Donald Trump markets himself as a business-savvy billionaire who will get American jobs back from countries like China. In the case of the coal industry, however, he appears to be just a very clueless politician making pro-pollution promises he can’t keep.
“I’m a free-market guy, but not when you’re getting killed,” he said recently at a rally in Carmel, Indiana. “Look at steel, it’s being wiped out. Your coal industry is wiped out, and China is taking our coal.”
Huh? “China is taking our coal”? If China were taking much of our coal (in the form of U.S. exports) that would be great for coal jobs.
If Trump meant Chinese coal exports are taking away our coal market (i.e. potential U.S. sales overseas), then he is truly clueless about the coal business. China flipped from net coal exporter to net importer back in 2009 (!) and quickly became the world’s biggest importer.
We have exported a modest amount of coal to China in recent years — but again these statistics provide zero support for the claim that China is somehow harming our coal industry, let alone wiping it out.
Trump likes to demagogue on easy enemies and easy fixes, but coal has no “enemy” except maybe the world’s growing desire for having cleaner air and preserving a livable climate. Trump certainly seems to imply that clean air and a livable climate have become his enemy too.
Trump recently said in coal country:
“Let me tell you: the miners in West Virginia and Pennsylvania, which was so great to me last week and Ohio and all over, they’re going to start to work again, believe me. You’re going to be proud again to be miners.”
Of all of the impossible promises that Donald Trump has made in the past year, this one is certainly near the top of the list.
Why Coal Jobs Aren’t Coming Back Even If Trump Becomes President
There is zero chance Donald Trump or anyone else can reverse the multi-decade decline in coal jobs for two reasons. First, it has been the coal industry itself that has wiped out most of those jobs.
As Nobel prize-winning economist Paul Krugman explained in 2014, “The real war on coal, or at least on coal workers, took place a generation ago, waged not by liberal environmentalists but by the coal industry itself. And coal workers lost.”
He posted this chart on his blog of total mining jobs from Historical Statistics of the United States (HSUS) and the FRED database:
As he explains, “strip mines and machinery in general have allowed us to produce more coal with very few miners.” Strangely, we never hear about Reagan’s war on coal (as I’ve said). Or George H. W. Bush’s war on coal.
Second, the market for coal has started to collapse — both domestically because of competition from cheaper and cleaner energy sources — and internationally, as the global export market disintegrates because most countries in the world are moving away from that dirtiest of fossil fuels just as fast as we are.
“Peak coal is coming sooner than expected.” That’s what Goldman Sachs told clients in a September research note. Indeed, Goldman projected global demand for coal used in power generation will drop from a peak of 6.15 billion metric tons in 2013 to 5.98 billion in 2019 (the end of its forecast range).
“The industry does not require new investment given the ability of existing assets to satisfy flat demand,” explained Goldman Sachs commodity analysts Christian Lelong and Amber Cai. “So prices will remain under pressure as the deflationary cycle continues.” In short, there’s no foreseeable recovery for coal futures, which have already plunged 77 percent since 2008 and 63 percent since 2011. No wonder so many coal companies have “pulled a Trump” and declared bankruptcy.
Indeed, while global coal consumption appears to have already begun a slow decline, global coal exports have begun a precipitous decline — since many big global coal consumers have their own domestic production.
“Chinese coal consumption enters downward spiral,” was the key conclusion of a December analysis of Beijing’s energy and climate policies from the Center for American Progress. Unsurprisingly, China’s coal imports dropped 30 percent last year.
And it’s not just China. India was supposed to save the global export market. Yet, as an Institute for Energy Economics and Financial Analysis (IEEFA) article explained in a January headline: “34% Drop in Indian Coal Imports Snuffing Out Thermal Coal Export Market.”
Here is where U.S. coal production is now, as Inside Energy reported Tuesday:
The future is more of the same. Domestically, coal power is going to continue its decline thanks to low-cost natural gas, aggressive state-based electric efficiency programs, and Congress’s recent multi-year extension of the major tax credits for solar and wind.
Internationally, a director with the China Coal Transport and Distribution Association said in January, “China doesn’t need overseas coal supplies anymore as it already faces a big domestic oversupply.” India’s Minister of Energy said last year, the country is confident that quite soon “we will be able to stop imports of thermal coal.” A 2014 auction revealed “solar PV is cheaper for Indian users than the electricity price needed to pay for imports of coal from Australia” for new thermal coal-fired power plants.
The IEEFA “forecasts a 30% decline in global traded thermal coal demand by 2021 relative to 2015 levels,” with China and India all but ending imports entirely. Here is their overall projection:
So demand for coal exports is going to keep falling in the near term. Beyond then, there is truly no future for coal, now that 200 leading nations unanimously adopted the plan negotiated in Paris of increasingly deeper emissions reductions aimed at keeping total warming “to well below 2°C [3.6°F] above preindustrial levels.” A 2015 article in the journal Nature, “The geographical distribution of fossil fuels unused when limiting global warming to 2°C,” concluded that, “over 80 percent of current coal reserves should remain unused from 2010 to 2050 in order to meet the target of 2°C.”
It seems increasingly likely that we will be leaving the majority of coal reserves in the ground simply to avoid catastrophic global warming. If you believe Trump has a secret plan to reverse domestic and global coal trends in the near-term, I have some great hotel properties I’d love to sell you….