Energy and Climate Change
June 15, 2016
Can U.S., nations meet emission goals?

With oil prices low, natural gas use growing and coal in decline, the U.S. energy sector continues to experience turmoil. The coal industry has lost 94 percent of its market value in the last five years as natural gas has virtually overtaken coal as the top fuel for electricity production. The industry also is wrestling with the consequences of climate change. Nearly 200 nations agreed at a summit in Paris in late 2015 to reduce greenhouse gas emissions to limit the rise in global temperatures. The Obama administration has unveiled its Clean Power Plan to lower power plants’ carbon emissions, but opponents have sued to block it. However, many states are addressing components of the plan — even some of the so-called coal states that are fighting the policy.

An excavator mines coal at Peabody Energy Corp.’s Somerville Central mine in Oakland City, Ind. (Getty Images/Bloomberg/Luke Sharrett)   An excavator mines coal at Peabody Energy Corp.’s Somerville Central mine in Oakland City, Ind. (Getty Images/Bloomberg/Luke Sharrett)

The world’s largest coal producer, Peabody Energy, filed for bankruptcy protection on April 13. The St. Louis-based company blamed excessive regulation, reduced demand in China and competition from other energy sources, particularly natural gas. Footnote 1 The energy industry is undergoing a seismic shift: Amid stiff competition from natural gas and renewables, as well as other challenges, four other U.S. coal companies filed for bankruptcy in the past year. And in the last five years, the coal industry has lost 94 percent of its market value — the price at which it would trade in the marketplace. Footnote 2

The bankruptcies do not mean coal will completely disappear as a key energy source. Last year, coal generated one-third of the electricity in the United States, according to the Energy Information Administration. Footnote 3 Some projections see that percentage holding for at least the next 25 years. Footnote 4 In addition, the world’s appetite for energy will increase as many developing nations continue to grow and urbanize. Coal may be dirty, but it is easy and cheap to burn.

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