Ever since the industrial revolution hit our shores and began transforming our country, coal has been our power king. Not coincidentally, the industrial revolution is also when we began emitting vast amounts of carbon dioxide into the atmosphere — where it remains for centuries. So we’ve been collecting it ever since, resulting in the health and climate problems we face today.
After coal overtook wood as our chief energy source around 1880, it looked like it would be powering our world forever. Until now.
The Mountaintop Has Crumbled
Coal usage has been in slow, general decline for years, but over the past year things escalated, and the impact has been swift and stunning. Of the top six largest U.S. coal companies, four have recently declared bankruptcy. Patriot Coal (filed for the second time), Alpha Natural Resources, Arch Coal — the second largest supplier, and lastly the chief: Peabody Energy, founded in 1883 and the #1 largest supplier of coal in the U.S., declared in the country’s largest bankruptcy filing this year.
Other major casualties include Walter Energy and James River Coal Co. All told, with the Peabody announcement, companies representing nearly half of the country’s coal production have recently filed for bankruptcy.
On the ground, the decline shows in the reduction of coal-fired power plants. The Sierra Club is tracking the movement, and says that 242 plants have been retired in the U.S., with 281 remaining. With Dynegy, Inc.’s recent announcement of the shuttering of 3 coal-fueled units in Illinois, it brought the total to over 100,000 MW of coal-fired power retired in the U.S. since 2010.
Throughout the country, all but 2 states have decreased their consumption of coal over the past 8 years (hello Nebraska and Alaska). Even Texas, which is by far the #1 consumer of coal-fueled power, reduced its appetite by 16%; California by a leading 96%.
In total, U.S. production slumped to a 30-year low in 2015, and estimates show production declining by another 29% for the first 10 weeks of 2016 (vs. same period 2015). Overall, coal usage in the U.S. dropped almost 30% in the past 10 years according to the U.S. Energy Information Administration (EIA), and they anticipate coal will stop being the country’s biggest source of electricity this year, finally relinquishing the crown to clean energy.
The Rise of Clean Energy
Natural gas is a significant factor in coal’s decline, as more and more active plants are converting over to this cheaper option. Gas prices have plummeted due to abundant supply, which in large part is due to the advances of hydraulic fracking of gas-bearing formations. But prices go up and down, so when gas prices increase, some expect coal to retake the throne. Ah, but at long last, there is a new player in town.
The world is now adding more renewable energy power (capacity) per year than coal and natural gas combined. In data just released by the International Energy Agency, solar power now accounts for more installed capacity than any other power source. Bloomberg New Energy Finance forecasts that by 2020, renewables will account for an estimated 208 GW capacity vs. 91 GW for fossil fuels, and by 2030 there will be over four times as much renewable capacity added as compared to fossils. The axis has shifted.
Within renewables, solar will grow to become the dominant provider, and is expected to be the world’s biggest single energy source by 2050, according to the EIA. Wind will be second and hydro third. For the declining fossils, natural gas will dominate, with coal second and oil essentially out of the power generating picture by 2030.
Relatedly, a monumental shift is happening as well in the financial sector, as energy finance is moving away from coal and fossil fuels to renewable energy. Goldman Sachs, Citi and Bank of America have all recently announced multi-billion dollar, long-term investment programs in renewable energy. Last year, worldwide investments in coal and even in gas-fired power plants decreased to less than 50% of that going into solar, wind and biomass generation alone.
On the borrowing side, Bond prices for coal are falling, meaning the costs of borrowing for coal companies is increasing. And more dominoes fall.
The Shift in Jobs
Of course all this has a big effect on jobs, but here as well we see a major shift. While coal is losing jobs, clean energy is gaining, and the two are not mutually exclusive. In 2015, solar alone surpassed both coal mining and oil and gas extraction in overall job positions in the U.S., and the gap will widen hereafter. U.S. solar jobs grew more than 12 times overall job growth in 2015, more than offsetting the loss of jobs in the coal industry.
That may not mean very much to someone that’s just lost their job. But here as well, clean energy can be a positive: unlike coal, renewable energy jobs are not limited to any section of the country and are available to those interested in transitioning. For example in West Virginia, deep in coal country, there are programs now that specifically train people in coal communities for renewable jobs, and the state of Colorado is backing programs that are training both coal and oil and gas workers in renewable energy.
Those clean energy investments are helping to fuel this job growth, although in this election year it has been hotly debated if the federal investments are negatively impacting jobs. But in a study by the Political Economy Research Institute of UMass Amherst, an investment model of around 1.2% of U.S. GDP shows a creation of almost 3 million net new jobs after deducting the job loss in fossil fuels.
Where To From Here?
Overall, coal’s future looks bleak, as the rise of clean energy continues to look promising. The financial markets, the states, new federal and EPA guidelines, even the public have all made significant steps away from coal and toward a renewable energy future.
Moving forward, it seems the only way for coal to survive as a viable, long-term power source would be to innovate its way into being a clean-burning fuel, which given the massive cost and time needed to do so, isn’t likely. Even so, you’d still have major downsides, such as land destruction and dangerous working conditions, etc. We now have vastly better options in clean energy, available now.
The #1 cause of climate change is not dead yet by any means, but King Coal’s demise has started, with this profound and historic rise in clean energy that we’re now seeing. This country has lived on coal since the dawn of the industrial revolution, and grew mightily from its energy. But there were serious consequences, which we can now stop from growing further.
As incredible it is to think of coal as a disappearing energy source, it is as exhilarating to see the rise of clean energy, and how it can take the place of coal, if not fossil fuels, in our energy future.