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The Future of American Coal

The Future of American Coal

We must appreciate our past in order to build solutions for the future. Coal helped make America what it is today, but it’s time for change: clean energy will propel us forward through job creation and environmental risk mitigation.


So...what is coal?


Coal has fueled mankind since the earliest days—from the cavemen and the heat created for Roman communities. However, it was the Industrial Revolution, with its influx of machinery and efficiency, which determined coal’s domination in our present energy markets.

At its core, coal is a sedimentary rock filled with carbon and hydrocarbons. The process to form what we consider “coal” requires millions of years of dead plant matter to slowly bury under a swamp’s water, dirt, and rocks. Years of accumulation, heat and pressure transform these ancient plants into coal. Today, four different coal deposits support our energy supply — which you’ll find listed below, ranked by amount of energy produced.


  • Anthracite: 86% to 97% carbon; used mainly for the metals industry; less than 1% of 2014 coal mined in the US, mainly Pennsylvania.
  • Bituminous: 45% to 86% carbon; used to generate electricity and raw materials such as iron and steel; the most abundant type in the US in 2014, mainly in West Virginia, Kentucky, Pennsylvania, Illinois, and Indiana.
  • Subbituminous: 35% to 45% carbon; approximately 44% of 2014 coal mined in the US, mainly Wyoming.
  • Lignite: 25% to 35% carbon; burned at power plants to generate electricity; approximately 8% of 2014 coal mined in the US, mainly Texas and North Dakota.

Converting coal into electricity is then a multi-step process described in the diagram below by the World Coal Association. 

This fossil fuel, in addition to petroleum, natural gas, nuclear electric power, and renewable energy, fuel 5 sectors of the US: (1) transportation of people and goods, from ships to railroads to cars; (2) industry, from agriculture to mines; (3) commercial, from hospitals to offices; (4) residential, from homes to apartments; and (5) electric power, which uses primary sources of energy to provide electricity to the four other sectors. 

Altogether, in 2015, coal sourced 16% of the US energy consumption and provided the electric power sector with 33% of its needed power.

When we combine all the carbon dioxide emitted by the electricity generation sector, we find coal produced 71% of it. 

And so this data led to the creation of the Clean Power Plan (CPP).

Written under the Clean Air Act, the Environmental Protection Agency’s CPP is a landmark rule whereby existing power plants must abide by greenhouse gas emission guidelines. It was written through engagement “with states, tribes, utilities, and other stakeholders, with stakeholders providing more than 4.3 million comments on the proposed rule.” Although federally enforced, the CPP allows states to determine how to cut carbon pollution, with a goal of decreasing carbon levels in 2030 by 32% using 2005 levels. In doing so, the CPP will protect the environment and prevent premature deaths and potential health risks, including respiratory and cardiovascular diseases. After Obama’s administration finalized the rule in August 2015, courts issued a stay on the rule in February 2016.

Although Trump’s administration has promised to fight against climate science, he will need a decision from the Supreme Court for it to be dismantled—something that will likely not be until 2017-2018. However, his administration can loosen enforcement, overall regulations, and slash government jobs, which currently allow the CPP to run effectively. 

Trump could also rewrite Nixon’s 1970 Clean Air Act if approved by 60 Senate votes. The Clean Air Act was implemented to protect our health and our environment from air pollution through the EPA’s enforcement. State and local governments must also enforce the regulation with the EPA’s oversight.

According to the Union of Concerned Scientists, the Clean Air Act has:

  • cut ground-level ozone, a dangerous component of smog, by more than 25 percent since 1980;
  • reduced mercury emissions by 45 percent since 1990;
  • reduced the main pollutants that contribute to acid rain, sulfur dioxide and nitrogen dioxide, by 71 percent and 46 percent, respectively since 1980;
  • phased out the production and use of chemicals that contribute to the hole in the ozone layer; and
  • reduced the lead content in gasoline, which has cut lead air pollution by 92 percent since 1980.

The EPA's Clean Water Rule, along with the 2008 Interior Department’s Stream Protection Rule and Obama’s current proposal, run the risk of being overturned—each provide regulatory oversight into how we mitigate pollution entering our waters. Intertwining money and politics has only catalyzed the situation, as highlighted by the Disclose Act. The Clean Power Plan is at risk of being amended to include forest burning as a “carbon neutral activity,” which would continue to halt capital in carbon free industries. 

The Potential Good News

Since 1945, US energy consumption has increased three fold, but coal production has decreased since 2008. In 2015, it decreased by approximately 10%, returning to production levels not seen since 1986! 


Why Has This Happened?

1.  Natural gas prices have significantly decreased: In 2008, gas prices were $12 per million BTU, and by 2012, they were at $2. Today, the price remains in the $2-3 range according to Bloomberg. 

2. Clean energy: Solar installation costs have decreased, as well as an overall increase in renewable energy investment. Increased regulation, as noted by the Clean Power Plan, and financial incentives for renewable energy, such as Renewable Electricity Production Tax Credits.

3. Bankruptcies and rating agencies: Since 2014, at least seven companies with liabilities over $500 million have declared bankruptcy. Peabody Energy, the largest private coal company, is just one example. Rating agencies have also been downgrading generation facilities. In November 2016, Moody’s downgraded FirstEnergy Solutions Corp, a fossil fuel, hydroelectric, and nuclear generation facility to Caa1 from Ba2. Michael Wilkins, head of environmental and climate risk at S&P Global Ratings, recently stated coal is at risk of becoming a “stranded asset”—an investment that becomes obsolete or devalued well before its anticipated lifetime. 

4. Financing from big banks: In March, JPMorgan Chase announced a ban on financing new coal-fired power plants in the US and other developed nations. UBS Group AG recently imposed bans on a number of coal mining or coal-fueled power plant investments as well. As a result, debt financings have seen an overall decrease, from $91.2 billion in 2015 to $ 52.8 billion through November 9, 2016.

Now although many bulge-bracket banks have continued to publically state their positions on coal investments in developed nations (as shown below), they do not have a stance in developing nations. According to Bloomberg Briefs from November 17th, 2016, the world has 8,175 coal plants and plans to build another 733. With the current decrease in coal prices, power plant financing could see a rebound. If western banks move to fund coal in China and India, it would prove to be environmentally detrimental. Gregory Elders, a Bloomberg Intelligence analyst, believes “investors may be underestimating the potential carbon risk those projects could face.” Catherine McKenna, Canadian Environment Minister, understands this risk. She announced that Canada is committed to closing out traditional coal power by 2030, stating that “the goal is to increase the country’s clean energy use, currently at 80 percent, to 90 percent, while cutting the emissions equivalent to taking 1.5 million cars off the road.”

In Conclusion...

Coal has been a pillar of US growth, and there is no doubt we would not be where we are today if coal hadn’t fueled our industries. It is an unfortunate reality that the coal industry has lost 191,000 jobs since 2014, but the clean energy sector now employs 2.5 million jobs. In the Midwest, clean energy sectors currently employ 568,979 people

As we become smarter and more efficient, we must grow and adapt. The Paris Agreement has reinforced the need to close coal plants by 2030 in order to limit global warming to 2°C. Clean energy is both saving our planet and creating jobs for Americans—and we must continue to lead by example.

And while you're at it, don't forget to help support Sustainable Directions' campaign to tell YOUR local reps that we are committed to the Paris Agreement. Either text Paris Agreement to 52886 or click here! http://p2a.co/sr1vPA0

And while you're at it, don't forget to help support Sustainable Directions' campaign to tell YOUR local reps that we are committed to the Paris Agreement. Either text Paris Agreement to 52886 or click here! http://p2a.co/sr1vPA0

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