2 January 2017

Those coal industry jobs are not coming back

Shortly after the election I was driving, and feeling too lazy to find something on the MP3 player. I found myself listening to NPR on FM radio. They were interviewing people in West Virginia, which used to be a solidly Democratic state but went full Trump in the election.

NPR were asking Trump voters why they had voted the way they had. Many of the people interviewed were unemployed, and had formerly worked in the coal industry, which was once the main source of unemployment in the state. They explained that while they thought the Republicans were likely going to screw over the working man (again), they were angry at the Democrats for not doing more for them. They didn’t think Trump was likely to make things better, but thought it was worth a shot, given that neither of the two parties seemed to be offering to help.

Then one man said something I found interesting. He was a coal industry engineer, a highly skilled and trained worker. He was still employed, but had watched the industry slowly dying for a decade or more, and knew a lot of unemployed ex-colleagues. He said that people were angry with the Democrats for failing to warn them that the coal industry was going to go away.

I don’t think that’s true, but just in case, let’s make a point of giving them no more false hope and promises that can’t be kept. Here’s my contribution.

The story so far…

The coal industry has been dying since the Reagan era. West Virginia had over 40,000 coal industry jobs in the early 80s. By the time of George W Bush, it had shrunk to less than half that. After 9/11 there was a push to make America less dependent on Middle Eastern oil, and for a while coal jobs started to return. That stopped around 2011, when the industry went back into steep decline.

The EPA isn’t the problem.

The fossil fuels industry likes to demonize the EPA as the cause of coal’s decline. However, the coal industry in West Virginia declined steadily from 1950 all the way through to 1970 — the year the EPA was founded. It was after the EPA came into existence and clean air laws were enforced that coal saw job growth for the first time in decades, with coal employment rising until 1980.

Reagan attacked the EPA and the clean air act as obstacles to growth. Land was opened up to mining, the EPA’s budget was cut, and enforcement of antipollution laws was cut 79%. It didn’t matter: coal industry employment still declined.

So what does make coal boom? I’d argue that in 1973 it was the oil crisis which led to a mini-boom in coal. There was a perceived need to reduce dependence on middle eastern oil, and stop using it to generate heat and electricity. The same cause explains the post-9/11 mini-boom. So, absent another oil crisis, I predict that there won’t be another boom in coal jobs, even if the EPA regulations are cut back like they were under Reagan. Which is why…

Trump is not going to bring those jobs back.

In case you missed it, Trump has picked the CEO of ExxonMobil to be Secretary of State. You can expect the Trump administration to relax sanctions against their friends in Russia. This will lead to a boom for ExxonMobil and Putin’s state-owned oil company as they get access to exploit 22% of the world’s undiscovered oil and gas. The Energy Information Administration currently believes there’s plenty of oil to last us until at least 2040, and Trump’s pals hope to sell as much of it as possible, along with all the associated natural gas.

Even if Trump cripples the EPA, and even if that does help coal a little, it’ll help big oil a hell of a lot more. It can’t have escaped your notice that the big environmental protests are all about oil fracking, oil pipelines and shale oil extraction. Relax environmental restrictions and oil and gas get even cheaper and more abundant.

Yes, Trump’s election did see some coal companies’ stocks leap up by double digit percentages. However, coal company stocks had lost 99% of their value since 2011. They were jumping from diddly-squat to 15% more than diddly-squat.

“Clean coal” isn’t going to help.

It’s questionable whether “clean coal” even exists. Coal power plants are the most dangerous to human health of any energy source, by almost a factor of 3x, and China shows us what happens if you try to cut costs. Mining the coal is dangerous too, even after 30 years of safety improvements. I don’t think we’re willing to make coal great again and go back to a smoggy America like the 1970s.

But let’s suppose there really are technological breakthroughs which will allow us to burn coal cleanly and extract it safely. Those technologies will cost serious money, making coal power more expensive — and that’s where we arrive at the real reason why the coal industry isn’t coming back.

Coal is uneconomical.

Take a look at the IEA data for cost of energy generation. These are real-world costs of producing electricity using the actual power plants in use by America’s electric utilities, in millidollars per kilowatt hour.

Coal is “fossil steam”. Notice that it’s the most expensive. It’s even more expensive than nuclear. That’s part of the reason why most of the major export markets for US coal are seeking to cut their coal consumption, and the US’s biggest coal power plant is closing down.

