Jul 16, 2019

Coal's decline puts some communities in economic peril

Adapted from Morris, et. al, 2019,  "The risk of fiscal collapse in coal-reliant communities"; Chart; Andrew Witherspoon/Axios

Local governments face severe economic risks from coal's ongoing decline and future climate policies, yet often fail to disclose these threats in their municipal bond filings, a report shows.

Why it matters: It's a sobering look at what could be in store for specific mining-dependent regions, where coal revenues account for a third or more of the budget, and the sector's collapse could have severe ripple effects.

  • The analysis — from a Columbia University energy think tank and the Brookings Institution — arrives as Democratic White House hopefuls push emissions policies that would hasten coal's power-sector decline.
  • However, the Democratic proposals also aim to help fossil fuel workers and communities transition to other economic sectors.

What they found: One conclusion is that "even a moderately stringent climate policy could create existential risks for the coal industry." Mining employs roughly 53,000 people and its economic importance to coal-dependent regions affects far more people still.

  • Another is that while new climate policies would further threaten coal-mining regions' ability to pay outstanding bond debt, their filings fail to capture this.
  • "[O]ur review of the outstanding bonds indicates that municipalities are at best uneven and at worst misleading (by omission) in their characterizations of climate-related risks," it states.

The bottom line: The report emphasizes the need for economic diversification of coal-reliant economies — and federal investment and support for these regions and their workers.

  • "A new source of government revenue may be required to push a serious economic development program across the finish line, and logical source of these funds would be a federal carbon price," it states.

Go deeper: Coal communities risk fiscal collapse (Washington Examiner)

Go deeper

Energy transition prompts more insurers to back away from coal

Cooling towers of a coal-fired power plant. Photo: Federico Gambarini/picture alliance via Getty Images

Earlier this month, Chubb became the first U.S. insurance company to limit coal-related underwriting and investing, expanding a global trend that has seen 15 companies — underwriting a total of $313 million in premiums — announce new policy restrictions.

Why it matters: The proliferation of coal-exclusion policies at globally significant financial institutions — 113, according to the the Institute for Energy Economics and Financial Analysis — is leading large, diversified mining and utility companies to reduce their exposure to coal, and in some cases to exit the coal industry altogether, to avoid losing access to finance.

Go deeperArrowJul 19, 2019

Coal bankruptcies are piling up

Blackhawk Mining is slated Friday to make a pre-packaged Chapter 11 bankruptcy protection filing that the Kentucky-based coal producer says will cut 60% of its debt and enable $150 million in new financing.

Why it matters: It's the latest in a string of coal company bankruptcies, which began before President Trump's tenure but have picked up lately. They signal the challenge he faces in making good on pledges to revive the sector.

Go deeperArrowJul 19, 2019

The past and potential of replacing coal-fired power, heating with gas

Data: International Energy Agency; Chart: Chris Canipe/Axios

The International Energy Agency on Tuesday issued a report making the climate case for natural gas — with important caveats — and unveiled a tool for tracking methane emissions from oil-and-gas development.

What they did: The report explores the past (see chart above) and potential of replacing coal-fired power and heating with gas.

Go deeperArrowJul 17, 2019