Trump, in a speech on Thursday, laid out his proposed energy policy to be implemented if he becomes the next president of the United States. His plan echoes his populist rhetoric by claiming he will bring full energy independence to America and bring back thousands of coal jobs in regions that have suffered from a collapse in the price of coal and other fossil fuels. In addition, Trump has pledged to eliminate regulations aimed at curbing CO2 and greenhouse gas emissions and reducing the influence of the Environmental Protection Agency (EPA). (For more, see also: An America with Donald Trump as President.)
His focus will be on increasing domestic production of fossil fuels, as he feels that the return on investment for alternative energy sources such as solar and wind require very long payback periods and the need for large amounts of government subsidization. Not only does he say that wind energy is very expensive, but that turbines have killed millions of birds.
“We have so much potential energy people wouldn’t even believe it.” -Donald J. Trump
But people shouldn't believe his wild claims that the U.S. has more than 1.5 times the combined proven oil reserves of OPEC countries. In an excerpt from the Washington Post: "the United States had proven oil reserves of 39.9 billion barrels as of Dec. 31, 2014. Saudi Arabia alone has proven reserves of about 268 billion barrels, and four other OPEC members have greater reserves than the United States. Trump also claimed that the United States has more natural gas than Russia, Iran, Qatar and Saudi Arabia combined. In fact, according to the EIA, the United States ranks fifth in the world, and its natural gas reserves come to less than a tenth of those countries combined."
Trump is not the first candidate to advocate for energy independence. Ever since Richard Nixon and the oil shocks of the 1970's it has been on every president's campaign agenda. What makes Trump's plan different is his aversion to alternative green energy sources and a preference to re-energize the flagging fossil fuels industry.
Is Trump Right About Wind & Solar?
Trump's criticism of alternative energy sources, particularly wind and solar, have been challenged by experts. A recent report by Bloomberg finds that wind power has become the most cost-effective method of energy generation in Germany and the U.K., even without any subsidies.
The investment firm Lazard each year publishes an analysis of the levelized cost of energy (LOCE) for various sources of power generation, and over the past six years, wind energy costs have dropped by 61%, ranging between $0.032 and $0.077 per kWh in 2015—compared to $0.006 to $0.0156 for coal. This analysis computes costs before any subsidies are accounted for. (For related reading, see also: Top Wind Power Stocks, ETFs.)
Solar power has had an even more impressive improvement in cost, falling 82% over the past six years, however it still remains a more expensive option. If the trend continues, though, solar photovoltaic power may become a truly cost-effective means of generating electricity.
Interestingly, it has come to light via reporting by Mother Jones that Donald Trump's campaign manager, Corey Lewandowski, previously worked a lobbyist for the solar power industry in Washington.
What About Bringing Back Coal Jobs?
Since 2004, coal has been losing market share to natural gas and renewable sources of energy around the globe. The world market price of coal has been falling over the past few decades, and recently it has been hit hard. Coal producers have been facing losses, with a number of them declaring bankruptcy. Chinese coal production has also added to a global oversupply, further depressing prices. The Market Vectors Coal ETF (KOL) is down nearly 40% over the past 12 months, and has lost nearly 85% of its value over the past five years. It will be difficult for any president to promise that he or she would be able to create thousands of jobs in an industry where both the demand and the market price have been falling so rapidly and over such a long period of time. (For more, see: Is the Coal Investment Story Over?)
Trump has been publicly blaming the Clinton administration for enacting environmental protection regulations that have "put coal producers out of business." De-regulating the coal industry and allowing producers to pollute at will will not bring those jobs back.
Of course, out-of-work coal miners and those in regions that have been floundering due to the demise of coal will find Trump's proposition attractive, even if there is no practical way to fulfill those promises.
The Bottom Line
Donald Trump is appealing to middle America with his promise to make America great again, and part of that story is now his energy policy that promises to bring coal jobs back to the U.S., to eliminate pollution regulation and to end subsidies on green energy. Experts tend to agree that Trump's plan is regressive and will not bring back lost coal jobs, and that alternative energy production is becoming a more cost-effective solution each year.