Coal’s End Of Days

The Article: Coal Is Doomed by Philip Bump in Slate.

The Text: Imagine I hand you the keys to an Apple Store.
It’s a big one, a warehouse-like, multiacre affair running floor-to-ceiling with Apple products in tightly packed rows. And it’s yours to do with what you want.
Obviously, you’d sell everything. And within an hour, you’d be making money hand over fist. You’d have some costs—staff, bags, whatever—but nothing big. Customers would be lined up out the door. Even if I charged you a $5 fee for every device you sold, it’s a spectacular deal.

After a while, though, things start to slow down, almost imperceptibly. You’d need more staff to pull items off shelves farther back in the store or closer to the ceiling. The hectic pace of extracting the right product would invariably lead to spills and clutter. More popular items like iPhone 5s would become harder to get to than things like first-generation iPads. But these are minor distractions.

Eventually, you start to sweat. You’ve given up your regular job to manage this massive moneymaker. It’s taking you more and more time to find the products people want. It’s not quite the cash cow it used to be. So I make a deal with you: If you find other Apple warehouses, I’ll let you run those for the same fee. You dedicate staff to seeking out new stores, and you find some. But in each, the same problem repeats itself: a burst of high profits until products are harder to find.

Late one evening, the New York Times breaks a story revealing that the use of Apple products has been linked to serious, long-term health consequences. The effects are usually tiny, incremental but potentially serious; in very rare cases, they’re suddenly fatal. There’s some outcry, but the time lag and mental distance between use of the products and the health problems are great enough that most people ignore the link. The government promises to look into the problem, but in the interim, sales barely stumble at all.

But then you face a real problem. Something newer comes along. Better. Cheaper even than your bargain-basement prices, more popular, hipper. One day you’re running an Apple Store. The next you are selling BlackBerry. Your customer base rapidly dries up. Customers in India and China are still eager to buy, but finding and shipping the products across the ocean proves harder than it looks.

You used to be the luckiest person in the world, blessed with the sweetest deal imaginable. Now, you run a string of stores in vacant malls with plummeting margins, unpopular products, and the looming specter that every BlackBerry you sell is the last nail in some poor fool’s coffin.

You run, in short, a coal company. It is possible that there is a magic spell somewhere out in the world that can reverse the fortune of the coal industry. But the way things are going, that spell is buried deep underground where it’s just far too expensive to get to. The American coal industry has key life-support mechanisms beeping by its bedside, but it’s doomed.

That’s difficult to deal with, particularly if you’re the owner of a coal company. It’s hard to deal with if you’re a coal miner or live in a coal community. Coal has been so successful for so long, its halo of economic benefit so wide, that affection for coal is in some places religious. At tourist shops in West Virginia you can buy statuettes carved from coal, including crucifixes. Coal mines were once portals into the middle class. In the future they won’t be.

The Apple Store analogy is the birth and decline of the coal industry in brief.
The good products are harder and more expensive to get to. After decades of extraction, rich seams of high-quality coal that run near the surface have been exhausted. The Department of Energy’s Energy Information Administration suggests that the United States has enough coal reserves to last 239 years. In a breezy aside, it notes that “advancements in mining technologies have tended to compensate” for difficulties in extraction. “Mountaintop removal” mining is one such advancement. Coal companies simply blow apart the tops of hills instead of digging mine shafts, saving time and expense. (This haphazard process has polluted more than one-fifth of streams in southern West Virginia.)

Other coal companies have turned to lower-quality coal, like high-sulfur coal from Illinois, because the economic advantage of easy access to high-quality coal has vanished. Digging deeper and longer for higher-quality coal is not much cheaper than easily digging up lower-quality coal and running it through better “scrubbers,” devices that remove the sulfur from emissions. Remember those scrubbers. We’ll come back to them.

Coal isn’t cool anymore. Earlier this year, for the first time ever, use of natural gas for power generation in the United States passed the use of coal. Coal use has since regained the lead, but the trend line of coal consumption is plummeting. The advent of hydraulic fracturing (fracking), for all of its own challenges, has created a large enough supply that power generators have widely converted to cheaper natural gas as a fuel source to power generators.

Fracked natural gas has a key advantage over coal: It is near the beginning of its life cycle, where coal is near its end. The shadow of resource limitations hangs over both, but constrained access is already manifest in the coal industry. For some time, fracking will continue to yield a massive supply of natural gas—so much so that the market is seeing a glut. Coal can’t match that production.

