Courtney: Hi, welcome to Argus' podcast on U.S. thermal coal matters. I'm Courtney Schlisserman, editor of Argus Coal Daily. With me is Elena Vassilieva, senior reporter for Coal Daily, who also covers the largest coal-producing region in the country, the Powder River Basin.

Elena, thanks for joining me.

Elena: Hi, Courtney. Thank you for having me on the podcast.

Courtney: So, it's just over 100 days since President Trump's second term started, and there's been a whirlwind of changes. What's standing out in terms of domestic policy?

Elena: Well, one action that has the most immediate effect, could potentially influence the industry is Trump's executive order that granted 47 utilities and 66 coal-fired power plants a two-year exemption from complying with updated mercury and air toxic standards. Without the exemption, these plants would have to comply with the new standards by July 8, 2027. The most recent version of the rule was put in place by the Biden administration in July 2024. The EPA also is reviewing these standards and others to possibly ease them, but those types of changes require longer reviews with public consultation and environmental analysis. I believe the exempt coal plant represents about one-third of the overall coal capacity in the U.S. Many of these generators that spoke to Argus indicated they are still evaluating their options. Other U.S. utilities not on that list are also carefully considering the effects that this measure can have on their operations in the longer term. Some are considering extending coal unit operations by a few years. Others say they could extend the lifespan of those facilities that were scheduled to retire around 2030s.

Courtney: Trump also has signed some executive orders aimed at reopening leasing of federal coal property and speeding up environmental review processes for new coal, oil, and gas production. Are there any signs that producers will open new mines, or are they just going to move to other sections of property they own?

Elena: Well, not yet. And we have not seen any new announcements from coal producers saying they are going to add production. There are a few mines that were opened in the last year or two that are still ramping up production, but it takes a lot more for coal producers to open new mines, including significant investment and long-term planning. The federal government has only an indirect ability to decide what types of electricity will be used. Both investors and miners need to see that there is going to be the demand in the future. So there are one or two mining applications in front of the Interior Department for already existing mines to move into other sections of their property. At least one coal producer has said getting its application approved would allow it to maintain production and employment. Well, notably, Powder River Basin coal production inched higher in the first quarter from year-earlier levels after nine consecutive quarters of declines. This uptick can be attributed to the entry of more buyers into the market this year.

Courtney: That's an interesting point that you made about 2024 being kind of low. So these improvements that we're seeing in terms of production, or rather than improvements, you could even say just higher production or even higher demand, they're kind of coming off of a low place. That being said, we have seen more RFPs from domestic utilities for other types of U.S. coal, not just PRB, following higher-than-expected coal generation this past winter. And EIA is expecting both coal consumption and coal production to be higher this year than in 2024. How are these moves affecting the coal markets in the U.S.?

Elena: Well, true, we are seeing signs of increased demand. So far, coal generation in much of the U.S. has been above year-earlier levels from December through April due to colder weather and higher natural gas prices. However, just as you mentioned, it is important to keep in mind that we are comparing 2025 numbers with 2024. U.S. coal producers have been scaling back mining operations since at least mid-2023 in response to lackluster demand. Market participants had to deal with elevated power plant inventories following relatively mild winters in 2022 and 2023, as well as more competitive natural gas prices.

Illinois Basin and Appalachian Coal Producer Alliance resources partners, earlier this week, raised its 2025 sales outlook marginally because of better-than-expected demand within the U.S. We will get more insight from other eastern U.S. coal producers during the first earnings announcements in coming weeks, and we have seen increases in coal prices across most basins, but the gains have been somewhat minimal, and coal and Utah prices have declined.

Regarding PRB mines, output last quarter was nearly 2.1 million tons above what it had been a year earlier, when production was at an almost four-year low. But production, last quarter, was still significantly lower than the 63 million short tons produced in the first quarter of 2023 and the 65 million short tons produced in the comparable quarter in 2022.

Courtney: When you mentioned four-year low, I think about that being 2020 and the start of the COVID-19 pandemic, plus the end of Trump's first term. This is Trump's second presidential term, and some of these initiatives that he has rolled out so far this year were in the first term as well. How are things different now?

Elena: Well, he definitely issued more executive orders so far this term than in the first 100 days of his previous term. Well, these don't have as much permanency as the act of Congress or regulation. Perhaps they are a sign of him moving more quickly to act on his agenda. But it's true, a number of the actions themselves are not that different than what was put forward in the first four years, including efforts to prevent unprofitable coal plants from closing by using emergency authority, typically reserved for a fleeting crisis like natural disasters. However, this approach faced significant backlash from oil and gas companies, grid operators, and consumer groups who argued that it would drive up electricity bills. Consequently, the administration eventually backed away from this idea. Some regulatory changes also were overturned by federal courts and rescinded and revised during the former President Biden's administration. It is possible that the current Trump administration will revise regulatory plans to avoid the legal pitfalls.

Courtney: Yeah, it seems policies by administrations of all of the recent presidents have faced at least some legal challenges. For example, both the waters of the U.S. rule changes made under former President Obama and the changes made during the first Trump administration ended up being blocked by the federal courts. Other rules, of course, did stay in place. What's being challenged so far?

