Published on May 4th, 2018 | by Joshua S Hill0
Researchers Point Finger At Natural Gas Prices For Coal’s Decline, Not “War On Coal”
May 4th, 2018 by Joshua S Hill
New research from North Carolina State University and the University of Colorado Boulder has shown that declining natural gas prices were primarily responsible for the significant reduction in US coal use for power generation over the past decade, putting to rest (for the moment) the mythical “War on Coal.”
A lot has been made over the past decade in the United States about why coal jobs are declining and what caused the seemingly sudden decline in the use of coal for power generation. Given the right Google search queries, one could be lead to believe it was entirely the fault of Democrats unfairly supporting and subsidizing renewable energy technologies such as wind and solar, and introducing unfairly restrictive regulations on coal. This would be to ignore the billions being funneled into the coal industry across the United States from government and private pockets, and the growing consensus around the impact coal had on the environment, but it was a significant fear for many across the country — especially those who were faced with the hard reality of losing their jobs.
Though the issue cannot be laid at the feet of now-President Donald Trump — who, for the most part, simply used a keen eye for divisive policy positions which could separate “them” from “us” — his Presidential campaign nevertheless used the issue as a key tent-pole of his message. He promised to bring jobs back to coal country, and received rapturous applause for making such a promise — regardless of his ability to actually keep the promise which, as we’ve seen, he hasn’t really been able to.
In information obtained by Reuters in January, US Government data showed that coal jobs only increased by 771 through the President’s first year in office — a figure which belies the lack of growth and outright job losses across most of the country. As can be seen below, the overall figure was thanks primarily to an increase of 1,345 jobs in West Virginia.
There has been plenty of evidence to disprove the notion that coal’s decline was due to some mythical “War on Coal” being waged by Democrats and the renewable energy industry, but new research from North Carolina State University and the University of Colorado Boulder has served to put the matter even further to rest.
“From 2008 to 2013, coal dropped from about 50 percent of U.S. power generation to around 30 percent,” said Harrison Fell, an associate professor of resource economics at NC State, and co-lead author of a paper on the work. “Coal boosters blamed stiffer regulations, calling it a ‘war on coal.’ But that same time period saw a steep drop in the cost of natural gas and an increase in wind generation. We wanted to know how big a role each of these factors played in driving down the demand for coal.”
The new research, The Fall of Coal: Joint Impacts of Fuel Prices and Renewables on Generation and Emissions, published online in the American Economic Journal: Economic Policy, is based on analyzing the daily power generation of coal plants across four power transmission regions between 2007 and 2013 — the Electric Reliability Corporation of Texas (ERCOT), the Southwest Power Pool, the Midcontinent Independent System Operator and PJM Interconnection (PJM), covering over 20 states.
While potentially circumstantial, the researchers found that coal plants in all four regions used much less of their power capacity in 2013 than they did in 2008, at the same time that natural gas prices dropped in all four regions and the amount of wind power increased.
The researchers took this information, then, and created a model that accounted for a variety of variables — including daily power demand — and ran it to see how power use (coal vs. gas/wind) would have changed in 2008 if gas had been available at 2013 prices and wind power had been as plentiful.
“This work uses the observed data – capacity factors, fuel prices, power demand and so on – to make predictions about how capacity factors are affected by different variables,” Fell says. “In short, we can get a good idea of what influences the extent to which we use coal power generation.”
Their results? Coal power would have fallen significantly in 2008 under these conditions, coming in line with the observed 2013 capacity usage.
“If the ‘war on coal’ was what drove down power generation, our econometric models would not have predicted a drop in coal use caused by changes in gas and wind,” Fell says. “But they did. It looks like the changes in coal power production were actually driven largely by capitalism.”
While this is unlikely to deliver a knockout blow to the idea of a “War on Coal,” it is at least yet another nail in the theory’s coffin, and one that will hopefully spell the end of the argument and another blow to coal use in the United States.