Going, Going, Going … Trouble Ahead For Montana Coal Industry

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Whelp, so much for bringing back coal jobs. As a candidate for the Oval Office, US President* Donald Trump made extravagant promises to coal miners and their communities, but throughout his first year in office he seemed content to carry water for the natural gas industry. That relaxed attitude is already on track to continue into the second year of his administration. Montana is a case in point: the number of power plants burning coal produced by the state is rapidly shrinking down to nothing.

Considering that Montana is the sixth-largest coal producer in the US, that’s another red flag for the whole industry.

When Coal Power Plants Close, Door Slams On Montana Coal Mines

Montana is especially vulnerable to power plant closures because almost all of the state’s coal output goes for electricity generation.

The Billings Gazette crunches the numbers and they don’t look pretty. As recently as 2012, 50 power plants in the US ran on coal from Montana. That number currently stands at about 31 and it will reduce to about 14 by 2030, based on a running count of power plants that have announced plans to close by then.

More grim details are in a new report commissioned by the Montana State legislature. The report was produced by the state’s Environmental Quality Council, with the aim of gauging the fiscal impacts of a downturn in production at Montana’s six coal mines.

As described by the new report, Montana’s power plant customers reflect a broader national trend: they are aging out, and being replaced by natural gas.

Many of those power plants are located out of state, where Montana policymakers have little leverage to keep them open.

For example, in 2016 Oregon legislators passed a new clean energy law that effectively eliminates coal for power generation.

The nearby state of Washington is also easing coal out of its power generation portfolio.

As for power plants located within Montana, the situation of a plant located in Hardin illustrates how tough times at power plants ripple out to impact the mines that supply them.

The Hardin plant has been losing money since 2014 and the current owner is in the process of selling. If a buyer does not appear, the plant could close sometime early this year.

Last fall, the Gazette reported that solar development and natural gas could also be options for power generation at the site. Either way, it looks like the nearby Absaloka Coal Mine is losing out on a major customer.

Yes, That Absaloka Coal Mine

If the name Absaloka sounds familiar, you may be thinking back to last May, when Vice President Mike Pence toured the mine with Interior Secretary Ryan Zinke, among other dignitaries.

Here’s a snippet from a report on the visit by our friends over at ktvq.com:

Vice President Pence received a first hand look at a Montana coal mine, then later declared that the “war on coal is over.”

So, there’s that.

In hindsight, perhaps the Crow Nation, which depends on the mine for economic support, should have asked Pence to clarify exactly what “over” means.

Judging from the Environmental Quality Council report, the war on coal is far from over. It is still going full throttle in Montana and elsewhere.

Report author Sonja Nowakowski does not mince words:

Coal-fired power generation is in decline, as inexpensive natural gas and cheaper renewables fuel more electricity production. In addition, air quality regulations have accelerated…

According to Nowakowski’s figures, coal currently lays claim to about 37%  of generating capacity in Montana, a steep drop from the 55% mark recorded just two years ago, in 2015.

Aside from the recent troubles at the Hardin plant, Nowakowski cites the J.E. Corette coal-fired power plant in Billings, which shut down in 2015. Another closure is expected by July 2022, at Units 1 and 2 of the Colstrip plant.

What About The Export Market?

Should Montana lose its domestic customers, the mines could still keep humming — if overseas demand makes up the difference.

In fact, production in 2017 ticked up compared to 2016, thanks largely to demand from  South Korea and Japan.

The problem is that 2016 is a weak point of comparison. Near the end of 2015, mines in Montana halted shipments to the Asia-Pacific market altogether due to an overseas glut, which drove prices down so far Montana producers couldn’t even cover their shipping costs.

The result was a “historically bad” year in 2016. In other words, comparing 2017 to 2016 is not evidence of a long-term recovery. Compared to 2015, coal production in Montana is still down.

Another problem with the export market is the transportation bottleneck.

Last fall, Washington State dealt a lethal blow to a proposed new shipping terminal that would have helped Montana producers reach Asian markets.

Meanwhile, here at home the President has indicated that he will pull the US out of NAFTA, the North American Free Trade Agreement. If that happens, the booming US shale gas sector could lose some important export opportunities. All that low-cost gas would just keep hanging around the US, creating more headaches for coal producers.

A Renewable Energy Future For Native Americans

Montana’s Crow community could be left in the lurch if the Hardin power plant goes offline.

Tribal employment has already suffered as a result of reduced royalty payments from Absaloka. The reduction was the result of a 2016 agreement aimed at keeping the mine in operation. If the Hardin plant goes down, though, the agreement does little more than delay the inevitable.

In normal times, the Energy Department’s Office of Indian Energy Policy and Programs could offer alternative solutions for job creation and energy development.

In 2016, for example, the Office of Indian Energy assembled a pot of $9 million for large and mid-sized clean energy and energy efficiency projects at 24 tribal communities.

Unfortunately, last June the office was thrown into turmoil when news surfaced that its Trump-appointed director William C. Bradford issued some offensive statements on social media and right-wing talk radio prior to his appointment.

On the plus side, Bradford quietly resigned in August, and it seems the work is continuing apace. Last summer, the office selected 13 additional projects for renewable energy and energy efficiency on tribal lands.

One example of good news from the office involves the Picuris Pueblo of New Mexico. The community now offsets 100% of its energy costs with a new 1-megawatt solar installation partly funded by an Energy Department grant. The new installation will also provide maintenance and operation jobs for community residents.

Another good sign is the Energy Department’s insistence on promoting its renewable energy initiatives. Those efforts have been enthusiastically supported by Energy Secretary Rick Perry (I know — weird, right?).

On its part, the Crow nation is apparently looking into solar and wind for alternative energy development. Back in 2014 the community also received an Interior Department grant with the aim of developing a hydropower project. It was supposed to hit the shovels-in-the-ground stage last year but it stalled due to a water rights issue, so stay tuned for more on that.

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*No words.

Photo: Colstrip, Montana by Rachel Cernanky via flickr.com, Creative Commons license.

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Tina Casey

Tina specializes in advanced energy technology, military sustainability, emerging materials, biofuels, ESG and related policy and political matters. Views expressed are her own. Follow her on LinkedIn, Threads, or Bluesky.

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