No matter who wins the May 7 general elections in Great Britain, the new prime minister is already committed to a radical shift in the nation’s energy policy. Back in February, the leaders of Britain’s three main political parties—the Conservatives, Labour, and the Liberal-Democrats—jointly pledged that whoever formed the next government would promptly phase out coal in the name of fighting climate change. “We expect coal’s share of the UK electricity market to decline from 40 percent today to 1 to 2 percent by 2025,” says Edward Davey, the UK Secretary of State for Energy and Climate Change.
The rejection of coal by the birthplace of the Industrial Revolution is but the latest sign that coal as an economic enterprise is in a death spiral. “Coal is a dead man walking,” Kevin Parker, the head of global assets management at Deutsche Bank, said back in 2011. Since then, the industry’s outlook has only gotten grimmer.
China and the United States, the world’s leading economic and climate change superpowers, are also restricting coal. The agreement the two countries’ leaders signed last November obliges China to cap its coal use by 2020—and it appears China may already have reached that goal. In the United States, Obama’s EPA has proposed regulations that in effect ban new coal-fired power plants and could force existing plants to close.
These shifts are driven partly by immediate health concerns, but climate change is the clincher. Burning coal kills between 13,000 and 34,000 people a year in the United States and another 670,000 in China, where popular anger at ghastly air quality has clearly rattled the government. Meanwhile, the latest climate science says that more than 80 percent of coal reserves must be left underground to limit temperature rise to the international goal of 2 degrees Celsius. That amounts to a death sentence for coal.
Investors are responding accordingly. The three biggest US coal companies—Peabody Energy, Arch Coal, and Alpha Natural Resources—reported combined losses of $1.5 billion for 2014 and watched their stock prices continue plummeting, the latter two suffering the indignity of becoming penny stocks. Coal executives talk bravely, as their tobacco brethren once did, of exports saving them. Analysts disagree. “If you look at the long-term, it’s not getting any better,” said Aneesh Prabhu of Standard & Poor’s when S&P downgraded coal bonds to junk status. “It’s a secular decline.”
Coal is becoming the tobacco of our time, and its time is passing. Like smoking cigarettes, burning coal is deadly for individuals and society alike. This is now sufficiently recognized by governments and mass opinion such that, as with smoking in the 1990s, public policy is turning against coal and is unlikely to turn back.
“Big coal, oil, and natural gas, and related industries like the Koch Brothers’ companies, profit by offloading the costs of their carbon pollution onto the rest of us,” said Senator Sheldon Whitehouse, Democrat of Rhode Island, in his 98th “Time to Wake Up” speech on climate change to his colleagues. “They traffic in products that put health and safety at risk, and they don’t tell the truth about their product. Sound familiar? It should, because the fossil fuel industry is using a familiar playbook, one perfected by the tobacco industry.