Trump declares end to
'war on coal,' but utilities aren't listening
Send a link to a friend
[April 05, 2017]
By Valerie Volcovici, Nichola Groom and Scott DiSavino
WASHINGTON/LOS
ANGELES/NEW YORK (Reuters) - 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 "war 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.
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/openarms_lda_EASTER_2017.png)
"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."
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.
[to top of second column] |
![](../images/040517pics/busine71.jpg)
A mechanics works on mining equipment at the Black Butte coal mine
outside Rock Springs, Wyoming, U.S. April 4, 2017. REUTERS/Jim
Urquhart
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/graue_preowned_033017.png)
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.
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/ccaonline_lda050208.png)
"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."
(Editing by Richard Valdmanis and Brian Thevenot)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |