Trump’s coal promises not seen changing much on the Peninsula

Trump’s coal promises not seen changing much on the Peninsula

The business that got Newport News started  shipping coal to the rest of world  may not be much affected by Donald Trump’s oft-repeated promise to end the war on coal, while his election probably won’t give the Peninsula’s big electric generating units a reprieve.

Coal keeps several CSX trains a month rumbling down the Peninsula and fuels two of the aging units at Dominion Virginia Power’s Yorktown plant, which the utility says it must close when its special permission to exceed new federal standards on mercury and toxic gas emissions expires next spring.

Trump’s big promises on coal  basically to do away with the Obama administration’s aggressive push to slash carbon emissions from power plants  don’t directly affect either the Peninsula’s export business or its coal-fired power plants much.

One reason is that the export business has been doing a little better for months, mainly because of demand from China. Jim Levesque, who tracks coal markets for S&P Global Platts, said export prices for metallurgical coal have climbed from February’s lows of $70 to $75 a metric ton to range now between $217 to $262 a ton, depending on the grade.

That dramatic rise, and the fact that it seems to be sticking, is prompting modest increases in production, he said. What drove prices higher, though, were sharp earlier cuts in production in the months before China sharply ramped up its purchases of Australian coal.

The combined effect of tight American supplies and Australian mines busy with Chinese demand spilled over to the European market that Newport News’ Dominion Terminal Associates and Pier IX primarily serve.

The U.S. Energy Information Administration forecasts a 22 percent rise in coal exports in the last three months of the year, compared to the quarter before, and expects production of met coal to continue in the nine to 10 million ton a quarter range next year, after dropping to that level in late 2014.

Met coal isn’t as affected as the bigger market for coal used in power plants, like Dominion’s two coal-fired units at Yorktown. Power plants, and the coal many still use, are a primary focus of the Obama administration’s efforts to cut the carbon emissions blamed for climate change and rising sea levels.

Power plant demand is where coal miners place their hopes for a new Trump administration — and where many critics say Trump is promising a rebirth for coal that he won’t be able to deliver. The reason, they say, is that power companies these days prefer lower-priced, cleaner burning natural gas.

Childress, at the coal alliance, doesn’t buy this. He said Dominion’s giant 4-year-old coal-fired plant in Wise County shows that modern plants can meet tougher new emissions standards for nitrogen oxide, sulfur dioxide and mercury. Coal and natural gas deliver about the same amount of energy per dollar, he said.

Mercury and other toxic gases, though, are a problem for Dominion’s 60-year-old units at Yorktown. It has special permission from the U.S. Environmental Protection Agency to operate the plant, even though it emits more pollutants than federal rules otherwise allow, when the area risks blackouts. That happened 20 times this summer.

But that permission expires next spring.

Childress doesn’t think Trump’s election will change that.

“It’s like driving a car from the 1940s or ’50s, but adding on all the stuff we now require,” he said. “Older plants won’t keep operating.”

It’s because the plant can’t continue operating in violation of those caps on toxic emissions, and because the Peninsula’s electricity demand keeps growing that Dominion is seeking permission from the Army Corps of Engineers to build the Surry-Skiffes Creek line.

“There are short- and long-term reasons why a new electric transmission line is urgently needed to serve the Peninsula,” said spokesman David Botkins.

“It is too soon to know what changes, if any, may occur in regulations. Growing energy demand, the desire to increase access to cleaner energy for the region, and the need to preserve electric reliability will be there in any case. In our view, the Skiffes Creek line is still very much needed.”

“We’re already seeing a little firming in demand and prices for met coal,” said Harry Childress, president of the Virginia Coal and Energy Alliance, referring to the metallurgical grade coal used for steel-making that Virginia mines produce and that account for the bulk of Hampton Roads’ exports.

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