It is unhealthy. Which is an understatement. Coal is deeply unhealthy, in at least two ways. Burning coal emits a variety of unpleasant chemical compounds and microscopic soot particles. The Environmental Protection Agency suggests that particulate pollution can cause nonfatal heart attacks, worsen asthma, reduce lung function, and lead to premature death. In a 2010 report, the Clean Air Task Force suggested that coal plants lead to tens of thousands of deaths a year, as well as hundreds of thousands of heart attacks.

Oh, also: Coal is responsible for about one-fifth of the greenhouse gasses that contribute to climate change. Climate change is extremely unhealthy—and coal’s contribution to it is the focus of the hardest-fought efforts by the EPA.

Over the course of the recent presidential campaign, there was a localized undercurrent of debate over coal. Those not paying close attention may have missed the ads that ran on repeat in southern Ohio and western Virginia: Obama repeatedly citing Romney’s anti-coal rhetoric from his time as governor; Romney picking up the argument that Obama has launched a “war on coal,” a mantra of the industry.
That “war on coal,” manifested in harsh EPA action on coal pollution, is, according to the slogan’s progenitors, why coal is collapsing. It isn’t. Given that the EPA’s mercury and greenhouse gas regulations aren’t in effect and that Obama killed any tightened smog regulation, the claim is factually inaccurate and willfully misleading. It’s expense that’s closing coal plants, not the government. But the EPA and its efforts to halt the intangible, distant “climate change” offers the coal industry its best chance at pointing the finger elsewhere.

As its fortunes have slipped, the coal industry has mounted a deeply ironic defense, visible on billboards along the Pennsylvania Turnpike and in print ads around the country. The industry promises “clean coal technology,” a “green” coal that we can use safely to wring power out of each of those 239 years. Clean coal doesn’t exist—and any arguments that it does rely on external technologies like the aforementioned scrubbers that make the output of coal consumption cleaner.

“Clean” coal is coal that’s burned just like normal coal, but its sulfur and particulates are removed from the smoke, and its carbon dioxide is captured and stored underground. There are literally no plants that do this—in part because no power generator would build such an expensive facility unless the EPA enacts the sort of regulation that the coal industry is fighting tooth and nail.

And there’s the irony of coal’s last, best argument. When industry cedes the point that coal needs to be clean, you know that coal has lost. Once it admits that its ideal product would meet the unattainable goal of being clean, it admits that an ideal world contains no coal at all. Suggesting that clean coal is the answer is coal’s first slip at the top of the downward slope toward obsolescence.
That slide won’t be without pauses. As an entrenched industry, coal will continue to try and wring every last dollar out of the West Virginia hills that it can. Its longevity is based on two key advantages: an ongoing and artificial inexpensiveness and booming international demand.

Coal remains cheap. Its high-energy density makes it a cost-effective way to quickly create the heat that produces the steam that turns the turbine of a generator. But it is also cheap in the literal sense. The government leases federal land to coal companies for small fractions of what the coal is worth, in some cases getting one quarter for a ton of coal that sells for $35. The cost of coal is kept low by externalizing the effects of pollution, forcing people who live near power plants to pay doctors to clean up the effects of particulates they inhale instead of the power producers cleaning the smoke before it escapes.

Meanwhile, there’s a massive market for coal in China, Europe, and India—one that promises to offer domestic coal producers a customer base for decades to come. Coal exports are booming, and the industry is working (with varied success) to expand the number of ports on the West Coast from which it can ship its product to China. Without that expanded access, the industry’s ability to eke out a subsistence drops fast.

Even getting discount rates from the government to sell coal to Asia won’t be enough over the long term to protect coal. The reason coal is at its most precarious condition right now—health—is the reason that it can’t exist as an energy source over the long term. And the push to rebrand as “clean coal” means that the industry reads the wall as clearly as do its opponents.

At some point during your imaginary tenure running those Apple Stores, a thought probably would have occurred to you. “Maybe,” you thought while stuffing hundred-dollar bills into a money-counting machine, “maybe I should quit while I’m ahead. Walk away.” But it’s hard to walk away from the table when you’re winning—and easy to grasp desperately for salvation when you’re not.

Coal will die. The only question is when. And how painful the death will be.


From The PBH NetworkHot On The Web
Hot On The Web