The world has started moving away from fossil fuels in a noble cause to fight climate change and save the earth, while pushing an industry that fueled the growth story of mankind on to the brink of extinction. This transformation has also forced the largest coal companies in the US to layoff huge number of coal workers before running into bankruptcy. The surge of natural gas as a cheaper, environment-friendly source of energy – thanks to fracking- and solar panels with their associated subsidies are gradually replacing coal based energy. This has made coal companies spew venom at President Obama, who championed this cause and citing the reality of climate change as ‘Obama’s hoax’.
The share prices of coal companies are falling steeply as the US Energy Information Administration (EIA) reports that coal production is down by 29% in the first ten weeks of 2016 as compared to the same period in the previous year. The companies are also finding it hard to find their markets abroad in Asia and Europe, as there is an overhaul of coal utilization in every country including China and India. The largest coal company of the US, Peabody Energy filed bankruptcy that is followed by other major companies including Alpha Natural Resources, Patriot Coal, and Arch Coal. Peabody in its bankruptcy filing didn’t blame Obama but majorly found reasons in market forces including the Chinese economy, overproduction of shale gas and the regulatory changes.
This brings in further consequences of layoffs, as companies find it unprofitable to operate with cheaper natural gas and strict environmental regulations. The largest private coal producer in the US, Murray Energy warns 4400 job cuts in September, 2016. Robert Murray, the CEO of Murray Energy Corporation endorses Donald Trump, while he vehemently opposes Obama and his anti-coal policies. He is the only coal magnate who still runs successfully in the lonely race by acquiring a controlling stake in Foresight Energy LP for a deal of $1.4 billion. He has higher hopes that Trump will reside in the White House, once the Obamas vacate it.
In another historic turn of events, the CEO of the sixth largest coal company in the US, Donald Leon Blankenship was sentenced to a jail term for putting the lives of coal mine workers under risk with unsafe working conditions to gain more profit. He became the first CEO to be jailed in the history of US and the term ‘Obama’s Hoax’ was coined by him.
The coal companies had lost the battle after putting up a hard fight. In the last decade, $95 million has been spent on lobbyists by five coal companies and another whopping $1 billion on executives. According to a Bloomberg report, the companies have cut the employee benefits while the huge packages to the executives have remained unchanged.
The EPA, Environmental Protection Agency, under the command of Obama, aggressively upped the ante in the war against the coal companies and there was little the coal companies could do as the EPA’s measures were targeted against the coal using customers.
Globally, the largest oil companies have started in investing green energy and Saudi Arabia, the largest exporter of crude has started thinking to diversify its economy moving away from the fossil fuels.
Thus, what could be the future of the coal industry? With billions worth coal energy remain untapped beneath the ground, they will not be just neglected. What the coal industry would look forward is a Trump’s administration in November 2016. Even a Clinton administration wouldn’t oversee the billions of dollars as still the US is dependent on coal for one-third of its electricity, which may go down further in future. It would be interesting to see how the untapped coal is monetized by the US with no threat to the environment as the voice of climate change activists has been heard worldwide.
We are at the crossroads of a historic transformation from fossil fuels to green energy. But the consequences will have some collateral damage that needs to be handled positively as the hope for lives on earth has been kept alive for a little longer. Obama read the right message during his final State of the Union address ‘rather than subsidizing the past we should invest in the future’.