FULL OF HOT AIR

This one chart explains why Donald Trump’s plan to bring back coal is doomed

Obsession
Energy Shocks
Obsession
Energy Shocks

The year 2016 will go down in history for many reasons. For some, it will be because of this chart:

This year, for the first time ever, natural gas is set to unseat coal as the major source of fuel for electricity generation in the US, according to data from the Energy Information Administration (pdf). As Quartz reported in 2015, the reasons for the change are simple: “low gas prices, increased regulation on emissions, and the build-up of alternative energy sources like renewables.”

Observers have been expecting the annual milestone to be achieved some time soon. But the fact that it will likely happen in 2016 is particularly interesting in light of the promises that US president-elect Donald Trump made in his campaign.

Trump spent a lot of time this fall trying to convince voters in coal-producing states like Wyoming, West Virginia, Kentucky, Pennsylvania, and Illinois that he would bring jobs back to their communities. How he will do this, however, is unclear. It used to cost less to generate one unit of electricity from coal than from natural gas. That is no longer the case. According to The Economist (paywall), 94 coal-fired power plants closed in 2015 and 41 closed in 2016. When future regulation costs are factored in, energy companies are unlikely to invest in new coal plants.

Meanwhile, signatories to the 2016 Paris climate agreement are making plans to phase out coal in order to deliver on their carbon emissions goals. Just this week, Finland promised to ban the use of coal by 2030. Trump has said he plans to pull the US out of the agreement (though in an interview with the New York Times, he seemed to waiver) meaning America would not be subject to hitting any emissions goals.

But even if he is able to do this, the only way Trump can realistically rejuvenate the coal industry is by subsidizing coal, which he would have to do at the cost of cutting subsidies for renewables. That won’t go over well by his voter base in the windy states, such as Kansas, Oklahoma, Nebrasaka, North Dakota, South Dakota, and Texas, or in the sunny states of Arizona and Utah, which receive (or are slated to receive) benefits from those subsidies.

If Trump is going to run America like he ran his businesses, he’s going to realize a heavy investment in coal is most likely the wrong decision.

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