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Are we Winning the War on Coal?
By James Griffitts, Contributor

Coal Economic Issues Structural Coal plantIn Washington, tightening EPA restrictions and policies favoring cleaner energy have led some to characterize present policy as a war on coal. Whether or not an actual war on coal is underway, a recent report released by the Carbon Tracking Initiative indicates that the decline in the US coal sector is not cyclical, but structural. The report states that the market share losses suffered by the coal industry, 10.5% of the US energy market in the last decade, are the result of more than just increased regulation and are likely signs of a broader trend away from coal.

Coal's decline has been to the benefit of cleaner energy options. The largest market share loss has been taken by natural gas, though a significant portion has also been taken up by the expanding renewable energy sector, which grew over 4% during the same period. Investors are fleeing from coal, as many coal companies have gone bankrupt in recent years. Peabody Energy, the country's largest coal producer, has seen its stock drop nearly 80% over the last two years, and most other producers are seeing similar effects. The Carbon Tracking Initiative's report indicates that coal's losses at the hands of clean natural gas and growing renewable energy are not temporary, and that the industry will almost certainly continue its decline.

Coal plants across the nation have closed or converted to burn cleaner fuels. Production of natural gas has expanded dramatically, putting the squeeze on coal extraction nationwide. As national concern over climate change continues to rise and government commitment to reducing emissions increases, the ability of the coal industry to rally is dubious.  While many in the coal sector hope to see rising international demand compensate for the loss of domestic markets, the future of the international coal market is in doubt as well. China, the world's largest consumer of coal and the last, best hope for the industry's growth, has pledged to begin limiting carbon emissions and coal consumption. This comes in the wake of decreasing demand across Asia and rising competition from Australia and Indonesia. If there is a war on coal, it is not merely being fought in the US but across the world. Both domestically and internationally, the coal industry's fortunes have sunk low, with coal exports on track to hit a five year low in 2015.

Clearly the coal industry is reeling, and seems unable to compete in a 21st century market. Whatever the truth about the existence of a war on coal, the fact is coal producers are on the verge of collapse, and there seems to be little that any branch of government can or will do to save it.


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Posted: May 13, 2015