The swift demise of Big Coal

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"The U.S. coal industry is imploding," said Brad Plumer atVox. Peabody Energy, the world's largest private producer of coal, last week became the fifth American coal company to declare bankruptcy in the past year, amid a "seismic shift" in the energy landscape. "A decade ago, coal provided fully half of America's electricity." Today, it's less than a third — the result of tougher regulations and a flood of cheap natural gas from fracking. But St. Louis–based Peabody, founded in 1883, was brought low by its own missteps too. In 2011, the company made a "disastrous bet on Chinese coal demand," just as China's economic growth was beginning to wane. Saddled with debt, Peabody executives insisted the market for coal would rebound. "It never did." The company, valued at $20 billion in 2011, is now worth just $38 million.

"We're witnessing something that we rarely see in America: the sudden and sharp collapse of a functioning industry," said Daniel Gross at Slate. Overall, the value of the companies in the Dow Jones U.S. Coal Index has plummeted 93 percent over the past five years. Natural gas now accounts for 31 percent of electricity produced in the U.S., up from 21 percent in 2007. The shift is being accelerated by regulations that discourage companies from building new coal-fired plants. Many states now "dictate that a certain amount of power come from renewable sources," and "virtually every utility in the U.S." has contingency plans for stricter emissions standards that could come down the road. The playbook is almost always the same: "Burn a lot less coal."

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The Obama White House deliberately killed the coal industry through impossible-to-meet emissions standards, said Stephen Moore at The Washington Times. Since 2009, 31,000 coal miners, truckers, engineers, construction workers, and others have lost jobs, decimating the economies of mining communities in Wyoming, Pennsylvania, and Illinois. "What is maddening about all of this is that coal is much cleaner than ever before." U.S. plants have reduced their emissions by 50 to 90 percent over the past several decades, thanks to technologies that capture CO² and store it underground. With an estimated 500 years supply, America could be the "Saudi Arabia of coal." Instead, we're determined to keep a "cheap and highly reliable" energy source in the ground.

Peabody's failure actually shows the limits of clean coal technology, said Richard Martin at Technology Review. The coal industry has invested billions in clean coal R&D worldwide, with little to show for it. Carbon capture still adds 30 to 40 percent to the cost of generating coal power, "a nonstarter if it's to be competitive with inexpensive natural gas." Coal's "dirty legacy" will outlive the industry itself, said Tom Sanzillo and David Schlissel at The New York Times. Abandoned mines "create long-lingering problems including polluted drinking water." By law, coal companies are required to clean up after mining, but with bankruptcies mounting, hundreds of millions of dollars in reclamation guarantees are now "in limbo." Big Coal's demise means taxpayers will be stuck with cleanup bills for years to come.