In his latest volley to shrink the trade deficit the United States maintains with China, Trump last week announced tariffs on $50 billion in products from the world’s second-largest economy. In response, China struck back by unveiling commensurate tariffs on $50 billion in U.S. products. China seemed to target Trump voters in rural areas by including farm products, oil, natural gas and coal on the list.
But the effect of any additional tax by China on U.S. coal may be more political than economic. Energy analysts note China is just one of many customers for U.S. coal. In 2017, China imported 3.2 million tons of U.S. coal — or just over 3 percent of all American coal exports that year, according to the U.S. Energy Information Administration (EIA).
Experts say the United States would probably be able to find other buyers abroad for that sliver of coal shipments.
“I wouldn’t predict that there is no disruption,” said Pavel Molchanov, energy analyst at the investment firm Raymond James, “but it’s a short-term effect.”
Exports have been a bright spot for the U.S. coal sector after Trump’s election. Last year, U.S. coal exports jumped by 61 percent from 2016 levels. Just last month, China was considering purchasing more coal from the United States to narrow the trade deficit between the two nations, Bloomberg News reported.
Most of the coal the United States ships abroad is used not for running generators at power plants, but for making steel.
As prices from metallurgical coal, or simply “met coal,” have risen over the past two years, U.S. met coal exports grew by more than a third between 2016 and 2017, according to the EIA. The first new coal mine to open during Trump’s presidency was Corsa Coal's Acosta Deep Mine in Pennsylvania, which produces met coal.
Like many nations, China purchases a “notable amount” of met coal from U.S. firms such as coal giant Peabody, according to Chiza Vitta, a coal analyst at Standard & Poor's. But much of that coal comes from American operations in Australia, the world’s largest met coal supplier, he said.
“Assuming that those assets in Australia are not subject to the tariff,” Vitta said, “we do not expect this to have a significant direct impact.”
Outside of steelmaking, the world’s most populous nation says it is trying to wean itself off burning coal for electricity because of pollution concerns. , whose cities are smeared with smoggy skies,
“China is making strong efforts to shift its electricity mix away from coal,” Molchanov said, “partly for climate considerations, but even more importantly, because of the public-health crisis caused by coal-related pollution.”
Because China has yet to determine the date of the fuel tariffs, coal industry representatives are cautious but concerned.
“We’re obviously watching it closely,” said National Mining Association spokeswoman Ashley Burke. “So anything that would chip away at the appetite for U.S. coal abroad would be of concern. At the same time, given that just two weeks ago we were being asked about China’s rumored plans to increase coal imports from the U.S., we don’t want to get ahead of developments before anything occurs.”
The brush with China is dwarfed by the economic head winds the coal sector faces at home.
Coal-fired power plants continue to shutter because of competition from cheaper natural gas, solar and wind generation. A new report from Bloomberg New Energy Finance this week concluded that coal will be pushed out of the power market over the next three decades as the cost of renewables continue to decline. The report predicts there will be $11.5 trillion of investment in electricity generation through 2050, of which 85 percent will go to wind, solar and other zero-emissions technologies such as hydropower and nuclear.
The situation has become dire enough for coal suppliers for Trump to order Energy Secretary Rick Perry to halt the closure of electricity generators running on coal as well as nuclear power by using emergency powers.
“The industry has much more immediate challenges closer to home,” Ethan Zindler, an analyst with Bloomberg New Energy Finance, said in an email.
Correction: An earlier version of this article inaccurately stated that Bloomberg New Energy Finance predicted $9.8 billion in new investment in zero-emissions electricity generation instead of the actual figure of $9.8 trillion.
|You are reading The Energy 202, our must-read tipsheet on energy and the environment.|
|Not a regular subscriber?|
— Pruitt watch: After vowing to hold a hearing on the controversies surrounding Environmental Protection Agency chief Scott Pruitt, Sen. John Barrasso (R-Wyo.), chairman of the Senate Environment and Public Works Committee, announced Tuesday that Pruitt will testify before the panel in August. “The hearing will give senators the opportunity to ask important questions and hear about the work being done at the agency,” Barrasso said in a statement. An exact date has yet to be set.
— Colorado joins states pledging stricter car emissions standards: Colorado Gov. John Hickenlooper (D) announced Tuesday that he signed an executive order committing the state to California's stricter car emissions rules in defiance of the Trump administration, which is considering preventing California from settings its own standards. Colorado is the 13th state to apply California's standards within its own borders. “Low emissions vehicles are increasingly popular with consumers and are better for our air," Hickenlooper said in a statement. "Every move we make to safeguard our environment is a move in the right direction.”
