The War On Coal : The Indicator from Planet Money President Trump's Energy Secretary, Rick Perry, had a plan to prop up the coal industry. This week, a federal commission—led by a Trump appointee—rejected it.
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The War On Coal

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The War On Coal

The War On Coal

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(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

I'm Stacey Vanek Smith. This is THE INDICATOR, Planet Money's quick take on the news. The Trump administration had a plan to save coal. This week, a panel headed by a Trump appointee rejected that plan. Today on the show - what that vote tells us about energy in America and the future of coal.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

VANEK SMITH: When President Trump took office, he promised to save the coal industry.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: My administration is putting an end to the war on coal. We're going to have clean coal.

VANEK SMITH: And by war on coal, Trump meant environmental regulations - regulations that had been put in place by the Obama administration. And President Trump did undo some major coal-related regulations almost as soon as he took office.

(SOUNDBITE OF ARCHIVED RECORDING)

TRUMP: With today's executive action, I am taking historic steps to lift the restrictions on American energy, to reverse government intrusion and to cancel job-killing regulations.

(APPLAUSE)

VANEK SMITH: But it turns out regulations were not the biggest problem for the coal industry. Coal had traditionally been the cheapest source of fuel. But about 10 years ago, that started to change. Christopher Knittel is an energy economist at MIT.

CHRISTOPHER KNITTEL: Fracking started to come of age if you will around 2008.

VANEK SMITH: Fracking was famous for unlocking an enormous amount of oil in the U.S., but it also unlocked an enormous amount of natural gas. And within a couple of years, the U.S. was producing more natural gas than any other country on earth.

KNITTEL: Natural gas prices fell dramatically.

VANEK SMITH: And all of a sudden, coal was no longer the cheapest form of energy.

KNITTEL: The use of coal within the U.S., it started to collapse.

VANEK SMITH: So fracking killed coal?

KNITTEL: Well, I think what the current administration doesn't realize is the actual war on coal has come from cheap natural gas.

VANEK SMITH: In the year 2016, for the first time ever, natural gas became the main source of energy in the U.S. all because of fracking. And coal went from providing about half of the energy in the U.S. to around 30 percent and falling. Getting rid of environmental regulations was not going to be enough to save coal. So last September, Trump's Energy Secretary Rick Perry came up with a new plan. Perry said, we have to make sure the energy supply in this country is resilient. So if there's a crazy cold snap, or we need a whole lot of power suddenly, we have a reserve.

KNITTEL: So it would have provided a subsidy for any power plant that had 90 days of fuel on-site.

VANEK SMITH: This subsidy, billions of dollars a year, would have been paid by people who use power - by us. But here's the thing. Power plants that burn natural gas do not store much gas on site. You know who does store lots of fuel onsite? Coal plants - also by the way, nuclear plants.

KNITTEL: I have to give it to Secretary Perry. It was quite a creative policy to target coal and nuclear plants.

VANEK SMITH: Secretary Perry's plan had to be approved by the Federal Energy Regulatory Commission. There are five commissioners, and four of them, including the chairman, were appointed by President Trump. The commission ruled on the plant this week. Today's INDICATOR is zero. That is the number of commissioners who voted in favor of the Perry plan. All five voted against it. Critics said the way to get energy supply resilience is not by stockpiling coal. Moreover, creating new subsidies for coal and nuclear power plants would mess up the market for electric power. That is a market the U.S. has spent decades trying to create. They want to encourage companies to figure out cheaper, more efficient ways of getting power to people. And Chris said that market has been working.

KNITTEL: Cheap natural gas isn't going away. And solar and wind continues to get cheaper. So it's not that coal is getting more expensive. It's that its alternatives are getting cheaper, and that's going to continue to happen.

VANEK SMITH: Regulation isn't coal's biggest problem. Coal's biggest problem is competition.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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