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Coal’s Comeback Year Runs into Trouble

By Nick Cunningham | Thu, 06 March 2014 23:22 | 0

The U.S. coal industry is expected to have a comeback year in 2014, regaining some of the ground it lost in the electric power industry over the last 3 years or so. Low-cost natural gas shoved aside the coal industry, which has been plagued by rising costs and increasingly stringent environmental regulations. But the run up in natural gas prices since 2012 – especially since the beginning of 2014 – provides an economic lifeline for struggling coal businesses. Coal can compete once again, at least for the time being.

That may be true as far as the economics go. But the coal industry has had a truly epic year so far in terms of environmental damage and bad publicity. The industry’s multiyear campaign to rebrand itself as “clean coal,” has achieved a certain level of success. Even President Obama has bought into this idea, if only to throw the industry a bone as his administration tightens the screws on air pollution. His latest budget calls for an increase in spending under DOE’s Clean Coal Research program.

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But that rebranding has run into some serious trouble. Over the last two months, the coal industry seems like it can’t get out of its own way. First came the chemical spill in West Virginia that cut off water supplies to 300,000 people. Then Duke Energy leaked tons of coal ash and millions of gallons of contaminated water into the Dan River in North Carolina. Then there was a second toxic coal spill in West Virginia. Then Duke managed a second leak into the Dan River. It was almost as if coal companies in the two states were competing for headlines.

The latest news is that the EPA has fined Alpha Natural Resources Inc. $27.5 million for violating water pollution rules. One of the largest coal producers in the country, Alpha will have to spend an additional $200 million to install pollution control equipment at its mines to reduce toxic waste discharges. The costs will hit Alpha pretty hard, but many environmentalists see it a different way. The coal industry has repeatedly and systematically violated environmental laws that they seemingly factor in fines to their operations.   

“These problems continue and the government's solution is the same: fines and a plan to make individual mines better — which didn't stop the problems last time,” said Dianne Bady, founder of the Ohio Valley Environmental Coalition, according to Al-Jazeera America. “Considering that Alpha is a four billion dollar company, this fine is just another acceptable cost of doing business.”

Coal’s allies are still fighting for the industry. Just this week, Senator Joe Manchin (D-WV) and Rep. Ed Whitfield (R-KY) pushed a bill that would largely strip the EPA of its ability to put greenhouse gas emissions limits on existing power plants. The House may pass it, but it is likely going nowhere in the Senate. And President Obama would veto it even if it did get to his desk.

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While the fight at the federal level has been going on as long as Obama has been in the White House, what is different this time around is the harm being done to coal on its home turf. The string of environmental disasters in only two months of the year to date has likely done irreparable harm to the industry’s image. The disaster in North Carolina may go all the way to the Governor’s office, exposing a cozy relationship between government and industry. In West Virginia, where the government and coal have a quasi-symbiotic relationship, coal’s allies have been scrambling to minimize the damage to the industry and stave off regulation in an anti-regulatory state. To be sure, the states that have traditionally supported coal show no signs of abandoning it, but with so many people so clearly impacted by environmental mishaps over the last two months, support for coal even among its allies might be a bit more muted going forward. And with the industry fighting for its very survival over the long-term, it cannot afford to lose public support.

By Nicholas Cunningham of Oilprice.com

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Nick Cunningham
Company: Oilprice.com

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