Meanwhile: Nine states, including California, are set to introduce a plan that would urge car companies to meet ambitious goals for selling electric vehicles and other environmentally friendly cars. “The plan among the nine states, covering 2018-2021 and expected to be unveiled Wednesday, outlines 80 steps that auto makers, dealers, utilities, government officials and charging and fueling companies should take to boost adoption of so-called zero-emission vehicles, predominantly battery-powered automobiles,” the Wall Street Journal reports.
— “Simply a deal-breaker”: Two Republican mayors in South Carolina are endorsing Democratic congressional candidate Joe Cunningham over his GOP rival Katie Arrington because of the two candidates different stances on offshore drilling. “Katie Arrington's support for offshore drilling is simply a deal-breaker for me,” Jimmy Carroll of Isle of Palms said in a statement. Cunningham and Arrington are both vying for the seat of Rep. Mark Sanford (R).
Arrington had said earlier this year she supported Trump lifting the ban on offshore drilling off of states like South Carolina. But shortly after the mayors' announcement, the Post and Courier received a new statement from Arrington distancing herself from that position. "Arrington said she does not support drilling for oil off of the coast of South Carolina," the paper reported, "her first public break with the president since she launched her campaign last year."
— Trump christens new oceans policy: The president issued an executive order Tuesday washing away an ocean policy set up by his predecessor, former president Barack Obama, in 2010 that provided guidance on what the federal government should focus on when it comes to coastal waters and the Great Lakes. "Marine conservation and addressing climate change are out," Science magazine wrote of the new policy. "Jobs and national security are in."
The new policy was met with praise by Republicans and condemnation from environmental groups. Rep. Rob Bishop (R-Utah), chair of the House Natural Resources Committee, said the order "puts our country’s ocean policy back on the right track" while Alison Chase of the Natural Resources Defense Council called the move "a major step backward from environmental stewardship."
— Steel yourself for tariffs: Major energy companies in the United States are racing to request exemptions from steel-import tariffs as the administration increases trade tensions with exporter nations, including China, Canada and Mexico. Almost 21,000 requests for exclusions have been submitted to the Commerce Department, Reuters reports, with more than 500 that involve pipes and related materials. Hess and Kinder Morgan are among the companies seeking steel-import tariff exemptions.
Meanwhile: The Commerce Department, which has been "overwhelmed" by pleas from U.S. companies for waivers, began just last week training the 30 people who will review the 21,000 petitions from companies, The Post’s David J. Lynch reports. “The department’s predicament highlights the disconnect between the president’s expectation of easy victory in any trade war and what is happening in the real economy, where production at hundreds of factories could be disrupted by Washington’s administrative sluggishness,” Lynch writes.
— CEQ considers new environmental review standards: The Council on Environmental Quality issued an advance notice of proposed rulemaking on Tuesday, calling for input from the public on potential changes to the regulations that federal agencies use to assess environmental impact under what is often called the nation's bedrock environmental law, the National Environmental Policy Act. The CEQ is aiming for a "more efficient, timely, and effective NEPA process."
The notice is likely to exacerbate environmentalists' already growing worries over changes the Trump administration is making to the environmental review process for large construction projects. The notice is due to be officially published on Wednesday.
—"It’s a fact": German Chancellor Angela Merkel on Tuesday called Trump’s decision to withdraw from the Paris climate deal “very regrettable.” “We know climate change isn’t a matter of faith,” Merkel said during an international climate meeting in Berlin, per the Associated Press. “It’s a fact.” She continued to pledge that her government “stands fully behind the Paris climate accord, because ambitious climate policies don’t just help limit the worst consequences of climate change, they also offer chances for innovation and therefore growth and prosperity worldwide.”
— Go ahead and plan that road trip: Starting in late July, the last part of California’s Highway 1 that had been closed following the state’s worst landslide will reopen. The Mud Creek Slide pushed more than 6 million cubic yards of debris onto the highway, forcing the shutdown of three sections of road. “In addition to rebuilding the road, engineers and geologists also reinforced the foundation with such stabilizing material as embankments, berms and rocks and installed a drainage system, steeling Highway 1 for the next big slide,” The Post’s Andrea Sachs reports.
— How climate change affects the housing market: From 2007 to 2017, the average cost of homes in areas with the lowest flooding, hurricane or wildfire risks outpaced prices compared with homes with the most risk. And homes in areas most at risk of floods or hurricanes were worth less on average in 2017 than they were a decade before, Bloomberg News reports: “The data suggest the relationship between climate risk and home prices isn’t always a straight line."
One reason: Home buyers weigh the risk of inundation against the "amenity value" of living at the edge of a lake or forest that can bring floodwaters.
