The London-based Carbon Tracker Initiative paints a bleak picture for the US coal industry and its investors in a recent report, which finds the market for thermal coal is in a “structural decline” in the United States, “squeezed out by an abundance of cheap shale gas and ever tightening pollution laws.”
The report, The U.S. Coal Crash – Evidence for structural change, has found that, over the last few years, US coal markets “have been pounded by a combination of cheaper renewables, energy efficiency measures, rising construction costs, and a rash of legal challenges as well as the shale gas revolution.”
“Cheap gas has knocked coal off its feet, and the need to improve air quality and ever-lower renewables costs has kept coal down for the count,” said Carbon Tracker’s senior researcher, Luke Sussams, who co-authored the report.
These issues are compounded by the growing belief that fossil fuel investments will be stranded in the coming decades.
“We’ve known for decades that coal posed serious health and environmental risks, but now coal has also become an investment risk as countries take serious actions to clear their air and protect the climate,” said Andrew Logan, director of the oil and gas program at Ceres, a non-profit sustainability organization.
“Investors have been pushing for coal and other fossil fuel companies to face facts and adapt their business models to thrive in a carbon-constrained world.”
Exploring coal industry index responses to different demand factors (01/01/07 – 20/01/15)
One of the primary “key takeaways” provided by the Carbon Tracker Initiative report is that, “whilst historically economic growth in the US has consistently driven increased coal use, there is now clear evidence of a decoupling of the two. In fact, despite GDP continuing to rise, domestic coal use peaked in 2007 and has been on a declining trend since.”