Coal industry braces for interesting times

Expect to hear a lot more about the US coal industry in the coming months, and only in part because of the tragic explosion in West Virginia. The accident at the Upper Big Branch mine in Montcoal, owned by Massey Energy, left at least 25 miners dead, with four still missing.

Massey itself is seeing its share price punished and one analyst said it was too early to tell what the overall effect would be on the company.  Although rival companies have seen share prices rise, the fallout for the wider industry could be substantial. Congress will look into it and the industry is predicting tougher regulations.

Much coverage is focusing on previous safety breaches in the industry and at Massey in particular, and editorials are making statements such as ‘Explosion demands action‘, ‘Accident an all-too-familiar anguish‘. Despite the company’s efforts to point out its safety record in terms of days lost is better than average, its many past health and safety citations and the combative personality of its chief executive, and among liberal bloggers, the company’s role in the political and socio-economic realm of West Virginia have also come under scrutiny.

Whether the attention settles on Massey itself or the wider industry remains to be seen, but the US coal industry was already in for an interesting few years. Some analysts have forecast that the new application of existing EPA regulations on sulfur dioxide and mercury would make new coal plants uneconomic – particularly if they require the best possible pollution reduction technology be used.  Cleantechnica reported this week that Xcel Energy, Colorado’s biggest utility, at a stroke is shutting down 30 per cent of the state’s coal-fire power, citing new state legislation.

Meanwhile the EPA’s recent decision about mountaintop mining has raised the ire of the coal miners, some of whom are planning to launch legal action against the agency.

All this is taking place against a backdrop of increasingly charged atmosphere for climate legislation, where support of southern Democrats in coal states is needed to give any bill a chance of passing the Senate.

Coal is abundant in the US and it is a cheap source of electricity, albeit one that is greenhouse gas-intensive. Now that natural gas, which burns cleaner than coal, is looking increasingly abundant, not to mention cheap – and lobbying efforts to point this out are gathering pace – the last thing the coal industry will want is a bout of bad publicity on safety.

[It shouldn't go unmentioned that a similarly horrible coal mine disaster took place in China a few days earlier; with 32 miners still missing and five confirmed dead. The New York Times reports that although mine fatalities in China have fallen since 2002, it has amongst the world's worst record. The Chinese government on Tuesday said more than 8,000 small coal mines "lacking in safety standards" would be closed down by the end of the year, Xinhua reported.]

Related links:

Will natural gas profit from the death of US coal? - FT Energy Source
Natural gas industry heartened by Colorado clean-energy plan - FT Energy Source
The death of US coal – FT Energy Source

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