King Coal ran into a slag heap of bad news in 2014.
From a groundbreaking US-China deal to slash carbon pollution, to a plan by the Environmental Protection Agency to impose carbon limits on existing coal-fired power plants, to crumbling prospects for exports to Asia, to more dire predictions of coal plant retirements in coming years, to tanking stock prices for many of the industry’s giants, the US coal industry has little to celebrate this holiday season.
Taken together, those developments give plenty of reasons to recall the 2011 pithy assessment of coal’s future by the head of asset management at Deutsche Bank. “Coal is a dead man walking,” said Kevin Parker. “Banks won’t finance them. Insurance companies won’t insure them. The EPA is coming after them … And the economics to make it clean don’t work.”
Or, as then New York Mayor Michael Bloomberg put it last year, “Even though the coal industry doesn’t totally know it yet or is ready to admit it, its day is done … Here in the US, I’m happy to say, the king is dead. Coal is a dead man walking.”
On the domestic front, the EPA proposed a plan in June to cut carbon pollution from existing electric power plants by 30 per cent from the levels released in 2005. Those facilities are the largest US source and emit about one-third of our total carbon.
The plan sets specific reduction goals for the 50 states, and allows for considerable flexibility for how states can achieve the goals. It comes on top of EPA’s 2013 announcement of a separate plan to cut carbon pollution from new power plants. Congressional Republicans have vowed, with their upcoming majority rule in Congress, to block the initiatives.
The EPA announcement on existing power plants came shortly after the Energy Information Administration projected that low natural gas prices and slower electricity demand would accelerate the pace of coal-fired electric plant retirements. The agency said a total of 60 gigawatts of capacity would retire by 2020, with the bulk of that coming by 2016. In 2012, there were 1308 coal-fired generating units in the US, with 310 gigawatts of capacity, and in that year alone 10.2 gigawatts was retired.
The EIA said implementation by 2016 of another EPA rule cutting emissions of mercury and air toxics would drive part of the new wave of projected coal plant retirements. The Supreme Court’s decision in April to uphold yet another key EPA tool for fighting pollution, the “Cross-State Air Pollution Rules” (CSAPR), further cemented the dirtiest coal-fired power plants as untenable business propositions.
Last month, during a visit to China, President Obama and China’s president Xi Jinping jointly announced an agreement to cut their nation’s greenhouse gas emissions. Under the deal, the US pledged to cut its emissions 26 to 28 per cent below 2005 levels by 2025, advancing an earlier US target of 17 per cent below the 2005 baseline by 2020.
China agreed to reach peak carbon emissions in 2030, and to get 20 per cent of its energy by that year from sources that don’t burn fossil fuels. China would have to have an additional 800 to 1000 gigawatts of zero-carbon energy in place by 2030 to meet that goal, close to the total amount of energy now generated by the US from all sources.
Analysts quickly predicted that China’s pledge on renewables and greenhouse gas emissions would hurt nations that export coal to that nation, which earlier this year had announced a resumption of import taxes on some foreign exporters and which has been modernising its domestic coal industry in ways that are likely to reduce imports.
For the US coal industry, which has seen exports as its great black hope, a way to offset coal’s shrinking share of the domestic energy market and stiff competition from cheap natural gas, that is a daunting prospect. Exports this year are already projected to fall about 19 per cent below 2013, according to the EIA. That is in line with recent analyses by financial houses like Citi, Goldman Sachs and Morningstar which have bluntly said that international prices for seaborne thermal coal, down significantly in the past few years, are unlikely to recover and that China’s demand has peaked.
Plans to build new coal export facilities in the Gulf Coast region and Pacific Northwest, have fallen by the wayside. With the announcement in June by Oregon regulators that they are denying a permit for a proposed Ambre Energy terminal on the Columbia River, four of the six proposed facilities in Washington and Oregon have been cancelled or are now questionable. A half-dozen proposed new facilities in the Gulf Coast region have also been cancelled or apparently put on hold.
Just last month, Ambre Energy, which is involved in one proposed coal export terminal in Washington State, in addition to the Oregon one, sold its US holdings mining and terminal planned terminal projects to a Colorado-based private equity firm. Activists opposed to the construction of terminals in the Northwest said that was a vivid illustration of how the once ambitious export dreams of US coal producers are “a financial train wreck going nowhere.”
Near the end of this year, activists also served notice to the Obama administration that they are ratcheting up the fight against the Bureau of Land Management’s continued aggressive leasing of federally-owned coal from the Powder River Basin in Wyoming and Montana, the source of about 40 per cent of US coal production.
In a lawsuit filed in US District Court in Washington, DC, financed by the Paul G. Allen Family Foundation, Friends of the Earth and the Western Organisation of Resource Councils are seeking to force the BLM to conduct a full updated environmental review of the coal program’s impact, including its effects on climate change.
Allen, a billionaire co-founder of Microsoft, sent the administration a pointed reminder that for all it’s done on the climate front, the federal coal leasing program represents a glaring point of hypocrisy.
“We have no comprehensive understanding of air pollution and climate impact of the federal coal-leasing program because the Bureau of Land Management has failed to analyse the available data for more than three decades,” Allen wrote in a Huffington Post column. “The leasing of coal from federal lands undermines President Obama’s climate policy goals.”
Originally published by Climate Progress. Reproduced with permission.