On Dec. 5, several families gathered at the White House to discuss how the GOP tax plan would benefit the middle class. One of the speakers, North Dakota state Sen. Jessica Unruh, discussed how the corporate-tax reduction would benefit her coal mining company. Unruh praised the tax plan, including a provision that reduces the tax credit for renewable wind energy, saying it would allow her to invest more money in domestic energy production.
"I think regulatory reform, coupled with tax reform, is exactly what we need to help make America great again," she said.
"We've done that," responded Trump, before detailing the ways that coal is purportedly making a comeback in West Virginia. Regular readers of The Fact Checker may recall that we gave him Four Pinocchios for claiming that he turned West Virginia around by cutting regulations on mining. This time, he pegged the state's economic growth to increased exports of "clean coal" to China.
There's a lot to unpack here. For one, are coal exports up? What makes the coal clean? And most important, Trump claims "things are changing" in states such as West Virginia, suggesting that those changes are a result of his administration's policies, but is that the case? Let's take a look.
From 2013 to 2016, coal exports steadily declined as a result of slow growth in global demand for coal combined with increased competition among the world's major coal suppliers, according to the U.S. Energy Information Administration. In 2012, coal exports peaked at 125.7 million short tons. By 2016, coal exports had declined to 60.3 million short tons - less than half the volume of the 2012 high.
But in 2017, coal exports soared. In the first quarter of 2017, coal exports were 58 percent higher than in the same quarter of 2016, according to preliminary data from the EIA. The exports are expected to slow as the year progresses, but the EIA's 2017 forecast of 72 million short tons is 19 percent higher than 2016 levels.
Where is all the coal going? Europe is the largest importer of U.S. coal, but demand for U.S. coal in 2017 has surged in China as well. From April to June in 2016, China imported a mere 1,107 short tons of coal. During the same period in 2017, China imported more than 1 million short tons of U.S. coal.
Trump's claim that there is a lot of coal being ordered by China checks out, but it also raises three questions: Is the coal clean, is the newfound demand a result of the Trump administration's policies, and is the coal coming from West Virginia?
The short answer to all three questions is: not at all, no, and nope.
The United States exports both thermal coal, which is used to generate electricity, and metallurgical coal, which is used to produce steel. And over the past year, U.S. exports of both types of coal have increased. But China primarily imports metallurgical coal from the United States. In 2017, more than 920,000 of the million short tons imported were metallurgical coal.
The distinction matters. The term "clean coal" refers to coal used for energy production. But the term is a confusion of concepts. When coal is burned to generate electricity, it releases a slew of noxious chemicals into the air, including carbon dioxide, sulfur dioxide, mercury and other heavy metals. The "clean" part of the coal refers to electricity-generating plants that "scrub" sulfur dioxide from smokestacks and bury carbon dioxide emissions underground.
The term was first popularized by the coal industry in 2008, after the Environmental Protection Agency asserted that carbon emissions were subject to regulations under the Clean Air Act. The coal burned is not cleaner, but the plant uses technology to reduce the effects of burning the fossil fuel. Yet Trump has made a habit of calling coal "clean." We've called him out on the term in a previous column, but the correction didn't seem to stick.
Metallurgical coal, in contrast, is not combusted. Instead it is carbonized and turned into coke, which is used to manufacture steel. In the process, most of the carbon is maintained in the coking coal. So Trump's claim that the United States is exporting more "clean coal" to China doesn't make sense.
Still, it is clear from the data that coal exports to China are on the rise. In China, domestic production of coal has declined just as demand for the resource has increased, according to a report on the commodity from the Reserve Bank of Australia. Investments in property and infrastructure have underpinned the demand for steel products within China. As a result, the price of coal, and coking coal in particular, has sharply increased.
Thermal coal prices have risen by 111 percent since 2016, and coking coal prices have risen by more than 200 percent over a comparable time frame, according to the bank. The sharp rise in prices makes it cheaper to import coal from the United States.
In addition, as China works to reduce pollution, its government has moved to shut down "inefficient, unsafe and polluting mining facilities," reducing coal production "capacity by around 1 billion tonnes over the next 3-5 years."
It's unlikely that West Virginia will be making up for China's reduced coal production. According to the EIA, 75 percent of West Virginia's coal is shipped to other states for use. The remaining quarter goes overseas.
In 2014, the value of coal exports to China from West Virginia ranked 13th out of the top 15 in the state, according to the Bureau of Business and Economic Research in West Virginia. And in 2015 and 2016, the bureau reported "essentially no coal" exports to China, causing a 90 percent contraction in exports from the state. (A report on the state's economic outlook by West Virginia University said the increase in coal production in the state was due to a surge in demand for metallurgical coal from the Asia-Pacific region as well as a temporary boost in demand from Australia after Cyclone Debbie damaged the country's rail infrastructure, but it did not specify China.)
The bureau estimates that the state will continue to see a modest decline in its overall share of U.S. coal exports as new construction along the Gulf Coast and in the state of Washington support the expansion of coal shipments to Asia and Europe from the Powder River basin in Montana and Wyoming and the Illinois basin in Illinois.
The White House did not respond to our request for comment.
The Pinocchio Test
Let's break down the president's comment to its core elements.
"If you look at what's happened in West Virginia and so many different places, we're sending clean coal. We're sending it out to different places - China."
Trump claims West Virginia is exporting "clean coal" to China. But this is wrong for two reasons. One, in 2015 and 2016, West Virginia exported virtually no coal to China. Two, there is no such thing as "clean coal." Electricity-generating plants can mitigate some of the effects of burning coal by capturing carbon dioxide and burying it underground, but that doesn't make the coal itself cleaner. And more important, the bulk of the exports of coal to China involve metallurgical coal, which is used to make steel, not generate electricity.
"So a lot of things are changing, and they're changing very rapidly."
Trump claims "things are changing' in West Virginia thanks to his administration's policies. But again Trump is trying to take credit for things outside his control. Market forces and external factors, such as China imposing regulations on mining its domestic coal supply coupled with an increased demand for coking coal, have contributed to a price surge, making it cheaper to import coal from the United States.
Still, Trump's claim is based on some factual information, namely that coal exports to China have increased in 2017. But his claims of coal cleanliness, his taking of credit and his suggestion that things are changing in West Virginia just don't hold up. We award Trump Three Pinocchios.