By Rebecca Smith 

Donald Trump campaigned on a promise to resurrect the ailing U.S. coal industry and put miners back to work. Delivering on that vow could prove nearly impossible.

Electric utilities that buy more than 95% of the coal mined in America have already retired hundreds of their coal-burning power plants from Colorado to Connecticut -- amounting to about a third of the total capacity -- and have plans to mothball even more.

While in Appalachia earlier this year, Mr. Trump pledged to "bring the coal industry back, 100%" by rolling back environmental regulations. But coal's biggest problem is that it is no longer the cheapest fossil fuel around. It is being displaced by natural gas.

American Electric Power Co. of Columbus, Ohio, one of the nation's biggest utility companies, has sold or retired half its fleet of coal-burning power plants in recent years. No matter who occupies the White House, "it's not coming back," said Nick Akins, AEP's chief executive.

Even if Mr. Trump makes good on his campaign promise to relax or repeal pending limits on carbon emissions, it won't be enough to restore coal's market share. "We're moving to a cleaner-energy economy and we're still getting pressure from investors to reduce carbon emissions," Mr. Akins said. "I don't see that changing."

Investors love gas-burning power plants because they take less time to construct, cost less to operate and convert fuel into electricity with greater efficiency. Gas has just half the carbon emissions of coal and, thanks to the U.S. drilling boom, most of the country is now flush with new supplies.

Since the 2008 recession, the gas glut has become so acute that prices have plunged by more than 60% while coal has been relatively stable, federal data show.

To understand what the coal industry is up against, consider one of the newest coal units in the U.S.: Duke Energy Corp.'s power plant in Mooresboro, N.C. Built in 2012, the plant already needs modernization it so it can compete amid rapidly changing market conditions. Duke is adding equipment so the plant can run on coal or gas, depending on which can produce electricity more cheaply at any given time.

The percentage of electricity Duke generates by burning coal has steadily dropped from 58% in 2000 to 35% in 2015, mirroring a nationwide trend. The company closed 40 coal plants in the last five years and expects its coal-fired power generation to keep dropping until it stabilizes at 23% in 2030.

Atlanta-based Southern Co., one of the biggest coal-burning utilities, is also pouring money into gas projects because they lower power-generation costs and offer better growth opportunities. Southern recently bought AGL Resources, a gas utility, and said it would spend $1.5 billion on a 7,600-mile pipeline network to connect Gulf Coast gas supplies to consumers in Alabama, Georgia and South Carolina.

When a utility builds a power plant, it has to live with that decision for decades. With so much uncertainty about climate policy, power companies say they have no intention of rushing back to coal, though it makes sense to keep it in the mix as a hedge against any gas price increases and because it is easy to stockpile for emergencies.

Aside from investors who want to see cleaner electricity generation, some state-level power standards demand it. A few states, such as California and New York, now discourage coal use altogether.

Many others require utilities to consider cost and pollution profiles when they decide which power plants to run. Since it is generally cheaper and cleaner to make electricity with gas, companies haven't been running their coal plants as hard.

Xcel Energy Inc. in Minneapolis is "focused on renewable and other infrastructure projects that will reduce carbon-dioxide emissions," said Frank Prager, vice president of policy. Last month Minnesota utility regulators said Xcel could shut down two coal plants and add more clean-power generation to the grid. Xcel aims to get more than 60% of electricity from zero-carbon sources -- such as wind and solar power -- by 2030.

Mr. Trump has said he would throw out the Obama administration's Clean Power Plan, which was designed to greatly reduce carbon emissions. If he is successful, some utilities may keep some coal plants running for longer. Twenty-four states, including Texas, New Jersey and Wyoming, sued the federal government to block the Clean Power Plan; the issue is now before a federal appeals court. Even in those states, some utilities supported President Obama's carbon-reduction efforts.

"Markets are driving a lot of the behavior," said Tom Williams, a spokesman for Duke. "Regardless of what happens to the Clean Power Plan, we'll continue to move toward a lower carbon energy mix."

Coal basins in Appalachia and the Powder River Basin in Montana and Wyoming are hurting. U.S. coal companies have shed 21,000 jobs nationwide since 2008. Employment fell 12% in 2015 to 66,000 employees, with West Virginia and Kentucky the taking the brunt of the cuts.

A rare bright spot for coal miners: Natural-gas prices are expected to rise modestly in 2017. If that happens, some coal plants may become more profitable and boost demand for coal deliveries.

Write to Rebecca Smith at rebecca.smith@wsj.com

 

(END) Dow Jones Newswires

November 13, 2016 18:54 ET (23:54 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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