If President Donald Trump is serious about bringing coal back, he has his work cut out for him. The President’s first year in office was marked by a slew of coal power plant closings, and his second year is already off to a bad start. Mepco, Inc. announced that it will close a Pennsylvania mine, eliminating 370 coal jobs. The cuts will occur in two waves as the 4 West Mine in Greene County winds down operations this spring. The blow to local workers is painful enough, and the closure also illustrates some hard truths about the state of the U.S. coal industry.
Yes, renewables are now in play
Fossil energy stakeholders and their allies regularly charge that policies favoring renewable energy are driving coal out of its once-dominant position in the U.S. power generation sector, and consequently forcing coal mines to shut down.
That argument ignores a more substantial consensus among industry observers. A change in federal law under the Bush administration enabled the ongoing shale gas boom, which continued to flood the market with low cost natural gas during the Obama administration.
Until recently, renewable energy has played little if any role in coal plant closures. That has changed in the past year or so. Natural gas is still the main force, but wind and solar costs have become more competitive with coal (and natural gas, for that matter) in some markets. More consumers are also willing to pay a premium for clean, renewable energy.
The combination of renewable energy and natural gas is also a one-two punch to coal, according to The American Petroleum Institute. The organization, which represents major gas stakeholders as well as oil producers, has argued that gas beats coal as a more flexible, nimble fit for grids that are introducing more wind and solar.
Bearing out these trends, the latest Energy Infrastructure Update from FERC indicates that by 2020 the combination of wind and solar will add 116,054 megawatts of capacity to the nation’s fleet of power plants. Natural gas also continues to make a strong showing at 92,489 megawatts of added capacity. That spells more bad news for coal ahead.
Given all the market forces at work, FERC foresees only 1,927 megawatts of coal added by 2020, spread among just four generating units. The coal industry is also looking at the retirement of 74 units totaling 20,650 megawatts by 2020.
It’s also worth noting that the update looks at central power plants, not small scale (less than 1 megawatt) installations, so the figure for wind and solar does not include the growing number of micro wind turbines and small rooftop or ground mounted solar installations.
Coal vs. coal
Long before the advent of renewable energy and low cost gas, mechanization began driving workers out of the coal sector. That trend — the decoupling of productivity with mine employment — has continued in recent years. The advent of mountaintop removal in Appalachia, for example, enabled high productivity with relatively low labor costs.
The closure of 4 West Mine provides another example of the impact of mechanization and other operational factors on mining employment.
The mine is operated for Mepco by the company Dana Mining of Pennsylvania. The local news organization Observer-Reporter sums it up in a January 3 article about the mine closure:
Mepco Inc., Dana’s parent company, notified the state of its decision Tuesday and cited as reasons for the closing the age of the mine and poor geological conditions that have resulted in high production costs.
The Observer-Reporter cites Mepco senior vice president of operations Brian Osborne, who explains that “the 4 West Mine simply can’t compete in today’s steam coal market.”
The mine is at a disadvantage compared to most in the area. As described by the Observer-Reporter, it is placed in a different seam than most of the others. Among other problems, that has exposed it to “poor geological conditions” resulting in structural issues.
Another major disadvantage is the continuous system used in the mine, which is not as efficient as the longwall method used in others.
Do read the full piece for more details, but the upshot is that another coal mine in the area beat out 4 West for a prize customer, the 700-megawatt Longview Power Plant in nearby Morgantown, West Virginia.
Timing also worked against the mine. It opened in 2005, when economic growth in the U.S. was still coupled to an increase in power production. Its owners may have anticipated a level of demand that failed to materialize, as the financial crash of 2008 slowed the global economy. By the time the U.S. economy found its footing, the shale gas boom revved up.
Energy efficiency improvements also accelerated during the Obama administration, and that has also helped slow demand for new power plants.
What’s all this about the Longview Power Plant?
In a somewhat ironic twist, the Longview Power Plant also represents the kind of technological advances that foster the shrinkage of U.S. coal mining jobs.
Longview was profiled last summer in a piece by coal reporter Taylor Kuykendall, who describes how the supercritical power plant represents an improvement over conventional power plants. Though it does not include a carbon capture system, it does produce about 20 percent less carbon dioxide.
Supercritical refers to advanced boilers that can produce steam at higher-than-usual pressure and temperature. The plant’s pollution controls are also designed to reduce emissions without a loss of efficiency.
Kuykendall cites Longview CEO Jeffery Keffer, who explains that the new technology is not aimed at competing with natural gas or renewables for an increased share of the power generation market. Rather, it is intended as a replacement for old coal power plants that are scheduled for retirement.