— Oil watch: Russia and Saudi Arabia continue to push for Organization of the Petroleum Exporting Countries and its allies to move to increase oil output to make up for supply outages elsewhere, despite opposition from Iran and other members of the group. “Oil demand usually grows at the steepest pace in the third quarter . . . We could face a deficit if we don’t take measures,” Russian Energy Minister Alexander Novak told reporters, according to Reuters. His remarks precede a meeting of OPEC members on Friday to decide on an output policy. Iran’s oil minister, Bijan Namdar Zanganeh, countered that the issues in the oil market were political, citing concerns with Trump's demands on Twitter and elsewhere for more oil production.
And prices? They have rebounded since OPEC and Russia cut crude oil production in 2016, The Post’s Steven Mufson reports. Prices have since more than doubled from a low of $27 a barrel to $65 for the West Texas Intermediate benchmark price. “Now that Trump has jettisoned the nuclear deal with Iran, the kingdom’s longtime rival, Saudi leaders plan to fulfill their pledge to increase production enough to offset the loss of Iranian oil sales resulting from the reimposition of U.S. sanctions,” Mufson writes.
— Fracking goes global: For years, oil companies tried to take hydraulic fracturing, or fracking, which had been perfected in the United States, global. Now a $12 billion BP project that launched in Oman last year signals a breakthrough for the technology. “Now, big oil companies are drawing on expertise gained from their U.S. operations and making investments around the world again,” the Wall Street Journal reports.
However: The economic viability of fracking depends on sustained oil prices, meaning the OPEC meeting could have big implications for these projects.
— No more monkeying around: Volkswagen announced on Tuesday an interim replacement for Audi chief executive Rupert Stadler after he was arrested on Monday in connection with the emissions investigation. Stadler has temporarily stepped down and sales executive Abraham Schot was named as the interim CEO, Reuters reports. Stadler remains in custody but has not been charged, according to the report.
— The road ahead for Tesla: Over the weekend, the electric carmaker’s chief executive sent an email to employees accusing someone in the company of intentionally disrupting the company's work. Elon Musk said an individual had conducted “quite extensive and damaging sabotage” to company operations. “This included making direct code changes to the Tesla Manufacturing Operating System under false usernames and exporting large amounts of highly sensitive Tesla data to unknown third parties,” the email read, according to CNBC. The email noted an investigation will follow.
Meanwhile: Musk said last week the announced 9 percent layoffs at the company would not affect production as the electric automaker races to build thousands of its Model 3 sedan a week. But days later, the company filed documents with the state of California warning of hundreds of terminations at its factory in Fremont, and The Post’s Drew Harwell and Danielle Paquette report “the mass layoffs offer a glimpse of the surging pressure the company is facing to keep up with the ambitious goals Musk has set. Factory workers say they’re being pushed to ramp up work even as their co-workers are being pushed out the door.”
— Last year's wildfires could force a utility into bankruptcy: Pacific Gas & Electric has warned California state lawmakers that it may need to declare bankruptcy or reorganize if it is found liable for blazes in Northern California last year. It wouldn’t be the first time — the company filed for bankruptcy protection in 2001 during the state’s energy crisis, Sacramento's KOVR reports.
- The Senate Committee on Environment and Public Works will hold a hearing on the nominations of William Charles McIntosh and Peter C. Wright to be assistant EPA administrators.
- The House Energy and Commerce Subcommittee on Energy holds a hearing on “the Benefits of Tax Reform on the Energy Sector and Consumers."
- The American Council on Renewable Energy's finance forum continues.
- The Atlantic Council holds its US launch of the 2018 BP Statistical Review of Energy.
- The EPA holds a webinar on “Environmental Sampling and Analytical Methods for Environmental Remediation and Recovery.
- The Center for Strategic and International Studies hosts the launch of Bloomberg New Energy Finance's New Energy Outlook 2018.
- The House Science, Space and Technology Subcommittee on Environment holds a hearing on “State Perspectives on Regulating Background Ozone” on Thursday.
- The Federal Energy Regulatory Commission holds a meeting on Thursday.
- The U.S. Nuclear Regulatory Commission holds a public meeting on Thursday.
- The Wilson Center holds a briefing on “Energy Innovation in Remote Arctic Communities” on Thursday.
- The Center for Strategic and International Studies holds a discussion with Duke Energy CEO Lynn Good on Thursday.
- Brookings Institution holds an event on “Blending climate finance for low-carbon infrastructure” on Friday.
— A rare meteorological sighting: The Post's Angela Fritz called this "microburst" of rain in southern Austria “the perfect combination of meteorology and scenery.”