President Trump has made it clear on a number of occasion he wants to make America a leader in coal production again. In February he signed a legislation ending an Obama era coal rule. The regulation was used under Obama to protect waterways from coal run-off and pollution. His reasoning was that these regulations in coal killed jobs. Fair enough, but the reason leaves a reader asking a few questions: how many jobs were actually harmed by these regulations, are these jobs worth protecting or should the government be utilizing its resources to invest in the clean energy jobs market. Let’s look at the first question.
How many jobs in coal were killed? At its peak coal mining offered 178,300 jobs. Since then mining jobs have been on the decline. From 2015-2016 around 10,900 jobs in coal were lost. Trump feels by reinvesting in the coal industry the United States can move towards peak numbers again. But were government regulations to blame for the dying jobs market in the coal industry? Since 1983 “Kentucky and West Virginia lost 38,000 coal jobs.” Before the government regulations of Clinton and Obama, automation was driving employment down. Strip mining reduced the need for large labor forces, rather than investing in new workers the company invested in machinery. In fact the only recent rise in coal employment came under Obama in 2009.
The nation saw a 10% rise in employment for coal workers because the EPA cracked down on surface mining jobs. This forced companies to rely on labor. So with a 30 year trend of job loss, and the only increase employment came after a government regulation, how will loosening restrictions on coal lead to more jobs? With the discovery of fracking and improvements in technology for green energy generation, coal is becoming a more expensive option and these companies will continue pursuing automation over labor. So the towns where these mines will operate could potentially have larger mines, higher unemployment, and a worse overall standard of living (polluted air, higher cancer rates, potential water contamination). Which leads us to our next question: Are these jobs worth keeping?
Jobs in renewable energy, (specifically solar and wind) are growing 12 times faster than the US Economy. “Solar and wind jobs have grown at rates of about 20% annually.” In states like Arizona and Nevada clean energy is becoming cheaper than natural gas and coal: “solar projects are less than $40 a megawatt-hour. Compare those figures with the U.S. average lifetime cost of $52 for natural gas plants and about $65 for coal.”
Not only are jobs in clean energy more readily available, they are healthier for the labor force, and adjoining town. West Virginia University revealed a study on the negative health effects of coal mines on their towns. Not only do the miners suffer, but the entire area: A survey of more than 16,000 people revealed those exposed to mining areas are at a higher risk of heart and lung disease, hypertension, Chronic obstructive pulmonary disease, and cancer. Other peer review studies from 2007-2011 found birth defects to be 42% higher in areas near mines and “the public health costs of pollution from coal operations in Appalachia amount to a staggering $75 billion a year.”
With the opportunity cost of coal on the rise, and a history of coal companies showing little concern for the harm they cause their laborers and the damage they do to their towns, why pursue it? What’s wrong with America no longer being a leader in mining when we can solidify ourselves as a global leader in renewable energy. Jobs are becoming more readily available in clean energy, clean energy has no negative health effects on adjoining towns, and the consumers are benefiting more as usage of clean energy reaches competitive prices with fossil fuels (in some cases undercutting prices). Clean energy is proving to not be a partisan decision, but a common sense one. A decision that benefits both the consumers and firms.
Views expressed are the opinions of Jeffrey Goldfarb and the Financial Advisors at Goldfarb Financial and not necessarily those of Raymond James. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Investments in the energy sector are not suitable for all investors. Further information regarding these investments is available from your financial advisor. Information within is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Investing always involves risk and you may incur a profit or loss. No investment strategy can guarantee success. Past performance may not be indicative of future results.