Coal's comeback is not going to happen, Moody's says

A decision to renounce the Clean Power Plan is forecast to arrest the long-term decline of coal, according to a projection released earlier this year by the U.S. Energy Information Administration. Moody's on Friday said President Trump's decision to abandon the CPP will not reverse coal's decline "or bring back the idled production.”

Moody’s Investors Service on Friday joined a chorus of investment and energy analysts who say President Trump’s decision this week to renounce the Clean Power Plan will have little short-term effect on the beleaguered coal industry.

While Trump’s decision may moderate the long-term decline of coal, Moody’s said, it will have little immediate effect on production of electricity from coal.

“Economics, not regulation, is the prime driver of near-term coal sector distress,” the credit-rating agency said in a report.

In the next three to five years, coal will struggle to compete with natural gas and renewable energy on price, Moody's said.

“Most major U.S. coal miners have gone or are going through the Chapter 11 bankruptcy process to restructure balance sheets, close unprofitable mines, and reduce costs,” Moody’s said. Though Trump’s executive order may slow the secular decline of the industry, “we do not expect it to reverse the trend or bring back the idled production.”

Moody's also said Trump’s decision is long-term negative for the bonds of producers of renewable energy, which “will lose a major regulatory driver of nationwide demand, relying instead on continued cost declines to maintain growth.” 

Renewable-power producers are still expected to experience robust near-term growth because of generous tax credits that remain on the books.

Moody’s assessment joins a consensus outlook that the coal industry is destined for long-term decline.

PJM Interconnection Inc., the regional electric-grid operator, released a report Thursday examining the effects of various fuel mixes used to produce electricity, and assumed in all scenarios that coal and nuclear generation would decline or, in the best case, remain flat.

We encourage respectful comments but reserve the right to delete anything that doesn't contribute to an engaging dialogue
Help us moderate this thread by flagging comments that violate our guidelines

Comment policy:

Philly.com comments are intended to be civil, friendly conversations. Please treat other participants with respect and in a way that you would want to be treated. You are responsible for what you say. And please, stay on topic. If you see an objectionable post, please report it to us using the "Report Abuse" option.

Please note that comments are monitored by Philly.com staff. We reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable. Personal attacks, especially on other participants, are not permitted. We reserve the right to permanently block any user who violates these terms and conditions.

Additionally comments that are long, have multiple paragraph breaks, include code, or include hyperlinks may not be posted.

Load comments
Continue Reading