Coal has been used to generate power for millennia and became an indispensable resource as early as the Industrial Revolution. The twenty-first century has brought many changes to the coal industry, however, with many cleaner-burning energy sources vying for widespread use and making deep cuts to coal production.
As of 2016, in fact, coal accounted for about one-third of power generation in the U.S. whereas 2005 numbers put coal at the top of the industry, with approximately 50 percent of total energy production. The decline is expected to continue, according to industry leaders.
Major companies are feeling the hit. 2015 saw coal mining giants Patriot Coal, Walter Energy and Alpha Natural Resources file for bankruptcy. The following year, Arch Coal (ACI), the U.S.’s second-largest coal mining company, followed suit.
Peabody Energy Corporation, the longtime leader in global coal production, has also seen major changes to its bottom line over the last several years. The company filed for Chapter 11 in early 2017 and announced plans to shut down its massive Navajo Generating Station, considered the largest power plant west of the Mississippi River with a capacity of 2,250 megawatts, in 2019.
Along with Peabody’s Mohave Generating Station in Southern Nevada, more than 200 U.S. coal power plants have closed their doors since 2000. Further sinking the coal industry, the U.S. government stopped granting coal mining leases on public land in 2016. This is a major blow to the industry since an estimated 40 percent of coal in the U.S. is mined on federal lands.
Factors Leading to the Downfall of Coal
Environmental concerns at a global scale are the biggest contributor to coal’s decline. With climate change remaining a hotbed issue throughout the world, coal stands out as a major offender. About 80 percent of total power plant carbon emissions come from coal plants, which also release carcinogens and dangerous neurotoxins including mercury and lead. In addition, power generation, including coal and nuclear power, is the No. 1 source of global warming emissions in the U.S. It is no wonder that green energy companies like Stream Energy rise to the top.
During the Obama Administration, the Environmental Protection Agency (EPA) enacted its Clean Power Plan (CPP) in an effort to address climate change. One of the CPP’s key points is the continual reduction in power plant carbon emissions, putting the coal industry in jeopardy since the energy source is a major contributor to air pollution.
The EPA has also put regulations in place that are designed to improve global air quality by reducing U.S. coal capacity. Since 2002, more than 50 gigawatts (GW) has been retired, and it’s estimated that another 14 GW will be retired by 2028.
According to many studies, the cost of coal is massive when healthcare is factored in. Researchers at Carnegie Mellon University found that health costs related to air pollution come to about $130 billion annually. Pollution from coal-based power plants can cause asthma attacks, other types of respiratory issues, heart attacks, and even premature death.
Adding to the problems plaguing the coal industry is the general stagnation in energy consumption since 2005. It appears that U.S. consumers are being more mindful of their energy use, frequently purchasing energy-efficient appliances and electronics and seeking alternative energy sources that burn clean and reduce fewer carbon emissions.
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Changes to the Power Industry
Some coal industry leaders have found ways around the recent environmentally motivated regulations, but they are not likely to bring the industry back to its former prominence. With “unabated” power plants being phased out across the world, many plants are being outfitted with carbon capture and storage (CCS) technology.
CCS is designed to capture and permanently bury the harmful emissions that may contribute to global warming. Power plants with CCS technology are considered “abated” and are not subject to closure in many global markets (Facebook).
Despite the attempts by the coal industry to clean up their act as much as possible, several sources of clean-burning energy are beginning to saturate the global market. Investors are adapting to the changes to the power industry, embracing solar and wind power as well as natural gas, which is considered cleaner than coal because it releases fewer carbon emissions. In fact, for the first time in recent history, in 2016, Natural gas surpassed coal as the leading source of U.S. power generation.
Renewables, a term that primarily encompasses solar and wind power, have also gained traction in the last decade. In 2010, renewables produced about 2 percent of power in the U.S. As of 2016, the number had jumped to 7 percent.
Other industry changes include cutting out the middleman during the sales phase and giving consumers more choices among energy suppliers than ever before. One notable company, Stream Energy, has used word of mouth to become a global leader in energy sales, effectively changing the residential energy market for the better.
Founded in 2005, Stream Energy is headquartered in Dallas, Texas, and was named one of 2017’s ten most trusted retail electric providers (REPs) in Texas by Market Strategies International. Also in 2017, Stream expanded into the state of Illinois, its eighth U.S. market. Stream also serves clients in Washington, D.C., Maryland, New Jersey, New York, Georgia and Pennsylvania.
Global Coal Markets: The Numbers
While reports indicate that coal-based power is gaining momentum in Southeast Asian markets, Europe’s coal industry mirrors that of the U.S., at least in regards to a major reduction in power generation. As reported by the Economist in March 2017, coal dropped to third place in power generation within the European Union, with nuclear energy and renewables taking the top spots. Between 2013 and 2016, coal production fell significantly – an estimated 22 percent below 2012 numbers.
European countries that have pledged to phase out coal power include Finland, France, and the United Kingdom. In fact, three coal plants in the U.K. shut down in 2016 as the energy source shrunk to 9 percent of the country’s power generation, a historic low.
Looking to the Future of Energy Production
Forward-thinking companies such as Stream Energy are at the forefront of today’s constantly evolving energy landscape. With natural gas prices at nearly record lows and renewables gaining momentum within the industry, coal-generated energy may soon become obsolete as the world continues to look for ways to reduce pollution.