One Obama Campaign Promise That Came to Pass: Coal Bankruptciesby
U.S. coal production this year falls to 33-year low, EIA says
Five publicly-traded coal companies have sought bankruptcy
Here’s one 2008 campaign promise from President Barack Obama that has clearly come to pass: the U.S. coal industry is riddled with bankruptcies.
Nearly eight years ago to the day, Obama told the editorial board of the San Francisco Chronicle his energy and climate strategies would force utilities to shutter coal-fired power plants, stifling demand for the carbon-intense fuel. Since then, no fewer than five publicly traded coal producers have sought bankruptcy protection.
Obama has backed tougher limits on carbon dioxide blamed for climate change. New mercury standards that took effect last year led utilities to retire 23 gigawatts of coal-fired electricity, according to Bloomberg New Energy Finance. On Friday, his administration said it will stop leasing public land to coal developers and will weigh raising royalty fees for exploration while it studies the fuel’s environmental impacts.
Both production and demand for coal this year will fall to the lowest level since 1983, the U.S. Energy Information Administration said this week. On Monday, Arch Coal Inc., the second-biggest U.S. coal company, became the latest to seek bankruptcy amid tighter regulations and competition from cheap natural gas.
Tougher regulations are not entirely to blame as coal’s share of electricity generation falls to 34 percent this year from about 50 percent a decade ago. Utilities are increasingly choosing cheaper and cleaner-burning natural gas, which will account for 32 percent of power generation in 2016, EIA data show.
Still, Obama’s 2008 remarks seem prescient.
“If somebody wants to build a coal-powered plant, they can, it’s just that it will bankrupt them because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted,” Obama said in 2008.
Arch has followed Alpha Natural Resources Inc., Patriot Coal Corp., Walter Energy Inc. and James River Coal Co., in bankruptcy.
“In every case, it’s a combination of making acquisitions using some form of debt, much lower than expected natural gas prices and tougher regulatory standards,” said Jeremy Sussman, an analyst at Clarksons Platou Securities Inc. in New York. “On a pain scale of one-to-10, coal is easily at a 10.”