A few generalizations can be made when discussing recent presidential administration transitions. First, the most damage to the coal industry was usually inflicted during the second term of a Democratic presidency, and while the Republican presidents failed to live up to campaign promises, they didn’t harm the industry.
So, what can the coal business expect from a Biden administration? Much of that depends on what happens in the Senate with the January 2021 runoff election in Georgia. Democrats could gain complete control of Congress and the Presidency or there will be gridlock in America for at least two years. The Democrats in Congress could try to undo Trump’s regulatory rollbacks and re-regulate industry. Even though Biden still has not really clarified his position on energy policy other than to say he wants to move away from fossil fuels, the fracking business probably stands to lose more than the coal business.
The world will continue to consume more fossil fuels (petroleum, natural gas and coal) for the foreseeable future. In the U.S., coal and natural gas will compete for the largest piece of the fuel pie chart for electricity generation with nuclear and hydro holding steady. Natural gas prices are expected to move higher next year, which would favor coal. Those are the markets that are somewhat competitive, but now that the swamp is filling back up and politics in D.C. are returning to business as usual, the fix is in for renewable energy.
For example, the American Energy Alliance (AEA) recently sounded the alarm on a proposed Sense of Congress resolution that, if adopted, could cause a disruption of America’s energy system. The AEA obtained a page from a discussion draft that appears to include a provision from the “Green New Deal”-like energy legislation, HR 4447, making it a “Sense of Congress” to call for 100% of power demand to come from “clean, renewable or zero-emission” energy sources. How this would be implemented was left vague, according to the AEA, but the provision appears to give the secretary of energy a blank check authorization from Congress to impose 100% renewables.
AEA President Thomas Pyle said, “…some unnamed members of Congress are making a last-minute attempt to sneak bad energy policy into a take-it-or-leave it spending bill before checking out for the year. It’s shameful and should be rejected outright.” The AEA said language in a “discussion draft” would give the secretary of energy “the authority to effectively change the Department of Energy into the Department of Climate Policy.”
We will hear a lot of similar climate change noise for the next four years. If policymakers decide to take on fracking, it will only drive natural gas prices higher. While energy policy remains uncertain with the incoming Biden administration, the U.S. coal business could recoup some market share in 2021 and beyond.