Trump's real choice: Coal or gas?

 

Donald Trump smiles as he stands next to Mike Pence outside the White House.

Despite the presidential posturing, this is not simply a battle between renewable energy and the old guard, Republicans and Democrats or America and the rest of the world.

The President's push to rejuvenate America's flagging coal industry is likely to set him on a collision course with the rising star of the US fossil fuel sector, liquefied natural gas.

Since taking office, the President has cosied up to both sides, pledging his allegiance. Unfortunately, gas competes with coal and is a major cause for the woes that have afflicted the US coal industry. At some stage, he's going to have to choose.

New extraction technologies such as fracking have transformed global energy dynamics. Where the United States once was a hostage to the OPEC cartel and the oil-producing countries of the Middle East, it now has become not just energy self-sufficient, but in a position to be a major energy exporter.

Natural gas is a cheaper and clEven Robert Murray, noted climate science critic and the founder and boss of America's largest privately owned coal miner, has cast doubt on Mr Trump's ability to boost coal industry employment.

"I suggested that he temper his expectations," he told The Guardian.

"Those are my exact words. He can't bring them back."

In the 1970s, coal mining employed a quarter of a million Americans. By 2015, fewer than 100,000 people were employed in US mines.

eaner alternative for Americans and no amount of posturing on the global stage will alter that. Coal is in decline because the economics have moved against it.

Before the Obama administration, coal-fired plants provided a little over half of America's electricity plants. That's now fallen to around 30 per cent following the closure of around 400 coal-fired generators, replaced by cheaper gas-fired plants.

Carbon price? When, not if

It's not just the immediate cost advantages of gas. Business leaders globally long ago abandoned the debate as to whether carbon emissions should be penalised, by way of a price.

That's now a given. The only question is when. That's the reason no bank is willing to finance the construction of new coal-fired generators in Australia and why the owners of our ageing coal-fired generators are shutting them down rather than spending extra money updating them.

Power stations are long-term investments. No-one is willing to risk billions of dollars on a 50-year plan to build a facility that could become a white elephant once a carbon price is introduced.

Coal jobs lost forever

Then there is coal mining itself. Pulling out of the Paris Accord won't boost coal prices or employ more American miners.

Even Robert Murray, noted climate science critic and the founder and boss of America's largest privately owned coal miner, has cast doubt on Mr Trump's ability to boost coal industry employment.

"I suggested that he temper his expectations," he told The Guardian.

"Those are my exact words. He can't bring them back."

In the 1970s, coal mining employed a quarter of a million Americans. By 2015, fewer than 100,000 people were employed in US mines.

Political opportunists have whipped up outrage among the army of unemployed, citing the Obama administration's clean energy policies and climate agreements such as the Paris Accord.

In fact, most of the lost jobs were a result of improved coal mining technology. The decline has been hastened in recent years by the rising competitiveness of gas and renewable energy which has seen a collapse in coal prices that sent many miners to the wall.

The renewable energy revolution

The great attraction of renewable energy, apart from the zero emissions, is that the feedstock, the main input, is free. Sunshine comes without cost. So too does wind. It was the capital cost of harnessing that energy that previously was prohibitive.

That's why governments devoted subsidies and grants to kick-start the industry in the same way they once built coal-fired electricity generators.

In recent years, as economies of scale have gained momentum, the cost of solar voltaic panels has plummeted, which has increased the competitiveness of renewables.

Mass production, particularly in China, has seen the average cost of solar cells decline from $US76.67 per watt in 1977 to just 74c in 2013.

Those cost declines have since accelerated with installed prices — the cost of everything including panels, electronics, hardware and the installation itself — falling to $US2 per watt for large scale solar farms.

According to Scientific American, much of the price declines since 2012 have been in ancillary electronics such as inverters, which convert DC power to AC, and in lower installation costs as panel prices have stabilised.

The hidden costs of coal

But there are other costs that the President has ignored with his decision to withdraw from the Paris Accord. Most of those relate to the health of Americans.

According to the US Environmental Protection Authority — which has been neutered under the Trump administration — the Clean Power Plan would prevent around 3,600 premature deaths, 1,700 heart attacks, 90,000 asthma attacks among children and 300,000 missed work and school days each year.

Trump's economic own goal

The health benefits of cleaner energy have not been lost on China. In Beijing, Shanghai and a swathe of cities through the Pearl River delta, the air is so thick with smog and pollutants, visibility is reduced to just a few metres.

As the world's second most powerful economy, the Middle Kingdom is facing pressure from its citizens not just for a more affluent lifestyle but for a healthier environment; calls the leadership has recognised it would ignore at its peril.

Over the weekend, Beijing reiterated its commitment to the Paris agreement and the European Union pledged to side-step the White House and deal directly with American business leaders.

After last week alienating European leaders on defence issues, Donald Trump may just have unwittingly ceded global economic leadership to China, and placed himself, not only on the wrong side of history, but in the unrelenting and unyielding path of American capitalism.

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