By ANDREA LANNOM
BECKLEY, W.Va. — President Donald Trump will make his first trip to West Virginia as president today to address Scouts, Venturers, Explorers and volunteers at the National Scout Jamboree.
Last May, Trump visited Charleston as the front-running Republican candidate. He addressed a crowd of at least 14,500 inside the Charleston Civic Center where he vowed to “put the miners back to work.”
“Your industry has probably been hit harder than anybody,” Trump said at his visit to Charleston last year. “Over-regulation is destroying families. It’s destroying jobs. In a sense, it’s destroying our country.”
Six months into Trump’s presidency, some improvement in the coal industry has been seen.
Brian Lego, research assistant professor with West Virginia University’s Business and Economic Research, said the coal industry is not as bad now as it has been. He said various factors have improved relative to how conditions were in 2015 and 2016 when the industry was in a slide. However, he said there are several different factors that have affected and will affect the industry in the future.
“Things are relatively better,” he said. “Use in electric power sectors for coal is up a little bit. It’s nowhere near what it was a few years ago but it has improved a smidge in some parts of the country which has helped coal mines in northern West Virginia, in particular.”
A report released last month from West Virginia University’s Bureau of Business and Economic Research in the College of Business and Economics said the state’s coal industry is stable in the short term but will decline in the long-term.
According to the report, coal mine output totaled 80 million short tons last year, just half of the 158 million short tons mined in 2008. The baseline forecast calls for statewide coal production to be about 89 million short tons this year and remain in the upper 80 million ton range into the early 2020s. However, the report said, decrease in demand for West Virginia coal will continue and lead to output shrinking below 80 million tons by 2030.
Lego said this number is the lowest in decades if they take out years when strikes occurred. He said that in 2008, West Virginia mined around 160 million tons. He said the past two quarters, state production is around 90 million tons.
“We are coming back to that 2015 level,” he said. “Getting up past that part is the tough part.” Lego added that there are lot of other things that probably will happen that “are likely in the short term likely not to occur.”
Several factors affect coal production, including the declining use of coal by domestic power plants — which the report says is linked to timing of low natural gas prices and stricter emissions standards — weak export demand and declining productivity from Southern West Virginia coal seams.
An April study by Columbia University’s Center on Global Energy Policy titled “Can Coal Make a Comeback” mentioned several factors.
The study said electricity demand contracted in the wake of the Great Recession and has not recovered due to energy efficiency improvements in buildings, lighting and appliances. It also said the surge in the nation’s natural gas production due to shale has driven down prices and made coal uncompetitive in U.S. electricity markets. The study also said coal has growing competition from renewable energy.
The study also said changes in the global coal market played a “far greater role in the collapse of the U.S. coal industry than is generally understood.”
Lego said one part of the global marketplace that is healthier compared to electric power is metallurgical. He said there are limited substitutes for coal in terms of making steel. He said the problem he sees in southern West Virginia and how it shapes the outlook over the next couple of decades is the cost to mine.
“Unless you operate in a global environment where coal prices are high, it makes production unprofitable,” Lego said. “There is not a lot that can be done to raise production to levels we saw several years ago. I won’t say it’s impossible but highly unlikely.”
The Columbia study said environmental regulations have played a role in the switch from coal to natural gas and renewables in U.S. electricity supply by accelerating coal plant retirements, but said this was a significantly smaller factor than recent natural gas and renewable energy cost reductions.
At last month’s Coal Forum, West Virginia Coal Association President Bill Raney said he doesn’t dispute the theory presented in the WVU study but said in his view, it doesn’t adequately address the regulatory environment.
Lego said regulations are part of the equation but there are several factors that happened at the same time that affected the industry. He cited the emergence of natural gas, the MATCH rule for emissions, and that power plants that once bought coal from southern West Virginia companies are buying coal from other parts of the country.
“To assign a percentage as to what share of the coal industry’s trouble can be attributed to one factor is very difficult to do,” he said. “I would say it’s a combined factor of two particular forces — natural gas and regulation, which were most important. For southern West Virginia, mines that produce metallurgical coal were affected by the international market falling apart. One factor was regulation and to dismiss it as a non-factor is not accurate. It’s just not the only factor to cause the industry’s deep trouble over 2015-2016. It was a part.”
According to the West Virginia Mine Safety Office’s 2017 summary for coal production, the number of employees and the number of mines reporting quarterly production to date is lower than last year’s numbers. However, Lego said even though the numbers are lower than last year, he said it is important to also look at how these numbers compare looking quarter by quarter.
According to data for the first six months of 2017, coal production was 42,610,292 with the majority mined underground. The number of mines reporting quarterly production to date through the second quarter, April through June, was a total of 60 mines. The number of employees is 12,243 with 9,436 underground and 2,807 surface.
In 2016, reported as of April 24, 2017, the total amount of coal production was 88,424,255. Through December 2016, the number of mines reporting production to date through December of that year was 99 mines. The total number of employees was 12,647 with 10,345 being underground and 2,302 being surface.
“You have to track sequentially,” he said. “Quarter to quarter, year over year, is down but you look at it as each quarter goes along, you’ve seen a bounce in the number of workers in the coal industry which continued into the second quarter.”
He said production has bounced more than employment. He said production for the first quarter of 2017 compared to the first quarter of 2016, was about 20 percent higher.
A few coal mines have announced openings in West Virginia and other states, including last month when Alpha Natural Resources announced plans to open a new underground coal mine in West Virginia in the summer, creating more than 50 jobs, according to The Associated Press.
“You’ve definitely seen some mines open, but a lot is driven by market factors related in particular to global metallurgical coal demand,” Lego said. “That’s why you see Alpha opening some of the mines that have been idle for several quarters.”
The president of American Electric Power previously said there would be no new coal mines for several reasons including coal use decreasing over the next few years and electricity demand being down except for two counties in the state.
Lego said capital markets also play a factor in whether utility companies will look at coal-fired power plants.
“They are not thrilled about financing many projects related to coal in particular in the utility industry and what it costs to build coal-fired power plants with emissions technologies and such,” he said.
Lego mentioned the Longview Power Plant near Morgantown, which he said is one of the most efficient in the country. However, he said building this type of plant elsewhere in the country could be expensive. He said gas operations can be built in a shorter amount a time and need a smaller team of people to run.
“A lot of things go into construction of power plants that do not bode well for someone to propose a coal-fired power plant to be built even if it was a modern ultra super critical plant.”
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