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King Coal is Losing Its Crown
You wouldn’t want to be King Coal these days. The coal mining industry, once a pillar of the US economy, is in the dumps as demand for the carbon-intensive black rock continues to plummet.
Here in the United States, coal demand fell by 21 percent from 2007 to 2012. With scores of existing coal plants scheduled to be retired in the coming years, the outlook has continued to dim for the industry. As a result, investors have fled the sector, and stock prices for major coal companies such as Peabody and Arch are down by 75 percent from only a few years ago.
Desperate to find a solution to their domestic problems, coal mining executives have sought markets abroad, hoping that growing demand in China and India would generate a new boom in coal exports. Yet here again, the news has been bleak for the mining companies. In the Pacific Northwest, a stiffening line of resistance in port and rail line communities continues to stymie proposals for new, large export terminals. And at the demand end of the pipeline, prospects seem no better, particularly in China, where the unprecedented “airpocalypse” smog of early 2013 sparked strong new government initiatives to finally rein in coal usage. In June, Bernstein Research, a top Wall Street analytical firm, privately circulated a report titled, “Asian Coal & Power: Less, Less, Less… The Beginning of the End of Coal.” According to sources who had read the 140-page report, Bernstein predicted an end to Chinese coal imports in 2015 and an absolute decline in Chinese coal demand by 2016.
As China shows signs of moving away from coal, more bad news for the coal industry quickly followed, this time in the form of dramatic shifts in policy by major international financiers. In June, President Obama declared that the US would no longer fund coal plants overseas except in rare instances. In July, the World Bank and the European Investment Bank both announced similar policies. Next came a joint announcement by the leaders of five Nordic countries that they also would end public financing of coal plants. A week later, the European Bank for Reconstruction and Development (EBRD) announced that it was dropping its support for the controversial Kulubara B coal plant in Serbia. Meanwhile, more than 17,000 people signed a petition urging the EBRD to take the next logical step and end coal financing altogether.
With the shift in policy by financial institutions making it more difficult to initiate new coal plants, environmentalists have increased their pressure on the World Bank to take a second look at recent approvals, such as the massive 4,000 MW Tata Mundra Ultra Mega Power Project in Gujarat, India. Although the project received a greenlight from the World Bank and construction was completed in March 2013, a new report by a fact-finding team led by former Chief Justice of Sikkim S. N. Bhargava pointed to a multiplicity of unresolved environmental issues. Led by a group called MASS (Machhimar Adhikar Sangharsh Sangathan, meaning Association for the Struggle for Fishworkers’ Rights), local communities, with additional support from the Sierra Club and other large groups, have demanded compensation for mangrove destruction, contaminated fisheries, and other impacts. MASS has filed complaints to the Compliance Advisor Ombudsman of the World Bank’s International Finance Corporation.
Here in the United States, the bad prospects for coal internationally continue to depress future mining prospects. One dramatic example: in August the US Bureau of Land Management failed to receive a single bid for 148 million tons of federally owned coal being offered for sale in the Powder River Basin.
Of course, bad news for King Coal is good news for Mother Earth. Just five years ago, NASA climate chief Dr. James Hansen wrote to Nevada Governor Jim Gibbons that ending emissions from coal “is 80 percent of the solution to the global warming crisis.” Though much remains to be done to phase out coal, the developments of 2013 have certainly raised the level of hope that King Coal will soon lose its crown.
Ted Nace is the author of Gangs of America: The Rise of Corporate Power and the Disabling of Democracy and the director of CoalSwarm, a collaborative information clearinghouse on U.S. and international coal mines, plants, companies, politics, impacts, and alternatives.