The U.S. coal industry’s prospects have “brightened” in President Donald Trump’s first year in office, according to international energy analysts.
Actions taken by the Trump administration to cut the coal country’s regulatory burden have “provided optimism” to the industry, that has been in decline in recent years, analysts wrote.
“The mood in the coal industry in the United States brightened in 2017,” the International Energy Agency (IEA) reported in its latest global coal market report that makes projections for the next five years.
It’s definitely been a comeback year for coal. Exports surged nearly 70 percent in the first three-quarters of 2017, and mines are producing more than in 2016.
“Measures introduced by the Federal government provided optimism to the sector,” IEA reported. “Some regulations were reviewed and the financial environment for coal mining improved. The country’s first new coal mine since 2011 was opened in May and other projects were announced.”
Experts at Platts noted similar trends in 2017, finding “coal was generally the fuel of choice to meet incremental fossil fuel demand in the power sector outside of Europe in 2017.”
Trump’s deregulatory actions and “higher domestic gas prices drove higher coal use in the power sector and higher international coal prices boosted exports and revenues for coal companies,” IEA wrote.
Trump made lifting the regulatory burden on energy, coal, in particular, a promise on the campaign trail. Trump signed legislation shortly after taking office that repealed a former President Barack Obama-era mining rule. The president also issued an executive order rescinding a moratorium on federal coal leases.
The Environmental Protection Agency (EPA) has reviewed several regulations expected to hamper coal industry growth, but the biggest step the agency has taken in that regard was to rescind the Clean Power Plan (CPP).
EPA said repealing the CPP would cut $33 billion in compliance costs.
However, coal has an uphill battle ahead. Platts notes that “sluggish power demand, abundant gas supply, and renewables growth are expected to continue to generate headwinds for coal use,” meaning that U.S. “production is forecast to be around 510 Mtce in 2022, equivalent to current levels.”
U.S. coal exports will also have to increasingly compete with liquefied natural gas exports. Europe and Asia are hungry for U.S. LNG exports, and that could cut into coal’s market share, especially in country’s shunning coal.
IEA expects the U.S. to remain a “swing supplier to international coal markets,” and even though “changes in the policy and regulatory environment are reducing costs for US producers,” these “will not significantly change their position in the seaborne supply curve.”
The U.S. Energy Information Administration expects coal production to dip in 2018 on lower international demand and no growth in power generation, but the agency also sees coal production rising again in the latter half of the year.
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