Coal Transition in the UNITED STATES

An historical case study for the project “Coal Transitions: Research and Dialogue on the Future of Coal”

2017

Over the past decade, the US started to cut down the production and the use of coal, which was affected by unfavorable market dynamics and changing federal regulatory environment. Even before the shale gas revolution and uptake of renewables diminish the use of coal in power generation, coal communities were struggling to meet ends. The regional cost differences between producing states, such as the Appalachian and the Powder River Basins, indicates that coal-impacted communities and workers have lived through the impacts of coal transition at varying magnitudes and time periods.

In the period between 2014 and 2016, we have seen the crash of major US coal companies due to declining demand for US coal domestically and internationally. Furthermore, Obama administration’s climate change policies negatively impacted coal-fired power plants with additional GHG emission requirements, contributing to declining domestic demand for coal. Combined with market downturn, US coal producers already struggle to pay for high operational costs and legal liabilities under bankruptcy conditions. With underfunded state budgets, coal states are also grappling with financial exposure resulting from pension, healthcare and reclamation liabilities of bankrupt coal companies.

In 2016, former President Obama announced the Power Plus Plan to aid coal-impacted communities and workers to prepare for a low carbon future. The federal budget plan targeted diversification of local economies, funding of health and pension funds of miners and retraining for employment in alternative industries. Under Trump administration, potential regulatory relief might ease the pressure on the coal industry.1 Still, President Trump’s campaign pledge to revive the coal industry will require more than rolling back the environmental regulations and providing tax concessions to the coal companies. The question remains whether the impacts of coal transition will be managed by additional federal funds under the Trump administration.

Authors

Insitute

  • DDRI

  • Climate Strategies

Employer

University of Oxford