Coal calamity: Obama wins

THE US coal sector’s worst fears were realised with Barack Obama winning the US presidential race yesterday.
Coal calamity: Obama wins Coal calamity: Obama wins Coal calamity: Obama wins Coal calamity: Obama wins Coal calamity: Obama wins

Obama's energy policy is widely referred to as anti-coal.

Noel Dyson

During Obama’s recent administration the coal industry faced the twin challenges of a massive natural gas glut and an Environmental Protection Authority set on regulating coal out of existence.

The twin threats have already led one major thermal coal producer to seek Chapter 11 protection.

Obama’s win clears the way for the EPA to bring in even stricter regulations on power stations, making it even harder for thermal coal miners to make ends meet.

Coal miners had been hoping for a Romney win because he wanted to bring the industry back to health.

After all, coal has been one of the drivers of US economic growth.

According to the US International Trade Commission the nation had the world’s largest recoverable reserves in 2011, with more than 260 billion short tons.

This was some 28% of known recoverable coal reserves globally.

The next closest nation was Russia with 18%.

The US has also been a large exporter of coal historically and ranks fourth worldwide after Australia, Indonesia and Russia.

According to the US Department of Energy domestic demand for coal is expected to fall below 44% to an estimated 33-36% within the next 20 years.

This is due to the two-pronged attack of harsher regulations against coal-fired power stations and an abundance of cheap natural gas.

At the same time coal demand in Asia is expected to grow.

China, as a case in point, is building dozens of coal plants to provide power for domestic and industrial use.

Little wonder many producers started to look at growing those export markets.

Add to that the opportunity created by coal production shortages in Australia.

However, the moment coal producers start pushing for expanded or new export terminals they start hitting the argument that exporting coal will simply shift pollution to another country.

To be fair to Obama it should be noted that some of the mechanisms at the heart of the EPA’s anti-coal regulations were forged more than a decade ago.

Bill Clinton first started looking at the dangers of mercury emissions from coal-fired power stations and that work was taken up by George Bush’s administrations.

It is under Obama, though, that the EPA has really ramped up its efforts, with coal the casualty.

No doubt there will be more to come.