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Trump vs. Coal: What You Need Know to Immediately

Coal Today, Gone Tomorrow

Written by Keith Kohl
Posted February 8, 2017 at 3:51PM

He did it again!

President Trump just can’t seem to stop dropping the c-word: coal.

Is he truly committed to reviving the coal industry? Or is he just giving lip service to the sector in order to score some political points on the right?

After his recent moves, we can’t be so sure that it’s the latter.

You might have caught the headline, but it was buried in a steaming pile of confirmation hearings. Last week, a joint resolution flowed through Congress that would block one of Obama’s coal mining regulations: the Stream Protection Rule.

Good old H.J. Res. 38, compliments of the 115th Congress.

We’ll call it Obama’s final act in his war on coal.

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The rule was set up to provide environmental protection from the coal industry; it simply defined damage to the water balance outside of the permit area. You can read full text of the Stream Protection Rule here, just in case any of you speak legalese.

What this rule effectively did was put very strict regulations on where new permits could be approved, based on the possible damage for water contamination on the surface.

Specifically, we’re talking about acid mine drainage (as seen to your right), which is exactly what it sounds like.

So, even though we are not talking about an outright ban on spilling hazardous waste into a neighboring stream, it helped clarify formerly ambiguous rules on the matter.

Of course, your first inclination might be outrage that we’re stripping away a rule that has been protecting our streams from the big, bad coal companies, but I want you to keep something in mind...

The Stream Protection Rule didn’t take effect until January 19th Obama’s last day in office.

In other words, everything is pretty much the same as it’s been since the early 1980s.

But if you think coal’s troubles are over, you had better take another look.

This time, I want you to take in the whole picture, and then you tell me where you think our energy sector is headed.

Coal Today, Gone Tomorrow

It turns out an aversion to coal is spreading.

I’ve pointed out time and again to my readers that we’ve been transitioning away from coal for more than a century!

The progress that natural gas and renewables have made in eating away coal’s share of our electricity generation has been extraordinary.

And yes, dear reader, it’s going to get even worse.

You see, even though we’ve been steadily reducing our reliance on coal, we’re quickly approaching a breaking point

Sure, there are a few short-term coal bulls out there right now, and for good reasonsIn fact, the EIA reported this morning that U.S. coal production is projected to rise in the near term, reversing an eight-year downward trend.

During that period, however, U.S. electrical generation from coal declined by nearly 40%!

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However, I also told you that my outlook on coal gets more bearish with each passing day.

Why?

Let me put it this way...

We’re simply not building enough new coal plants to replace the old ones.

Remember to keep a few key points in mind, like the fact that more than one-half of all U.S. electricity generating capacity was constructed prior to the 1980s.

Oh, it gets worse.

Nearly three-quarters of ALL coal-fired power plants were built about three decades ago. 

And if that doesn’t quite hit home for you right now, you should also know that the average life a coal plant is only 40 years! 

I challenge anyone to look at the chart below and not instantly become bullish over natural gas (or wind, for that matter):

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Of course, when you take a look at the bigger picture, the future becomes even dimmer for coal producers in the United States.

I believe coal companies have seen the writing on the wall here. I think they’ve seen it coming for years, yet the one hope they’ve desperately clutched onto in the middle of the night has been India and China — two countries ravenous for cheap energy that have been driving global coal demand.

And so long as coal companies here in the U.S. could tap into that market, they would live to see another day. Approximately 20% of India’s population — 240 million people — does not have access to electricity.

Moreover, over 70% of India’s electricity is already generated by coal.

Unfortunately, it appears that U.S. coal producers will have to stay optimistic without one of those growth catalysts: China.

It turns out the Middle Kingdom just canceled projects for 103 coal-fired power plants that were either under construction or in the planning stages. That’s 120 gigawatts of future capacity that now has to be made up through natural gas, nuclear, and renewable energy options like wind and solar.

Baby steps, right?

People are going to have to face the truth at some point in the near future — it’s not just a few voices in the wild that are losing faith in coal... it’s everyone.

Until next time,

Keith Kohl Signature

Keith Kohl

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A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.

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