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Stuart Hampton

The Rise of Fracking and the Decline of Coal

by Stuart Hampton | Dun & Bradstreet Editor

August 10, 2016 | No Comments »

As Donald Trump promises a return of coal mining jobs across the US, the reality is that those jobs are gone forever as the result of structural changes in the economy.

Tougher environmental rules for power plants (primarily to do with mercury and air toxins) have forced power plant operators to choose between building cleaner burning plants (mainly co-generation natural gas plants as well as wind and solar options) or investing heavily in making their older coal plants meet increasingly stringent environmental laws.

What’s made it easier for power plant operators (such as American Electric Power, Duke Energy, Southern, and Exelon) to go with natural gas plants is the fracking revolution of the past two decades, which has made available vast reserves of natural gas across the US. That fracking-driven production boom in such areas as the Eagle Ford Shale play in Texas and the Marcellus Shale play in Appalachia has lowered gas prices and made gas plants the only fiscally responsible choice for most power producers.

The die is cast. According to the US Energy Information Administration (EIA), natural-gas-fired power generation increased 19% in 2015. Gas’ lead over coal will continue to grow. EIA’s May 2016 Short-Term Energy Outlook forecasts that this year natural-gas-fired generation will exceed coal generation in the US on an annual basis.

In addition, natural-gas-fired generation capacity is expected to continue to grow over the next several years, as 18.7 GW of new capacity comes online between 2016 and 2018.

By contrast, coal-fired generating capacity has fallen 15% over the past six years, and a lot of shutdowns of older coal plants are planned over the next few years.

A Trump presidency, if there is one, would have to deal with this market-based reality. On the regulation front, it would have to face the fact that only a few finalized environmental regulations have ever been successfully undone by a succeeding administration, Republican or Democratic.

Coal country is rapidly losing power-production market share, as the recent spate of bankruptcies by coal producers bears witness. To paraphrase songwriter John Prine, it’s not Mr. Peabody’s coal train that is hauling it away, it is decades of natural gas fracking and settled environmental law.

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover’s since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Peter Doran’s “Breaking Rockefeller” and Daniel Yergin’s “The Prize.” You can also follow Stuart on Twitter.

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Photo by Guy Gorek, used here under a Creative Commons license.

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