A Decline in Coal?

Written by: Casey Chan
Edited by: Owen Wogmon

Paradise Fossil Plant in Kentucky; Retired in 2019 due to reduced coal demand. Paradise Fossil Plant, Muhlenberg County, Kentucky [image on the Internet]. [created 2010 Mar. 4, cited 2020 May 16]. TVA Web Team.

As businesses shut down and people retreated to their homes to wait out a global pandemic, concerned eyes watched the struggling economy. How can the economy resist collapse during such a time, and, moreover, which industries will recover once quarantine ends? These questions will remain unanswered for some time, but the current crisis has already affected some energy industries in a massive way. 

The coal industry has been facing competition from other energy sources, such as gas and renewable energy, for some time. Even before the lockdown, the coal industry was experiencing a decline in revenue. In fact, since 2015, six of the seven major coal companies filed for bankruptcy. Demand for coal has decreased, with power plants projected in October 2020 to consume less coal in 2021 than “at any point since President Jimmy Carter was in the White House”. [1] To make matters worse, investors such as JP Morgan and BlackRock are restricting funding to coal mining or coal-fired power plants [2]. BlackRock, the world’s largest asset manager, divested from the coal industry in January 2020 because of its high pollution intensity and loss of economic return [3].

COVID-19 has only exacerbated this problem. Electricity usage has plummeted due to the closures of schools and company buildings during the national lockdown. As a result, the demand for coal has been severely limited. In 2019, coal made up about 24% of US electricity generation [4]. But, due to the lowest energy demand in 16 years, coal plants are expected to provide just 19 percent of the nation’s energy this year [5, 6]. Less coal consumption will cause coal stockpiles to build and production in subsequent years to drop as reserves are used. To make matters worse, the use of gas and renewables presents lower-cost alternatives to using coal. Total coal exports have also declined as demand from major US coal consumers, such as India, has dropped [7]. This decrease in coal use and revenue makes coal an at-risk energy industry. 

Recently, the decline in coal production has caused major economic and social changes. Major coal producers have been forced to slow down operations. This has led to increased bankruptcy filings, plant closures in several states, such as Pennsylvania, Illinois, and Virginia, and miner layoffs. Miners who are still working are only given work two or three days a week [8]. Foresight Energy, a coal company that controls approximately 2 billion tons of coal reserves in the Illinois Basin, filed for bankruptcy due to economic slow-down during the COVID-19 epidemic [2]. Currently, companies are closing down or stalling the reopening mines, such as Consol Energy’s 29-year-old mine in Enlow Fork [9]. These closures are representative of the struggles that the coal industry will face in the coming years. Other large power companies, like Duke Energy in the Southeast and Xcel Energy in the Midwest, are still planning to retire at least four dozen coal plants by 2025 [5].
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The national shut-down is creating a more difficult position for an already-struggling industry. The coal industry has been supported by financial buffers and reduced emissions regulations over recent years. The COVID-19 pandemic may continue to cause a major decline in coal use, giving renewable resources a more significant portion of the energy sector. 

Another consequence of the recent coal decline does not concern the economy, but rather the environment. A study published by Nature Energy revealed that past coal plant closures may have led to a decrease in asthma-related health issues in surrounding communities. While coal plants provide 25% of the world’s electricity, they also emit air pollutants such as sulfur dioxide, nitrogen oxides, and acid gases. This study’s data was collected from 2013 to 2016, when four coal-fired power plants in Louisville, Kentucky either retired, switched to natural gas production, or installed sulfur dioxide controls [10]. These closures or renovations were correlated with decreases in instances of severe asthma attacks and rescue inhaler use. It seems that less reliance on the coal industry could confer health benefits and reduce air pollution. 

The recent decline in electricity use has had other positive environmental impacts. For example, in April 2020, a 5.5-5.7 percent decrease in global carbon emissions was recorded. As a result of less fossil fuel emissions, there is also cleaner air in several parts of the world, including some of the most polluted cities [11]. However, these changes are not expected to last once businesses reopen. Large-scale changes in the global economic landscape would have to occur in order to maintain these environmental benefits. Only time will reveal the future of the energy industry, which could not only impact the economy, but the environment and health of the United States and its citizens.

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​Works Cited: 

[1] U.S. Energy Information Administration. Short-Term Energy Outlook: 2020 [Internet]. 2020 [Cited 2020 May 16]. Available from: https://www.eia.gov/outlooks/steo/index.php.
[2] Jamasmie C. Foresight Energy joins ranks of bankrupt U.S. coal companies. Institute for Energy Economics and Financial Analysis [Internet] 2020 Mar 11 [Cited 2020 May 16]. Available from: https://ieefa.org/foresight-energy-joins-ranks-of-bankrupt-u-s-coal-companies/. 
[3] Buckley T, Sanzillo T, Brown M. $7tn investor BlackRock announces Coal divestment, but not across all funds. EnergyPost [Internet]. 2020 Jan 20 [Cited 2020 May 16]. Available from: https://energypost.eu/7tn-investor-blackrock-announces-coal-divestment-but-not-across-all-funds/.
[4] U.S. Energy Information Administration. What is U.S. electricity generation by energy source? [Internet]. 2020 Feb 27 [Cited 2020 May 16]. Available from: https://www.eia.gov/tools/faqs/faq.php?id=427&t=3.
[5] Plumer B. In a First, Renewable Energy Is Poised to Eclipse Coal in U.S. The New York Times [Internet]. 2020 May 13 [Cited 2020 May 16]. Available from: https://www.nytimes.com/2020/05/13/climate/coronavirus-coal-electricity-renewables.html.
[6] DiSavino S. COVID-19: America hasn’t used this little energy in 16 years. World Economic Forum [Internet]. 2020 Apr 14 [Cited 2020 May 16]. Available from: https://www.weforum.org/agenda/2020/04/united-states-eneregy-electricity-power-coronavirus-covid19/. 
[7] U.S. Energy Information Administration. Short-Term Energy Outlook: 2020, Coal [Internet]. 2020 [Cited 2020 May 16]. Available from: https://www.eia.gov/outlooks/steo/report/coal.php. 
[8] Gruver M, Brown M. Coronavirus accelerates decline of slumping coal industry. APNews [Internet] 2020 Apr 11 [Cited 2020 May 16]. Available from: https://apnews.com/7b7e148bdfb32117b90c336c896c5620. 
[9]  Gough PJ. Consol to temporarily idle mine in Washington County. Pittsburgh Business Times [Internet]. 2020 Apr 14 [Cited 2020 May 16]. Available from: https://www.bizjournals.com/pittsburgh/news/2020/04/14/consol-to-temporarilyidle-mine-in-washington.html. 
[10] Casey JA, Su JG, Henneman LRF, Zigler C, Neophytou AM, Catalano R, et al. Coal-fired power plant closures and retrofits reduce asthma morbidity in the local population. Nature Energy [Internet]. 2020 [Cited 2020 May 16]. DOI: https://doi.org/10.1038/s41560-020-0600-2.
[11] UN News. Fall in COVID-linked carbon emissions won’t halt climate change - UN weather agency chief [Internet]. 2020 Apr 22 [Cited 2020 May 16]. Available from: https://news.un.org/en/story/2020/04/1062332. 
[12] Image source: https://commons.wikimedia.org/wiki/Category:Paradise_Fossil_Plant#/media/File:Paradise_Fossil_Plant-2.jpg