Elena: Well, one of the first actions taken in Trump's first or second term was halting all leasing for new offshore wind farms in federal waters. These efforts have already faced legal challenges. And on April 15th, a federal judge ordered the administration to unfreeze billions of dollars for clean energy projects provided by the Inflation Reduction Act and the 2021 Infrastructure Law. In a separate ruling on the same day, the other judge prohibited the administration from suspending $14 billion in grants distributed to nonprofits under the Inflation Reduction Act for a greenhouse gas reduction program. Environmental groups are preparing to challenge more of Trump's actions, that's for sure, including those that involve the coal industry.

Courtney: Is there any sense that the Trump administration's moves, if not overturned by the courts, will result in more coal plant retirements being delayed?

Elena: Yes, as long as other market fundamentals support it. The current administration appears to be creating a framework that allows the U.S. Department of Energy to favor fossil fuels over renewable energy sources. There also have been actions that could further slow down the build-out of new solar and wind generation, such as tariffs on imports of certain equipment. Additionally, legislation moving through some state governing bodies aims to inhibit renewable projects, further complicating the transition to cleaner energy sources. But there are other states moving forward with the plans to exit coal in coming years. Also, utilities have to factor in expectation for low growth and natural gas prices.

Courtney: We can't forget that there simply are far fewer coal plants in the U.S. now than there were during his last administration as well. So the opportunities for growth are fewer. Or should we expect some boost from AI or new carbon capture developments?

Elena: Right. Coal has lost significant market share to natural gas, wind, and solar power. It's expected to account for 16% of the U.S. electricity generation this year, according to the EIA. Well, in 2010, coal was half of the U.S. generation. The average coal power plant is approximately 50 years old in the U.S., and most utilities have no plans to build new ones. It will take time to fully understand the significance of changes made now. Utility integrated resource plans that were recently submitted to the state regulators still include adding renewable and natural gas capacity. Some utilities say they do not expect that to change.

The extent to which AI and carbon capture storage technologies will support higher coal-fired generation in the U.S. also remains uncertain. The U.S. coal industry is exploring ways to respond to projected increase in domestic power demand linked to plant data centers. That's true. But interestingly, overall, U.S. power generating capacity increased by 42,000 megawatts, or 3.3% year over year in 2024 to 1.3 million megawatts. This increase was higher than in the previous four years when generating capacity expanded by an average of 20,000 megawatts, or 1.6%. But no new coal-fired generation was brought online in at least a decade.

Courtney: So are we talking really about policies that may just provide a little bit of relief then to operators of coal-fired power plants, such as maybe if they are concerned about some delays in building and adding new capacity, which has been a concern for a number of years. Now, if, say, if maybe the coal plant that they were expecting to retire in mid-2027 is needed for another year or two, they don't have to worry so much about making upgrades to comply with emissions standards that were promulgated a couple of years ago.

Elena: Well, possibly. It's hard to say. Let's be frank. But Courtney, I have a question for you. Exports also are a consideration. What's happening there?

Courtney: Coal export demand and prices already were somewhat mixed around the end of last year and early this year because of reduced utility demand in some key countries. That was partially offset by some easing of competition with petroleum coke in cement markets. Currently, some buyers in some countries have resumed solicitations to get supply for the summer, but there is heavier competition to place U.S. coal in these markets. Prices of coal from other countries, including Australia, have fallen. Petroleum coke prices also have fallen, creating some coal to pet coke switching for industrial buyers. But it's hard to talk about any U.S. export at the moment without mentioning tariffs.

While U.S. energy commodities so far largely have been excluded by measures other countries have put in place in response to President Trump's actions, there have been some exceptions. And some governing bodies have left open the possibility of additional measures that would affect U.S. coal export costs in the future. For example, the premiere of British Columbia in March suggested Canada impose a tax on U.S. coal that gets shipped through Canadian ports to other international customers. So far, the Canadian government has not done this, and a similar effort by British Columbian politicians eight or so years ago never came to fruition. But if there did end up being a tax, it would add to the cost of Powder River Basin and other Western coal exported through British Columbia.

Elena: So, have the trade actions by Trump affected activity at all?

Courtney: Generally, so far, it's been more uncertainty over whether the U.S. and other countries move forward with their announced plans and the potential global economic fallout that have had the greater grip on U.S. export trading activity.

For example, U.S. export trading activity paused for a bit after the U.S. trade representative in February proposed fees on Chinese-built, owned, and operated vessels doing business in the U.S. Then it picked up again a few weeks before the USTR made its final decision because some buyers wanted to try to lock in agreements out of concern that any USTR action would not only be finalized, but the proposal would become, the fees would become immediate. Now, the USTR's final plan was different than what had been proposed in February, though there could still be some effects on U.S. coal exports, and the fees will go into effect in mid-October, so we might have a better idea around then. Global economic uncertainty also has caused price volatility.

Elena: Well, is this affecting domestic markets as well?

Courtney: Only to the extent that some coal sellers are shifting their focus away from international deals. If sellers were to take uncommitted reserves out of seaborne markets and were not able to find interested buyers in the U.S., domestic coal prices could decline, but so far the U.S. is acting as a buffer against that. A number of utilities have recently issued solicitations for coal deliveries starting as early as this summer. Also, most U.S. coal prices are currently higher than export prices. That is going to give some support to sellers' profits.

Elena: Well, thank you for explaining this.

Courtney: Sure. Well, that's it for us this time. Thank you for listening.