Barron’s Senior Energy Writer Laura Sanicola and Andy Blumenfeld, data analytics director of McCloskey by OPIS, discuss what’s ahead for energy this week.

Watch this week’s episode for insights into the recent executive order aiming to boost domestic coal production and use it to power new data centers. The discussion also covers the lack of economic incentives within the order to favor coal over natural gas, the administration’s limited capacity to force utilities to increase coal usage, and the impact of escalating international trade tensions and tariffs on coal dynamics, particularly exports.

Transcript:

LAURA SANICOLA: Hi, everyone. This is Laura Sanicola, author of Barron’s Energy Insider, and I’m here today with Andy Blumenfeld, data analytics director at OPIS. Andy, thanks for being on with me today.

ANDY BLUMENFELD: I’m happy to be here. Thank you.

SANICOLA: So I brought you on this week to talk about coal. The Trump administration has passed an executive order aiming to boost coal production domestically in the U.S. and use it to power new data centers. Can you give us a bit of a rundown of what the executive order said and why stocks kinda paired their gains after they rallied?

BLUMENFELD: So there was quite a big show at the White House on Tuesday and was viewed with, you know, within the industry with a lot of enthusiasm.

Certainly, components of the executive order, actually multiple orders, one of them included trying to alleviate some of the permitting issues for coal plants. I mean, it should be for coal mines in the United States, and especially trying to lift some of the restrictions on leasing federal coal, which applies mostly in the Western United States.

It also had components on it to to delay coal plant retirements, which have, it’s mostly because of environmental laws and in some cases, the plants are just, you know, aging out. But still, the the idea is to try and preserve these plants because power demand is growing faster than previously expected. A lot of this is from some of these data centers, the artificial intelligence, etcetera, which is boosting power demand to a point where some of the electricity providers are concerned about the reliability of the system.

SANICOLA: Right. Now some of that enthusiasm has waned. You know, you saw Peabody Energy, which had rallied kinda fall off, Arch Resources as well. What does the EO say about the underlying economics of coal production in the US?

BLUMENFELD: So what was not offered in the executive orders was any kind of, I call it an economic boost for actually using coal compared to other sources. So there was no production tax credit. There was no, capacity payment provision, at least so far that we’ve seen.

That would actually change the economics of using coal versus, in most cases, natural gas. And even today, natural gas prices and through the week have been quite volatile. And at the moment, they’re right about three dollars and fifty cents, which is near that tipping point between competitive coal unit and a natural gas unit. So at this point, we get to a situation where, if natural gas prices continue to come down, the coal units might not be competitive on an economic basis. So that’s even with all the promises and provisions in the executive orders, it still doesn’t push, coal consumption any higher than where it is at the moment.

SANICOLA: Does the Trump administration have the capacity to, entice utilities to increase their use of coal over natural gas, and is that expected?

BLUMENFELD: No. They really don’t have the capability of forcing coal units. There’s been some talk about a minimum capacity factor, but so far, there’s been no rules.

So the coal units are still gonna be under the exact same economic constraints that they’ve always been. So it gets down to how competitive they are and how necessary they are. There’s gonna become down to times of the year, particularly in the winter and the summer, where the coal units are really necessary because of high power demand. But, overall, it really doesn’t change the dynamics of coal versus other fuels, especially natural gas.

SANICOLA: Now, of course, going on in the backdrop is the U.S. escalating its trade war with China while imposing ten percent tariffs on most of the rest of the countries of the world with the exception of Canada and Mexico at 25 percent for at least ninety days until they’re renegotiated. How is that also affecting coal dynamics?

BLUMENFELD: So in particular to China, there was a boost in exports to China last year, but it’s probably, you know, gonna come down to a a very small portion of that this year because of these tariffs.

But once coal gets on the water, we’ll find a new home. The biggest impact has been the delay on the tariffs, the 90-day delay on tariffs, for the other countries, and their response has been to, in most cases, is to delay any of the retaliatory tariffs. So this has allowed some general boost to coal export picture.

The other side of this is as well as the US trade representative is looking to delay implementing the fees on Chinese-built or or companies that operate Chinese-built vessels at US ports. So that also is is viewed as a net positive for US coal exporters.

SANICOLA: Great. Well, thanks again, Andy, for joining us, and we’ll see everybody next week.