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US withdrawal from Paris accord unlikely to benefit coal, but could damage renewables

Author : Alan Franck, Editor, Hazardex

02 June 2017

President Donald Trump says the decision on June 1 to pull his country out of the Paris Agreement on Climate Change will boost American employment, particularly in the coal sector. The number employed in coal mining dropped from about 89,000 at the start of 2012 to around 50,500 in April, according to US Energy Information Administration (EIA).

Stock image
Stock image

Including others involved in the coal industry, such as those working in coal-fired power plants, the sector total is 160,000.

The EIA calculated that the Clean Power Plan, the Obama administration’s set of rules for curbing carbon dioxide emissions from electricity generation, would have sent US coal production into renewed decline after about 2020. 

Scrapping that plan, as Trump says he will do, would stabilise coal production at about 2015 levels, the EIA projected.

Nevertheless, there is stiff competition from abundant reserves of low-cost gas released by the US shale boom. US power companies are continuing to shut coal-fired plants as new gas plants come on stream, and other markets for coal are in decline.

At least six coal plants have closed or announced they will close since Trump’s victory in November, including the main plant at the Navajo Generating Station in Arizona, the largest in the West. Another 40 are projected to close during the president’s four-year term, according to the Washington Post.

Efforts to revive coal employment are also hampered by the fact that there is a shift in production away from the high-cost, less productive mines of Appalachia towards the much lower-cost surface mines of the Powder River Basin in Wyoming and Montana, which employ far fewer workers.

The 2017 US Coal Outlook report by the Institute for Energy Economics and Financial Analysis (IEEFA) said: “Promises to create more coal jobs will not be kept — indeed the industry will continue to cut payrolls.” The report adds: “Too many companies are still mining too much coal for too few customers.”

The EIA says that another consequence of scrapping the Clean Power Plan will be to slow the growth of renewable energy, which employs far more than coal and is a major generator of employment. One in 50 new jobs in the US is now created in the solar sector, according to a 2016 census.

A 2016 study published by the US Department of Energy found that 374,000 were spending at least some of their time working in the solar power industry, with 260,000 working more than half the time. A further 102,000 work in wind power.

Major actors in the sector also fear that Trump’s decision will disadvantage US renewables companies on international markets. More generally, some commentators see all US manufacturers potentially facing the imposition of carbon taxes when exporting their products.

These fears have led the CEOs of some of the largest US-based companies to express support for the Paris Agreement. Perhaps surprisingly, this includes oil and gas producers such as Exxon Mobil and Chevron, and even, according to NBC, coal producers such as Cloud Peak Energy and Peabody Energy.

These energy companies would have preferred to face the light restrictions imposed by the Paris Agreement rather than losing their seat at the international negotiating table and operating in an uncertain international environment.

So Trump’s move is unlikely to restore employment in the US coal sector and could well restrict the expansion of the country’s renewables industry. One silver lining, however, is that the federal administration is not the only game in town. States including California, New York and Massachusetts continue to support renewables and are moving forward with aggressive policies to cut carbon emissions.

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