Market News

 February 19, 2019
Coal loses another battle, despite Trump

 Last week the Tennessee Valley Authority voted to close the 49-year-old Paradise Fossil Unit 3 coal-fired generating plant in western Kentucky, citing operating costs, the need for repairs and "flat to declining" load. The board's 5-2 vote came despite appeals from Trump to keep the plant and others like it open.

"Coal is an important part of our electricity generation mix and @TVAnews should give serious consideration to all factors before voting to close viable power plants, like Paradise #3 in Kentucky!" wrote Trump on Twitter in the days leading up to the vote.

Joining Trump in his calls to save the plant were Kentucky Sen. Mitch McConnell and the state's governor, Matt Bevin, both Republicans. Both cited concerns for the surrounding community, including mines who count the facility as one of their primary buyers. The TVA said that 40 percent of the plant's 130 employees are eligible for retirement and others will be offered other positions.

The unit that will be closed had a capacity of 1,150 megawatts. Two smaller units at the plant closed in 2017.

Complicating the Paradise plant closing is that its primary supplier of coal is a company owned by Robert Murray, a major Republican donor and Trump supporter. Murray Energy gave the Trump-supporting super-PAC America First Action $1 million in the last election cycle and Murray has personally lobbied the president to keep plants open, particularly in the areas where his company sells coal. Murray told Politico that while he had responded to questions from members of Congress about the potential devastating effects of the plant closing, he did not have anything to do with Trump's tweet.

Trump campaigned on the promise of ending the "war on coal," at one point donning a miner's helmet at a rally in West Virginia. And he appointed Andrew Wheeler, a former coal lobbyist who has worked for Murray, as his acting Environmental Protection Agency administrator last summer. But experts are saying there is little the White House can do to influence an energy sector increasingly reliant on renewables and an abundance of cheaper natural gas.

According to a U.S. Energy Information Administration report, the percentage of U.S. electricity generated by coal dropped 21 percent between 2008 and 2018. That reflected increases in the use of natural gas (up 13 percent), wind (up 5 percent) and solar (up 2 percent). Overall, it appears that coal production in the U.S. is starting to decline after a small uptick in 2017.

Trump has dialed back his boasts about bringing back coal jobs. After stating that he had ended the "war on clean coal" in his 2018 State of the Union address, Trump neglected to mention it in this year's, instead citing the country's high production of oil and natural gas. Apart from his tweet regarding the Paradise plant, he hasn't mentioned coal on Twitter yet this year.

Murray told Axios in November that he didn't know if the pro-coal changes he had proposed were going to happen.

Even at the time of Trump's election his promises about coal were met with skepticism. Michael Webber, the deputy director of the Energy Institute at the University of Texas Austin, wrote in November 2016 that the coal industry wasn't coming back.

"Many in Appalachia and other coal-mining regions believe that President Obama's supposed war on coal caused a steep decline in the industry's fortunes," wrote Webber. "But coal's struggles to compete are caused by cheap natural gas, cheap renewables, air-quality regulations that got their start in the George W. Bush administration and weaker-than-expected demand for coal in Asia."

In December, Wheeler lifted an EPA emissions standard, a move that would make it easier to open new coal plants. But only one small one is expected to open in 2019.

Burning coal is a significant contributor to climate change. The debate over coal comes amid a report stating that world governments have only until 2030 to stave off catastrophic effects from global warming.

The Tennessee Valley Authority was established in 1933 as part of the New Deal, to control flooding and provide power to rural communities in the mid-South. It is owned by the U.S. government and run by an independent board, which meets most definitions of "socialism." Republicans at the time, and periodically since, have suggested selling it off, a suggestion actually embraced in 2013 by President Obama, and opposed by Tennessee Sen. Lamar Alexander, a Republican.