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Coal tempers expectations amid Trump's order to roll back CPP, lift moratorium

President Donald Trump's March 28 order to repeal Obama-era environmental regulations has allowed some breathing space for the sector, but advocates remain skeptical over the possibility of a major industry comeback.

Trump promised to bring back jobs for coal miners and restore American dreams in signing an executive order March 28 directing various federal agencies to begin the process of unwinding environmental regulations issued under his predecessor. The Energy Independence Executive Order directs federal agencies to begin rolling back regulations such as the U.S. EPA's Clean Power Plan and methane emissions limits for the oil and gas industry, and to lift the moratorium on coal leasing on federal lands.

"The action I'm taking today will eliminate federal overreach, restore economic freedom and allow our companies and our workers to thrive, compete and succeed on a level playing field for the first time in a long time, fellas. It's been a long time," Trump said, gesturing to the coal miners behind him. "I'm not just talking about eight years. We're talking about a lot longer than eight years, you people know it maybe better than anybody."

The move has been commended by coal advocates, including Paul Bailey, president and CEO of the American Coalition for Clean Coal Electricity, who called the orders a "good first step."

However, some industry advocates have taken the executive actions with a pinch of salt, including Murray Energy Corp. CEO Robert Murray, who warned against expecting a full return of industry jobs.

Murray reiterated his comments in a phone call March 27, telling S&P Global Market Intelligence that while a regulatory rollback will help curb the "destruction" of the coal industry, it will not be enough to provide long-term job growth in the sector.

"I have suggested to Mr. Trump that he temper his expectations as to how many jobs he can bring back," Murray said, noting the lingering impact of Obama administration regulations. "We've got to overturn those regulations — get them stopped — before we can decide to bring the coal industry back."

Andy Roberts, research director for global thermal coal markets at consultancy group Wood Mackenzie, shared the same view, saying Trump's action may "help coal a little bit." He said that while nixing the moratorium on coal leasing could help western coal producers with their planning, and climate policy reversal might extend a few coal plants' lives by a few extra years, ultimately Trump can "nibble at the edges" but not change the underlying economics of coal versus its many forms of competition, including natural gas and renewable energy.

"It's interesting, what he's doing. It kind of upsets the apple cart, but I don't think it has an immediate impact and it doesn't really change the equation that much," he told S&P Global Market Intelligence.

Giant environmental advocacy group Sierra Club decried the executive order to roll back the CPP and vowed to fight on. "We're going to be spending a lot of time and effort fighting his efforts in the courts and on the streets going forward," said Bruce Nilles, senior director of the Beyond Coal campaign. "This is not just one thing. He's got a bunch he's proposing to do. He has failed on enacting a Muslim ban. He's failed on stripping health care from 24 million Americans and he's going to fail on slowing the U.S. transition from coal to clean energy."

The moratorium on the federal coal lease program was also lifted as part Trump's March 28 executive order, and resulted in a legal challenge against the Department of the Interior. The plaintiffs pointed to recent internal and independent audits that concluded the current leasing process "shortchanges taxpayers" and subsidizes coal producers.

Bills aimed at providing jobs and economic revitalization centered on coal mine reclamation were reintroduced this week, both in the U.S. House of Representatives and the U.S. Senate.

"This legislation will help the many mining communities throughout West Virginia and the country that have been devastated by the decline in the coal industry," Sen. Joe Manchin, D-W.Va., said. "Now, we must make sure these communities and their residents get back on their feet, and this bill will do just that by deploying funds that are just sitting unused in the Abandoned Mine Reclamation Fund. The Office of Surface Mining Reclamation and Enforcement (OSMRE) estimates that we can create 4,600 reclamation jobs across the country by putting these funds to work."

Finally, the week saw Westmoreland Coal Co. posting its earnings report for the final quarter of 2016. The company reported a $7.6 million loss attributable to shareholders, revenue of $392.7 million in the fourth quarter from 15 million tons sold, and a full year revenue of $1.5 billion from 54.7 million tons sold.

Future events:

Armstrong Energy earnings call: The last Q4 earnings call for coal producers will be at 11 a.m. April 5.

The National Coal Council's Spring Annual Meeting 2017: The National Coal Council is hosting its Spring Annual Meeting on April 18-19 at the Sheraton Suites Old Town Alexandria in Alexandria, Va.

Rail Energy Transportation Advisory Committee: The Surface Transportation Board committee will hold its Rail Energy Transportation Advisory meeting on April 6, 9 a.m. ET at the STB's headquarters at 395 E St. SW in Washington, D.C.