding several more dollars a share in the days after election day. After filing for Chapter 11 reorganization in April, Peabody's stock sold for less than $2.50 a share. The stock of Cloud Peak Energy Incorporated (NYSE:CLD) (Gillette, Wyoming) also surged November 9, rising 13%.

The National Mining Association (NMA) (Washington, D.C.) welcomed the election of Trump and the new congress with this statement: "The U.S. mining industry looks forward to working with the Trump administration and the 115th Congress on a wide range of issues of mutual interest. Meeting the needs of the American people cannot be accomplished without a robust mining industry. And a robust mining industry is only possible with reasonable laws and regulations that balance costs with benefits in pursuit of realistic goals."

In a poll commissioned by the NMA in the days before the election, it found 63% of voters and 75% of military families support "streamlining the mine-permitting process to improve timely access to domestic resources for the more than 750,000 tons of minerals the U.S. Department of Defense uses each year for military gear, weapon systems and other defense technologies."

"Despite the need for these resources," the NMA said, "the process to obtain a mining permit in the U.S. can currently take seven to 10 years, compared to two to three years in other countries, such as Canada and Australia. The U.S. remains entirely import-dependent for 19 key minerals resources and more than 50% import-dependent for an additional 24 minerals, subjecting our supply chains to geopolitical instability and supply disruption."

The NMA has been a frequent critic of the Obama administration's policies on mining, energy and the environment. Another critic of those policies, the U.S. Chamber of Commerce (Washington, D.C.), welcomed the election of the New York real estate developer with this comment: "Americans have just lived through a bitter, personality-driven campaign that exposed some deep divisions in our country. Now, it's time to turn the page and refocus the country's attention on the many substantive domestic and international challenges facing us. The Chamber and its members stand ready [to] help the new administration and the next congress unite our country around a mission we believe all Americans can support--to grow our economy, create jobs, and lift incomes for all citizens."

Peabody Energy made this comment about Trump's election: "With a new administration comes a new day to find common ground in achieving shared policy goals for low-cost energy, a strong economy and a clean environment. We believe that coal is an essential part of a balanced energy portfolio and helps maintain lower electricity costs for family budgets. Peabody encourages the new Trump administration to embrace an 'all of the above' energy strategy. This includes accelerating the use of clean coal technologies, including high-efficiency, low emissions (HELE) coal generation, and supporting development of next generation carbon capture use and storage technologies."

During the presidential campaign, Trump vowed to revive the coal industry, partly by yanking the Obama administration's Clean Power Plan, currently in litigation before the Federal Appeals Court for the D.C. Circuit. Trump also said he would walk away from the U.N. Paris Accord, reached last December to limit emission of heat-trapping gases, a document the U.S. signed. Under U.N. rules, once a nation has signed an international declaration, it can't withdraw from that commitment for four years.

An early clue to the incoming administration's view on global climate change was provided when Trump named Myron Ebell, a leading critic of climate science, to lead the transition team for the U.S. Environmental Protection Agency (EPA) (Washington, D.C.). Trump and Ebell have repeatedly said global climate change was a "hoax." Ebell is the director of the Center for Energy and Environment at the Competitive Enterprise Institute (CEI) (Washington, D.C.), a conservative think tank.

But beyond fervent and frequent promises to bring coal jobs back, Trump has been short on specifics. According to the Trump-Pence website, a Trump administration would do the following on energy:

• "Make America energy independent, create millions of new jobs, and protect clean air and clean water. We will conserve our natural habitats, reserves and resources. We will unleash an energy revolution that will bring vast new wealth to our country."
• "Unleash America's $50 trillion in untapped shale, oil, and natural gas reserves, plus hundreds of years in clean coal reserves."
• "Encourage the use of natural gas and other American energy resources that will both reduce emissions, but also reduce the price of energy and increase our economic output."
• "Rescind all job-destroying Obama executive actions. Mr. Trump will reduce and eliminate all barriers to responsible energy production, creating at least a half million jobs a year, $30 billion in higher wages, and cheaper energy."

A study from Duke University's Nicholas School of the Environment, released in early 2015, estimated nearly 50,000 direct and indirect jobs in and around the U.S. coal industry were lost between 2008 and 2012.

A different study, conducted by the NMA using data from the U.S. Bureau of Labor Statistics, said direct employment in coal companies fell from about 214,400 in 2011 to about 147,400 at yearend 2015, a decline of about 31%. Luke Popovich, vice president for external communications at the National Mining Association (NMA) (Washington, D.C.), told Industrial Info, "We use 2011 as a baseline year, because that's the year the Mercury and Air Toxics Standards (MATS) rule was first finalized." That study did not measure indirect or induced jobs relating to coal mining. For more on this, see August 12, 2016, article - Coal Crisis Threatens to Consume Murray Energy.

Low natural gas prices still loom
In speeches at energy conferences, Trump also said he "loves market forces," which is one of the reasons the coal industry has been suffering. The dramatic surge of natural gas production has created an abundant, low-cost alternative to coal for the Power Industry. His support for streamlined regulation gave badly needed hope to Coal Country, but how that will square with his fondness for free markets is unclear at this time.

Low-priced natural gas, coupled with tightened environmental regulations like the Clean Power Plan, MATS and the Cross-State Air Pollution Rule (CSAPR), have pummeled coal's fortunes, forcing the closure of numerous mines, the sale of assets and the filing of Chapter 11 bankruptcy reorganizations. Stock prices have collapsed. Coal's share of the electricity market has declined steadily in recent years, losing ground to natural gas.

Numerous details have yet to emerge on the Trump administration's plan to support the coal industry. As it is with every presidential election, Washington, D.C., is engaged in a non-stop parlor game of guessing who will lead which agencies. Exactly how closely a Trump administration will follow the pledges of Trump the candidate is unclear. He already has backed off campaign pledges to repeal the Affordable Care Act and investigate Hillary Clinton's use of a private email server to conduct government business while she was secretary of state. Several Trump surrogates, including Former House Speaker Newt Gingrich, have been quoted in the media as saying some of Trump's campaign pledges should be considered "great campaign devices" for getting elected.

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