
US policy can't save coal, but it can still have an impact
The new US power plan won't save a struggling industry, but that doesn't mean it won't make a difference for the worse
This month the future of coal – in the US, and by extension around the world – came under the spotlight again. Though US coal mining is now a shadow of its former self in employment terms – with just 50,000 coal miners compared with a 1923 peak of 883,000 – its output is still not far off its 2008 record high of 1.2 billion short tons, and, crucially, it still retains powerful totemic significance in US politics.
The future of thermal coal in the US power market is a lot more uncertain than most people believe – both the climate hawks who are pushing for the closure of coal-fired generators across the country, and the coal lobby, which takes hope from various pro-coal statements coming from US president Donald Trump before and after his 2016 election.
Coal is expensive compared with natural gas, but that alone isn’t enough to doom it – especially given the choice between continuing to run an existing coal-fired generator and building a new gas-fired one. At current prices, especially in the coal-rich western US, coal still looks good in many cases.
But it’s also true that the efforts of the US administration to dig coal, while electorally productive, are likely to do little to reverse the industry’s decline. New coal-fired stations will be politically difficult even if judged to be economically preferable, and the lack of infrastructure makes salvation through exports improbable.
All that political effort can do for the US coal industry is to hasten or delay the inevitable; but that doesn’t mean political efforts are a waste of time. The health, economic and environmental implications of either will be significant.
All that political effort can do for the US coal industry is to hasten or delay the inevitable; but that doesn’t mean political efforts are a waste
Outside the US, of course, the equation changes dramatically; for many industrial countries, coal represents the only significant domestically-produced energy source, and may also be a significant source of employment and/or export revenue. Politics may be better able to overrule economics in these circumstances.
But even these countries are not irrevocably wedded to coal, with renewables in particular taking over much of coal’s territory; it may be relevant here that solar and wind power, of course, are just as domestically produced as coal, and better in this respect than imported liquefied natural gas. Inasmuch as the US still retains any position of global leadership, the policies it adopts towards coal will be watched and considered for emulation by other countries. While they may make little difference to the ultimate fate of the US coal industry, they could have significant effects elsewhere.
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Our take
Degree of influence 2023: Quants thrive on volatility
Climate, crypto and market impact also featured among the top research topics in 2023
Korea’s ‘worst-of’ times are here to stay
Chinese houses’ success in Korean autocalls could stymie hopes of diversifying the product mix
Could intraday FX swaps help reduce settlement risk?
New swap platform hopes to ease funding pains, but can it promote more use of PvP?
Talking Heads 2023: A turf war in credit markets
Banks are looking to reclaim territory they previously ceded to market-makers and private funds
FX-style crypto platforms could bridge gap with TradFi
Emergence of execution-only ECNs, prime brokers and clearing houses brings new confidence in crypto
Skew this: taking the computational burden off basket options
Dan Pirjol presents a snap formula for estimating implied volatility skew in an instant
Shhh, don’t tell: the struggle to keep skew under wraps
Liquidity recycling by clients has made it more difficult for banks to keep skews quiet
How a machine learning model closed a hidden FX arbitrage gap
MUFG Securities quant uses variational inference to control the mid volatility of options