Coal’s big US stronghold is losing steam, even as Trump aims for a revival

Consol Energy CFO on coal vs. natural gas  

The U.S. Mountain States are moving away from coal, even as President-elect Donald Trump vows to revive the embattled industry.

Western states — a stronghold for coal consumption — are increasingly using natural gas and renewable energy for their electricity. The switch puts pressure on miners in Wyoming, the country’s biggest coal-producing state, and tilts the playing field against Trump’s plans.

The president-elect’s promise to put miners back to work was already a tall order — the International Energy Agency says the embattled U.S. industry must close more mines in the coming years before it can return to health. Trump also wants to increase natural gas production, but energy analysts say that would eat into coal’s market share even more than it already has.

While Wyoming miners have faced layoffs recently, the state has been something of a bulwark. Its vast deposits of easily accessible, low-sulfur coal have kept the mountain region running on the fossil fuel. Nearly half of the region’s power generation in 2015 was coal-fired, while the national average was 33 percent, according to analysis by the Energy Information Administration.

But even that swath of the United States is not immune to the market forces that have chipped away at coal. A decade ago, coal provided 63 percent of its power.

On the one hand, Wyoming has closed fewer coal-fired plants than other states, including West Virginia and Kentucky, because its facilities are relatively new and more efficient. New air-quality regulations have quickened the retirement of old and inefficient plants in parts of the United States.

But new power-generation in the mountain region is being provided by natural gas, solar and wind as some states commit to renewable energy and the regulatory outlook for coal remains unclear, said Robert Godby, director of the Center for Energy Economics and Public Policy at the University of Wyoming.

“Between the Colorado Renewables Portfolio Standard and growth being accommodated by renewables and natural gas, there’s just no reason to build any coal [capacity]. But there’s also no reason to retire it,” he said.

How Wyoming won the coal market

Americans tend to think of West Virginia and Kentucky as coal country, but Wyoming alone produced 40 percent of the country’s coal production in 2014. That year, the entire Appalachian region mined 27 percent of U.S. coal.

Coal mining in Wyoming increased during the 1970s oil crisis, when leaders became preoccupied with U.S. energy independence. Deregulation in 1980 led to lower rail rates, making it cheaper to ship Wyoming’s coal around the country.

Most of the state’s production comes from the northeastern Powder River Basin, where cleaner-burning, low-sulfur coal lies close to the surface, making it much cheaper and easier to extract than coal taken from deep mines elsewhere.

“People have described the deposits as freakish,” Godby said.

Read More: http://www.cnbc.com/2016/12/20/coals-us-stronghold-is-losing-steam-even-as-trump-aims-for-a-revival.html

Source: http://cnbc.com/