Meanwhile, the cost of solar panels (in dollars per watt generated) has fallen by 150x since coal’s 1970s heyday, thanks to technological advances. The unsubsidized cost of solar power at utility scale is now cheaper than coal. The same is true of wind power. Battery technology needed to store the energy is also getting far better — just look at Tesla cars.

That’s the real reason power companies are shutting down their coal plants and building wind farms and solar plants. It’s not EPA regulations or global warming, it’s money.

There’s no carbon tax in the US yet. Coal power stations don’t have to pay to pollute, they can just spew it into the air. Yet in spite of that hidden subsidy, coal is still too expensive to be worth investing in. That’s why the percentage of US power generated from coal is falling. There are now more US jobs in the solar power industry than there are in the coal industry.

The simple fact is that coal is difficult and expensive to dig out of the ground. It’s inefficient and dirty compared to gas, let alone renewable energy. It’s expensive to run a power plant to turn it into convenient electricity. None of those things is likely to change, so the coal industry is not going to see a turnaround. It would make more sense to build new nuclear power plants than to build new coal power plants.

Steel won’t revive the coal industry.

If the US steel industry somehow recovered, we might at least see a boost to jobs mining metallurgical coal. Unfortunately, the world has too much steel, to the point where China is planning to cut its steel manufacturing capacity.

Even if coal was economical, the jobs still wouldn’t come back.

Let’s imagine I’m wrong about all of the above, though. What if Trump gets some sort of quota passed to shore up the coal industry and require that we generate a certain percentage of our electricity from coal. That’ll help the people of coal country, right?

Well, they probably wouldn’t be very happy when their utility bills started going up to pay for using coal instead of more affordable energy sources, but let’s ignore that issue.

Take a look at a graph, again from IEA data, and you’ll see that US coal production went up from the 1980s until 2000 — the exact same timeframe that most of the coal jobs disappeared. Automation killed the jobs.

In the early 20th century, coal mining was done by men with picks and shovels. Right now, mines are deploying new automation: automated drilling and tunneling machines, automated loaders, and self-driving trucks. Estimates are that of the few jobs remaining in the coal industry, half of them will be eliminated by the automated systems being installed today. So even if by some miracle the coal industry gets a boost, the people who used to dig the coal are still going to be out of a job.

In conclusion…

The coal industry is dying rapidly because coal power is the most expensive form of power generation. Jobs in the coal industry are also dropping rapidly, by more than 10% a year. Even if the industry recovers, the coal jobs won’t come back, because coal mining is dangerous and robots are cheaper than humans. The EPA has nothing to do with the situation, and the era of coal would be at an end even if we could afford to completely ignore global warming — which we can’t.

So it shouldn’t be surprising to read that solar already employs more people than oil, coal and gas—put together. The jobs, for the time being, are in the changeover to renewable energy.

The politics of all this.

Hillary Clinton made a statement that probably lost her a lot of votes:

So for example, I’m the only candidate which has a policy about how to bring economic opportunity using clean renewable energy as the key into coal country. Because we’re going to put a lot of coal miners and coal companies out of business, right?

The thing is, she was almost right. When she said “we’re going to put a lot of coal miners and coal companies out of business”, what she should have said was “capitalism and market competition are going to put a lot of coal miners and coal companies out of business”.

Hillary Clinton actually had a plan for coal country. I’m not sure whether it would have worked or whether it was a good plan, but it looks like it mostly reflects what my plan would be: get the hell away from the coal industry as quickly as possible.

I don’t know whether coal country voters were aware of her plan. If they were, they didn’t like it. They apparently thought she was planning to kill the coal industry, rather than planning to help them out when the coal industry continued to die for economic reasons. Coal country doesn’t want to move away from coal. It’s what they know, it’s the work they’re trained for. They preferred the appealing promises of Donald Trump, that somehow coal could be economically viable again through some unspecified miracle.

The fact that it can’t isn’t just my opinion. Ask Robert Murray, CEO of the nation’s largest coal producer Murray Energy Corp, and a big Trump supporter:

“I have said to Mr. Trump on a couple of occasions, ‘Please temper your commitment to my coal miners and your expectations of bringing the coal industry back.’ It cannot be brought back to what it was. The destruction is permanent.”

So now the people of coal country will get to watch as Trump fails to deliver, offering them none of the assistance Hillary Clinton hoped to give them, and maybe popping the carbon bubble and crashing the economy too. I hope that this time they don’t decide to blame the messenger.

© mathew 2017