Trump’s Coal Gamble Is a Slap in the Face to the Green Deal

The United States emits roughly three times as much greenhouse gas per capita as the EU. Without its cooperation, the Union’s campaign against global climate change is becoming increasingly futile.

The Trump administration’s planned large-scale expansion of the US coal industry will increase supplies on global markets, but it will do little to reduce energy prices in the European Union. The main obstacle to cheaper electricity in Europe remains the Union’s strict climate regulation, particularly its emissions trading system.

The administration has unveiled a financial package worth around $700m to support coal-fired power plants and the construction of a new export terminal on the US west coast. The move is intended to enable a sharp increase in US coal exports, putting downward pressure on global prices. European countries that still use coal may therefore benefit from cheaper fuel, but the effect on consumers’ bills will be minimal.

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Cheap Coal, Expensive Power

Even if US coal were the cheapest available, European coal-fired power plants would still face substantial costs for their carbon dioxide emissions under the EU Emissions Trading System (EU ETS). Emission allowances therefore make coal-fired electricity artificially expensive in the EU and wipe out the price advantage of cheap imports.

Electricity prices in Europe have also long been linked to the cost of natural gas. Although Trump’s energy policy is intended to boost production, geopolitical tensions in the Middle East and the resulting threat of liquefied natural gas (LNG) supply shortages are driving gas prices higher. US investment in coal cannot offset the geopolitical risks that continue to unsettle the European energy market.

In the United States, however, Trump’s coal gamble could lead to cheaper electricity, making AI data centers more profitable and further widening the economic gap between the EU and the US, not least in artificial intelligence.

At the same time, the US administration is undermining the EU’s efforts to cut greenhouse gas emissions and achieve the carbon neutrality enshrined in the Green Deal. With the United States pursuing a sharply different energy policy, Europe’s ability to shape the global response to climate change is becoming ever more limited.

Originally published on the author's personal website lukaskovanda.cz.