Fighting the law of gravity is hard.
The Trump administration is learning that, as new data show that the industries it has worked hardest to prop up — through bailouts, tariffs and other favors — continue their descent.
Maybe it’s the perceived machismo of old, male-dominated, blue-collar industries; maybe it’s that their heyday (at least in terms of jobs) was during the postwar boom that happened to coincide with President Trump’s childhood. For whatever reason, the president has been obsessed with the fortunes of coal, steel and other heavy industries. To Trump, any difficulties such sectors face are national tragedies whose reversal demands re-rigging the rest of the economy, regardless of cost.
In coal’s case, this has meant a series of proposals intended to bail out a foundering fossil-fuel industry.
Trump (incorrectly) blamed the industry’s problems on overregulation, including by the Obama administration. So the president is scrapping the Clean Power Plan, which was intended to reduce carbon emissions at coal-burning plants. His administration has also been rolling back other regulations, including one regarding the disposal of coal ash and another concerning mercury emissions.
Then there were the many direct and indirect coal subsidies, including proposals to invoke national security so the administration could require power plants to keep financially non-viable plants running. Just last week, the Energy Department announced $38 million in new federal funding for research into how to keep old coal plants online.
A new government report finds that it’s been all for naught.
The U.S. Energy Information Administration, the statistical agency within the Energy Department, just released its annual energy outlook. Lo and behold, it forecasts a 21 percent decline in coal production over the next 20 years. Astoundingly, as the Financial Times points out, that’s an even steeper decline than the agency estimated a mere two years ago — which was back when President Barack Obama’s big, bad, coal-killing Clean Power Plan was still expected to go into effect.
Got that? This less-regulated industry is somehow expected to do worse than was once projected with all those supposedly industry-killing regulations.
The new EIA report was hardly the first clue that the Trump administration’s attempted coal-industry renaissance has been unsuccessful.
U.S. coal consumption in 2018 was at its lowest level in 39 years, according to another recent EIA report. More coal-fired plants closed in Trump’s first two years in office than in the entirety of Obama’s first term.
To be clear, that’s not because of anything Trump has done. It’s because of what he can’t do.
Despite Trump’s claims, the main challenge for coal is not regulation. It’s technology. Hydraulic fracturing, or fracking, in particular, has made natural gas a much cheaper alternative. Productivity gains have also been rapid, faster than many analysts expected, making natural gas even more competitive.
And a lot more natural gas may soon come online.
“Thus far, the shale revolution has been mostly confined to North America,” says Michael Greenstone, an economics professor at the University of Chicago. But there are large, as-yet-untapped deposits around the world that other countries want to extract. “The world’s history of leaving $100 bills on the ground is very, very short.”
Clean renewables — especially solar and wind — have made faster-than-expected technological advances, as well, threatening to leave coal in their dust (or, ahem, lack thereof). They are also increasingly in demand, as countries shift from fossil fuels to curb both particulate matter and carbon emissions.
The government’s official models are belatedly catching up to these on-the-ground changes, says Rice University professor Dan Cohan. And if anything, Cohan adds, the trends suggest that Obama’s Clean Power Plan was not all that ambitious (or draconian, depending on your perspective).
Or as S&P Global Platts coal analytics director Joe Aldina put it: The Clean Power Plan “was never in our expectation going to be a main driver in the switch away from coal.” Rather, market forces are.
We’ve seen this pattern before — wherein Trump promises a vision of an industry from decades ago and then struggles to understand why he can’t turn back the clock.
The president similarly tried to prop up the steel industry, through global import tariffs. Unlike coal, steel companies arguably didn’t need the assistance; they’re producing about as much steel today as they did 30 years ago, just with fewer than half the workers (thanks, again, to productivity gains). In any case, the much larger universe of U.S. firms that purchase steel has suffered as a result of the tariffs, as domestic steel prices have rocketed higher than those elsewhere in the world.
And as Bloomberg’s David Fickling points out, U.S. primary metals employment has barely budged and manufacturers’ stock prices have still plummeted.
The GOP once railed against “picking winners and losers.” It seems the party’s standard-bearer has trouble telling the difference between the two.