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Coal Companies Declaring Bankruptcy


Today I happened upon the website “Climate Denial Crock of the Week” which reports that Peabody Energy, described as ” the world’s largest privately owned coal producer” has declared Chapter 11 bankruptcy in the United States.  In the comments section, someone reports that three of the four largest US coal companies have declared bankruptcy in the last week.  This site is definitely work a look: ClimateCrocks.

Apparently, the straw that broke Peabody’s back was their purchase of coal assets in Australia.  There has been a drop in energy and metals prices since mid-2014, related to slowing in the economies of China and Brazil.  In 2011, Peabody did a $5.1 billion leveraged buyout of Australia’s MacArthur Coal, which had reserves of 2.26 billion tonnes of coal in four open pit mines producing over 6 million tonnes of metallurgical coal (used for making steel) a year (these figures from Wikipedia.)

The Washington Post attributed Peabody’s bankruptcy, and the bankruptcy of 45% of the US coal-producing industry, to competition from cheap natural gas in the US market.  Natural gas has suddenly become very cheap because of fracking technology.  The coal bankruptcies have occurred before US regulations, including the “Clean Power Plan”, could go into effect, so the popular turning away from fossil fuels has not been the cause of the coal industry’s troubles.

While most environmentalists would agree that bankrupting the coal industry is a good thing, it does not appear to be directly due to popular revulsion; rather, competition from the vast quantities of cheap natural gas that have suddenly become available is the cause.  It seems to be purely coincidental that prices of solar-derived electricity have fallen to levels comparable to the price of coal and natural gas-produced electricity.  Dramatic decreases in the cost of solar photovoltaic systems have stimulated increases in system installation, but there is a long way to go before solar power will supplant fossil fuel power.  Advances in power storage and transmission will also be necessary to make fossil electricity a thing of the past.

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