Trump vs. Biden: what does the election mean for coal in the United States?

US voters will go to the polls on November 3 to elect their next president. It’s fair to say that incumbent President Donald Trump and his Democrat rival Joe Biden have very different views on climate change and energy policy.

In 2016, Trump pledged to end the “war on coal” – a message well received by US coal producers. But what policy changes did he make in his post, and how are things in the coal markets under his control? And how can Biden’s victory change the picture?

We will discuss this topic in detail in a webinar on Wednesday October 14th – register to join us here. Or read a free excerpt from our recent study, “What is the future of the US coal markets under Trump vs. Biden?”

Has Trump revived the US coal industry?
Trump came to power in 2016 with a promise to revive the coal industry. And he took steps towards this goal. The Clean Energy Plan (CPP) – one of the Obama administration’s largest measures to reduce greenhouse gas emissions – has been replaced by the less stringent Clean Energy Efficiency Rule (ACE). The social costs associated with the Obama-era carbon footprint have also been lifted and the freeze on new federal coal leases has been lifted. Trump also announced his intention to withdraw from the Paris Agreement.

Have US coal markets thrived in this less stringent regulatory environment? Unfortunately, for Trump and coal industry supporters, the economy was not on their side. U.S. coal production has dropped 50% over the past decade and 30% since Trump took office.

Why didn’t policy measures stop the decline in US coal production?
Competition from natural gas remains a major cause of US coal problems. The explosive growth in shale gas drilling has led to a sharp increase in production over the past two decades. As a result, US coal markets continue to be under severe pressure from cheap natural gas. Henry Hub natural gas prices averaged $ 3.55 per million BTUs during Obama’s tenure, up from $ 2.81 per million BTUs over Trump’s prices today.

Meanwhile, the global political environment for coal has deteriorated. Financial institutions and insurance companies face public pressure to end support for coal projects, with many taking on environmental, social and governance (ESG) commitments to move away from the coal sector to some degree.

What is the current balance of supply and demand for coal in the United States? Check out our latest short-term coal forecast for North America.

What will Biden’s victory mean for the US coal industry?
Biden’s position on climate and energy is radically different from that of the current administration. In July 2020, he published his “Build Back Better” clean energy plan that has the potential to be a game changer for the US energy sector. The most notable moment for coal stakeholders is the call for a US carbon-free energy sector by 2035 and the promise of investment in the coal and power plant communities impacted by the transformation.

Can Biden make this change? His time as vice president provides some insight into what we can expect from him as president. The Obama administration has adopted a pro-climate stance, especially during its second term in office, with a range of environmental and energy policies, including the CPP. The Obama presidency began over a decade ago, and since then the energy transition has only picked up steam around the world. Everything is ready for a new ambitious plan.

It won’t be easy. The 15-year timetable for the development of a carbon-free energy sector will require an estimated $ 2.2 trillion in renewable energy and storage capital investments. And monetary barriers are only part of the equation. A federal mandate to dismantle coal-fired power plants will require strong political support. He will also face years of opposition and litigation from opponents. Biden will likely need two terms – and possibly control of the Senate – for his plan to take off.

What results should coal industry stakeholders be prepared for?
The US elections this November could lead to many possible outcomes. In our opinion, we will consider three main scenarios:

Trump is re-elected and Congress is divided.
Biden wins, but Republicans retain Senate majority
Biden wins and Congress is controlled by Democrats.
What is the potential impact of these scenarios? Visit the store to read this information in full. Join our webinar to hear our experts discuss this topic as the US elections approach.

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