Trump's War on Coal

President Trump came into office promising to revitalize the US coal industry, to reverse what he claimed were declines driven by the environmental policies of the Obama administration. During his 2016 campaign, Trump held a series of rallies in which he criticized Obama’s “war on coal” and paraded coal miners in hard hats across the stage, promising that if he were elected, he would save jobs and local economies. These promises helped him in struggling states that have suffered from the closures of coal mines and power plants.

But far from saving coal, the Trump Administration has instead overseen the accelerating decline of the industry it promised to protect. His failure underlines the fact that coal simply cannot compete with alternatives in the market today, even in the absence of burdensome environmental regulations. Rapid declines in the cost of natural gas, wind, and solar were driven by decades of government and private sector R&D investment and have made cleaner alternatives the most cost-effective option in much of the country.

By implication, then, the regulatory policy of the Obama administration also can’t be solely credited, or blamed, for coal’s decline.

Over the first three years of the Trump administration, coal retirements have continued at an even faster rate than during the Obama years, despite efforts to roll back environmental rules. The average annual coal capacity retirements during the first and second Obama terms were 4.2 GW (2009-2012) and 9.2 GW (2013-2016), respectively. Trump’s first term oversaw the retirement of 11.7 GW (2017-2019), more than either of Obama’s terms. In 2019, the US is on track to retire 14 gigawatts (GW) of coal capacity, the third-largest retirement on record after 2015 and 2018.

These capacity retirements have accompanied a precipitous drop in electricity generation from coal, which also accelerated under Obama and continues with Trump. The average annual decline in coal generation during the first and second Obama terms were 118 TWh and 69 TWh respectively, and 84 TWh during Trump’s first term. In 2019, electricity generation from coal use is expected to fall by around 14%, to levels last seen in 1978.

While the first Obama term saw larger declines in coal use, these were driven by the economic downturn during the Great Recession. Declines were smaller but still substantial during Obama’s second term, and have increased during the first three years of Trump’s term in office.

As a result of this decline, multiple coal producers are declaring bankruptcy, with one of the nation’s largest coal producers, Murray Energy, declaring bankruptcy just last month. The company’s CEO, Robert Murray, was an outspoken supporter of the Trump Administration and one of the leading voices in advocating for the rollback of Obama-era clean air policies. At least seven other coal companies filed for bankruptcy this year.

But coal’s continued decline hasn’t stopped President Trump from declaring victory, who pronounced at a 2018 rally that “the coal industry is back.” Nor has the Trump administration been willing to acknowledge that coal’s demise is being driven by energy economics rather than environmental regulations. The electric power sector accounted for 93 percent of total US coal consumption between 2007 and 2018, making coal extremely vulnerable to changing market forces in the power sector, where it has more competition. The price of natural gas has fallen dramatically since the advent of fracking, and the cost of solar and wind have each fallen over 70 percent in the last decade. The reality is that coal is just too expensive to compete with cheaper alternatives.

Instead, Trump’s focus remains on rolling back Obama-era regulations that aren’t the major culprit for coal’s woes. The Administration has attempted to roll back 85 Obama-era environmental regulations, including the Clean Power Plan, which aimed to reduce carbon dioxide emissions from electrical power generation by 32 percent by 2030, relative to 2005 levels.

The Trump Administration has also attempted to slow the retirement of coal plants by claiming they are needed to ensure grid reliability. To press this point, the Administration asked the Federal Energy Regulatory Commission (FERC) to issue a rulemaking that would keep plants open. Instead, FERC stated that interfering in the market to keep coal plants open would not be necessary to ensure grid reliability. The loss of coal has not had any noticeable negative impacts on grid reliability, as natural gas, wind, and solar have proven to be capable of meeting consumer demand at a lower cost.

Further highlighting the fact that markets and not environmental rules are driving the decline of coal, most of the coal mines and plants retiring are in red states like Alabama, Kentucky, Texas, Tennessee, and West Virginia, which have relatively lax emissions rules. Following in the footsteps of the Administration's failed FERC rulemaking attempt, certain energy commissioners in these same states are once again asking FERC to intervene in energy markets to give coal an advantage and enable coal plants to remain profitable.

Coal production has been declining since its peak in 2007, and barring massive market interventions such as direct subsidies, it’s not going to make a comeback. Decades of investment in new and innovative technologies have driven down the cost of natural gas, wind, and solar, and cemented the ongoing transformation of US energy markets. Coal is simply too expensive to compete.

Climate policy must be robust to the ever-swinging pendulum of the US political system. The story of American coal points to the need for policies that support the research, development, and deployment of clean energy technologies to reduce emissions. Coal’s downward march was not primarily driven by Obama’s environmental regulations, and thus has been largely impervious to Trump’s efforts to repeal them.