Coal industry hopes for Trump but prepares for Clinton

Republican presidential nominee Donald Trump has won over the U.S. coal industry by promising to revive the downtrodden sector and scrap regulations if elected.

But the industry has a Plan B if the New York businessman loses to his more green-minded Democratic rival Hillary Clinton on Tuesday: carbon capture and storage, a technology that captures carbon dioxide from burning coal and injects it underground, where many scientists are optimistic it cannot contribute to global warming.

Coal backers see CCS as a politically feasible solution that could help the next president thread the needle between environmentalists and a once-powerful business that is in desperate need of a lifeline. They have been pushing both major party candidates to embrace it.

Staff at the National Enhanced Oil Recovery Initiative held separate teleconferences with the Clinton and Trump campaigns in August on the merits of a bill that would extend and raise tax breaks for coal and other fossil fuel companies doing CCS in oilfields, from $10 per ton of carbon stored to $35 a ton. NEORI is made up of diverse groups ranging from environmental organizations to some of the country's largest coal companies.

Weeks after the teleconference, Clinton announced her support for the bipartisan CCS bill. Nearly 20 of 100 senators, including Clinton's vice presidential running mate Tim Kaine, also back it and expect it to gain momentum.

Trump has not given a position on the bill, but a senior policy adviser to Trump's campaign, Dan Kowalski, said he "supports all sources of American energy. This includes clean coal and research into new coal technologies."

"My sense is Clinton recognizes that, especially in certain parts of the country, coal-based energy and other fossil fuels provide some of the highest-paying jobs in our economy,” said Brad Crabtree, of the Great Plains Institute, a policy group that pushes for the deployment technologies to reduce fossil fuel emissions, and the parent organization of NEORI.

Oil drillers have used CCS since the 1970s, pumping carbon dioxide into aging reservoirs to force out remaining crude. Coal advocates want to expand CCS to coal-fueled power plants. But the business is expensive and needs incentives.

TRUMP'S PLEDGE, CLINTON'S PRAGMATISM

Trump's anti-regulation stance has made him a clear favorite of the industry, because it suggests lower costs and risks for major producers like Arch Coal Inc, Peabody Energy Corp, Cloud Peak Energy Inc and Alpha Natural Resources Inc.

The sector has given about $223,000 in support of Trump, compared with none for Clinton, according to a Reuters analysis of contributions over $200 made by several of the biggest coal companies and their employees.

Coal faces a potentially starker future under Clinton. She has promised to build on Democratic President Barack Obama's disputed Clean Power Plan to curb carbon output and suffered political damage earlier this year when she said that by doing so "we're going to put a lot of coal miners and coal companies out of business."

Those jobs are already quickly evaporating.

The industry now employs only about 65,000 miners across states like West Virginia, Pennsylvania, Kentucky and Wyoming, down from around 91,000 in 2011, according to the most recent statistics from the U.S. Department of Energy. The country's top two biggest coal companies, Arch and Peabody Energy, this year filed for bankruptcy.

Neither Trump scrapping federal regulations nor the expanded use of CCS will likely restore the sector, where production last year dropped to the lowest level since 1986, to its previous heights. Coal faces a dual headwind of both a global push for cleaner energy such as wind and solar power, and drilling technology that has made its competitor natural gas abundant - and cheap.

Jeff Holmstead, a Republican lobbyist at Bracewell Law, said if Clinton wins, much of coal's fate in coming years could be determined in the first 30 to 60 days. By then it should be known whether she appoints staunch environmentalists at departments including the Environmental Protection Agency and the Department of the Interior.

But he is confident that Clinton would work with industry on CCS and allow "coal to play a role in the future in the U.S. power sector."

Elizabeth Gore, a Democrat who lobbies with Brownstein, Hyatt, Farber and Schreck for a coal-burning cooperative said coal companies must "find the marginal changes they can make to buy themselves some time, to provide more of a soft landing."

(Reporting by Timothy Gardner; Additional reporting by Grant Smith, Valerie Volcovici and Emily Stephenson; Editing by Richard Valdmanis and Lisa Shumaker)