Why you should care
A key campaign promise may soon be on the ropes.
For one of President Donald Trump’s best-known campaign promises — to revive the American coal industry — to succeed, the U.S. is counting on major energy-guzzling economies to purchase the fossil fuel. There’s increasing evidence now suggesting that bet may not be the soundest.
After withdrawing from the Paris climate agreement and gutting the Clean Power Plan, the U.S. government is pushing coal internationally. It promoted the fuel at the Bonn climate talks in November, and signs are that its future efforts will focus on Asia, where energy demand is expected to grow rapidly in the coming years.
But the high costs of building coal-fired power plants alongside the constant fall in prices of renewables make coal a risky bet. This, along with shifts in policies in Asia’s largest energy markets, could mean that the Trump revival is precariously placed even before it has truly started.
So far, the U.S. coal revival under the Trump administration has been decidedly un-great. According to the Sierra Club, coal plants are retiring in 2017 at the same pace as during the Obama administration. Coal prices remain on a downward trajectory, and jobs are not returning to economically depressed coal-mining regions such as Wyoming or Appalachia.
Who in their right mind is going to pay four times the price of a coal power plant when renewables are cheaper … ?
Tim Buckley, energy economist
It has been a longtime dream that Asia’s fast-growing economies and energy demand would make up for this drop and then some, necessitating the building of coal plants abroad using U.S. coal and coal-burning technology. Perhaps even clean coal technology, as a recently announced deal between the ASEAN Center for Energy (ACE) and the World Coal Association (WCA) aims to bring clean coal power plants to Southeast Asia.
But the two countries expected to make up the bulk of Asia’s coal demand, India and China, are already making a massive shift toward clean energy years ahead of schedule. And economics is a major factor: Coal plants are already expensive, and clean coal — which requires presently unproven and expensive carbon capture and storage (CCS) technology — even more so, whereas the price of solar is on par with coal in some parts of the world already, and dropping fast. The cost of wind and solar has dropped by 50 percent in the past two years. And it’s in these energy sources that China and India are investing, more than in CCS.
“Who in their right mind is going to pay four times the price of a coal power plant when renewables are cheaper than coal plants without carbon capture and storage?” asks Tim Buckley, an economist with the Australia-based Institute for Energy Economics and Financial Analysis.
China, which back in the 2000s was famously opening a new coal plant every two weeks, has recently announced plans to freeze or shut down existing or planned coal plants and is adding wind power at a record pace. India’s energy shift is taking place years faster than expected, with solar energy booming there. “[India’s shift] is driven not by the Paris climate agreement, not driven by pollution, but driven by straight economics,” adds Buckley.
There is a glimmer of hope for advocates of Trump’s plan. The availability of cheap credit, particularly from government-supported banks in Japan and Australia, means that coal has a future in several Asian nations. Indonesia has more than 100 coal plants in various planning stages, the Philippines has 52 and Japan 39. If these are built, this would lock in decades of demand for coal — and greenhouse gas emissions.
But the global outlook for the coal industry remains gloomy. The International Energy Agency has repeatedly cut back its projections for future coal demand, last year dropping it by more than 50 percent. Analysts now believe China peaked coal use in 2013, and India is likely to peak far ahead of its projected schedule too. For the U.S. coal industry, which currently has almost no role in the Asian coal market, this means that even if plans go through for all the plants proposed in Southeast Asia and Japan, it won’t be enough.
“The idea that Southeast Asian markets will make up for the worldwide decline in coal is nothing more than the false hope of a dying industry,” says Nicole Ghio with Sierra Club’s Beyond Coal campaign.
A part of the problem lies simply in differing priorities. To Cecil E. Roberts of the United Mine Workers of America, a pro-coal union, developing scalable CCS is not a choice, but a necessity.
“The only true hope for reducing global emissions now and into the future is CCS and other similar technology,” says Roberts. “That is where all our energy and attention should be focused.”
But in Asia, it is often just varying levels of pollution control and not CCS that is being proposed. Rhere’s no clear benchmark of what is and isn’t clean, says Lauri Myllyvirta, a China-based coal expert with Greenpeace. “Most Asian countries outside of China and India have extremely weak emissions standards.”
Moreover, CCS hasn’t yet been proven feasible, despite the fact that the idea has been around for more than a decade and has received billions in funding. The latest setback happened last year, when Mississippi’s Kemper County energy facility, meant to be the first large-scale clean coal plant in the United States, announced it was switching to gas. “There’s no commercial deployment of clean coal anywhere in the world — it’s an absolute myth,” says Buckley.
The final nail in the coffin for Trump’s plans for overseas saviors of the American coal industry could come soon, says Buckley. The economics-driven trends that he’s observing in India will soon also impact Southeast Asia, where there are already signs that many of the proposed plants, such as those in Indonesia, won’t get built. “That will evaporate pretty quickly,” he says.