Nothing Trump Does Can Save Coal
(Bloomberg View) -- On the campaign trail and in the White House, Donald Trump has warmly embraced coal. He has rolled back regulations on its use and eliminated some federal subsidies for alternative energies like solar and wind, along with electric cars. A few coal miners even landed jobs in the industry as the producers anticipate rising use. "Coal is BACK, baby!," Breitbart News declared.
Only not really.
Sorry, but coal is not back. If anything, it's on life support. Contrary to the arguments some have made, it wasn't killed by regulations and liberals, but by capitalism and technology. Eliminating subsidies for clean alternatives will only force them to become relentlessly more efficient, further damping demand for coal.
“King Coal,” as Upton Sinclair called it in his 1917 novel about the dreadful working conditions in mines, was dominant for so long for many reasons: It is cheap. It is abundant. It is stable, and unlikely to explode or catch fire. Yet, it can easily be converted into heat, light and electricity. For the better part of three centuries, coal was the primary energy source for industry and transportation.
The rise of oil and natural gas brought closer scrutiny of the external costs of coal. It did not withstand this review well. It is incredibly dirty; coal contributes to a variety of pollutions, including particulate matter (soot) and ozone (smog). It also is not especially efficient; you cannot, for instance, readily power a jet airliner with coal.
As coal use declines, greenhouse gas emissions like carbon dioxide are falling by record amounts, according to the U.S. Energy Department.
We can debate the reasons why the president is so enthusiastic about coal, but at this point, the specifics are all but irrelevant. The arc of coal's useful life is coming to a close. The enormous investments made in coal-fired power plants in the last century are now fading, so the argument about sunk costs as a justification for continued use is losing force. When presented with a choice to upgrade to a cleaner, low-sulfur coal or retrofit to natural gas, almost all utilities choose gas.
So there are at least two reasons Trump's support for coal and antipathy for clean alternatives is misplaced: a) clean, green energy sources have already achieved critical mass, and b) alternatives have become globally accepted.
Consider electric-car maker Tesla Inc. for a moment. Regardless of whether there is a federal rebate is almost beside the point. Every automaker fears the Silicon Valley upstart will bypass them. As a result, most have embarked on a huge effort to build more hybrid and/or electric vehicles. General Motors Co. plans on having 20 all-electric vehicles on the market by 2023. Volkswagen AG expects to spend $81 billion to develop electric versions of all VW models by 2030. Toyota Motor Corp. has already sold 10 million hybrid cars, and has sold almost 4 million Prius hybrid vehicles. Volvo, owned by Geely Automobile Holdings of China, will begin phasing out gas-only cars in 2019. BMW’s entry-level i3 and its high-end i8 show the company is targeting the full range of price points.
The companies have all committed vast amounts of brain power and capital to EVs. Whether the federal tax credit stays almost doesn't matter. And this is just cars.
In zero-emission electrical generation, a similar story is playing out: Costs are falling while efficiency is rising. The Energy Department reported that in the first quarter, wind and solar for the first time accounted for 10 percent of all U.S. electricity generation. But China has leapt ahead of the U.S. in renewable-energy production; it employs 10 times as many people in the sector as the U.S. A research report suggests China will invest as much as $780 billion in alternative energy by 2030.
For both transportation and energy production, the toothpaste already is out of the tube. Coal cannot be saved by Trump or anyone else -- nor should we want to save it. It's time has come and will soon be gone. The only relevant question now is whether the U.S. will cede the leadership mantle on green energy to China. That seems to be the direction the president’s plan is taking the country.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Barry Ritholtz is a Bloomberg View columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He blogs at the Big Picture and is the author of “Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy.”
Coal plants are significant sources of sulfur dioxide, nitrogen oxides and mercury. High sulfur content in many sources of coal lead to acid rain It causes black lung disease among miners Where coal is widely used as an energy source there are increases in health concerns including asthma and other respiratory diseases The modern version of open pit strip mining is an environmentally destructive eye sore.
All data from https://www.eia.gov
Gas is killing coal; time will tell if green alternatives like wind and solar will threaten natural gas.
For more columns from Bloomberg View, visit http://www.bloomberg.com/view.
©2017 Bloomberg L.P.