Friday, August 07, 2015

Cheaper market for natural gas, not Obama or environmentalists, displacing coal industry

Coal advocates can blame President Obama and the Environmental Protection Agency for the downfall of coal, but the real culprit has been the market, where the rise of cheap alternative fuels like natural gas "have accomplished in just a few years what environmentalists and social advocates have struggled for decades to achieve," James B. Stewart reports for The New York Times.

Jorge Beristain, head of Americas metals and mining equity research for Deutsche Bank, told Stewart, “It’s kind of the ultimate irony that market forces, and not the administration or environmentalists, have displaced coal. It’s human ingenuity that found a cheaper, cleaner way to skin the cat, which is by producing natural gas from fracking. They’re both fossil fuels, of course, but burning natural gas puts out a lot less carbon than coal.”

Coal prices "have plunged about 70 percent in the last four years," and the number of underground and surface coal miners in the U.S. "dropped more than 10 percent, to just over 80,000 workers," Stewart writes. "There are now more than twice as many workers in the fast-growing solar power industry than there are coal miners." 

"Mountaintop removal, the poster child for environmental destruction, has all but ground to a halt as coal companies continue to close mines, lay off workers and slash capital spending on expensive new mining operations," Stewart writes. "Meantime, natural gas production has soared, and electric utilities have built up gas-fired generation to replace aging coal-fired power plants."

The coal industry isn't exactly dead, Stewart writes. In 2013, the U.S. "produced 985 million tons of coal, although it was the first time in 20 years that production fell below one billion tons. The U.S. consumed 924 million tons, 93 percent of it accounted for by the electric power industry, according to government statistics. In 2011, the U.S. consumed 1.1 billion tons."

Jeff Goodell, author of the 2006 book “Big Coal: The Dirty Secret Behind America’s Energy Future," told Stewart, “In the aftermath of the Bush-Cheney administration, there was this resurgence of the idea that coal was the American rock. America’s industrial strength was built on burning coal. No politician wanted to mess with coal.”

But with the shrinking of the industry, coal interests “are losing their clout, and they’re not going to get it back,” Goodell said. He told Stewart, “It’s becoming clear where the future is going. The politically smart thing is to jump on the renewables bandwagon." (Read more)

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