Trump’s Coal Announcement Completely Misunderstands Global Coal Markets

Trump’s Coal Announcement Completely Misunderstands Global Coal Markets

Rolling back restrictions on financing coal projects overseas is part of President Trump’s road-map to a “new era of American energy dominance,” he said a speech at the Department of Energy’s headquarters on Thursday.

Trump argued that by removing barriers to financing coal projects, the United States could export more of its coal to overseas power plants — though Trump failed to acknowledge that building coal plants in developing countries would also build in years of coal-related greenhouse gas emissions. Financing coal projects overseas would also be unlikely to boost national coal production, according to experts.

Environmental groups also argue that the move would run afoul of an Organization of Economic Cooperation and Development (OECD) agreement that went into effect in January limiting the types of coal projects that member nations could finance. Thirty-four countries, including the United States, agreed to the OECD restrictions in 2014; the restrictions mandate that countries stop financing coal projects unless the most efficient technology is used or unless the projects serve the most underdeveloped countries where no alternatives are available.

In 2013, the Treasury Department issued guidance on coal financing, saying that it would not support coal projects abroad except in “very rare” cases. Trump could easily unilaterally rescind that guidance. Pulling out of the OECD agreement completely, however, would be more difficult.

More likely, according to DeAngelis, the Trump administration will probably both rescind the Treasury Department’s 2013 guidance and seek to weaken the OECD agreement when it goes through review in the next year. That’s concerning for environmental groups, which have looked forward to the review process as a chance to tighten, not loosen, restrictions.

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“We’ve been trying to push for the expansion of those restrictions and now we’re worried that the U.S. is going to try to weaken those restrictions,” Kate DeAngelis, Friends of the Earth’s international policy analyst, told ThinkProgress.

According to DeAngelis, even if the United States were to weaken restrictions on coal financing, it’s unlikely that U.S. coal would be the primary beneficiary. More often, it’s coal technology that is exported to power plants overseas, not U.S. coal itself. Moreover, getting coal out of the United States remains difficult; the most direct export path for coal mined in the Powder River Basin — which supplies about 40 percent of the nation’s coal — runs through the Pacific Northwest, which has shown fierce opposition to a slew of proposed coal export terminals in recent years.

Coal is both one of the most widely-used fuel sources in the world and one of the primary contributors to global warming, so financing new coal plants is hardly good news for the climate. But there are signs that, at least before the Trump administration, coal’s grip on the world’s energy mix was starting to loosen.

Globally, demand for coal has fallen for the second year in a row, replaced by natural gas and renewables. Construction of coal-fired power plants also fell 19 percent last year, with countries like China and India abandoning plans for more than 100 sites. Earlier this week, Coal India — one of the largest coal companies in the world — announced that it would be shutting down 37 mines that were no longer economically viable.

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But other countries, such as Japan, show signs of increasing both domestic coal capacity and international coal financing. According to a Natural Resources Defense Council analysis, G20 countries contributed at least $8 billion in financing to overseas coal projects in 2016. Japan, Korea, and China are the largest backers of overseas coal projects, and Vietnam, Indonesia, and Bangladesh were the top recipients of funds.

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