The End of the Coal Era...Faded Glory, Now a Pollution Culprit

World's Largest Coal Company US Peabody Mentions Bankruptcy Protection
Natural Gas and Renewable Energy Surpass... China and India Also Cut Back
Financial Firms Accelerate Collapse... "Withdraw Investment from Risky Sectors"

[Asia Economy Reporter Naju-seok] On the 16th (local time), according to CNN and others, Peabody Energy, the world's largest coal company based in the United States, disclosed that it recorded a net loss of $67.2 million (approximately 74.6 billion KRW) in the third quarter of this year, raising the possibility of bankruptcy protection. This increases the likelihood of repeating the same risk just three and a half years after filing for bankruptcy protection in 2017. Despite efforts by the U.S. government to revive the coal industry through policy support, all attempts have been ineffective.

Peabody's downturn clearly shows that the policy effects of U.S. President Donald Trump were not significant. After withdrawing from the Paris Climate Agreement, President Trump showed a strong obsession with the fossil fuel industry. He even abolished environmental regulations to revive the struggling coal industry. According to CNN, the Trump administration's coal industry revival measures seemed effective, with Peabody's corporate value rising to $5.9 billion in 2018. However, market forces could not be overcome. Despite the Trump administration's support policies, the coal industry is losing out in competition with natural gas, whose prices have fallen.

In May of this year, the U.S. Energy Information Administration (EIA) predicted that for the first time in U.S. history, the scale of electricity generation using coal would be surpassed by that using renewable energy. The EIA even forecasted that the share of coal-based energy production in the U.S. could fall below 10% within the next five years.

Poland, a representative coal-producing country in Europe, also announced plans last month to reduce the share of coal-fired power generation. Poland's largest power company, PGE, currently relies on coal-fired power for 80% of its electricity production but plans to reduce this to 50% by 2030. It aims to expand electricity production through renewable energy and eliminate coal-fired power generation after 2050.

China and India have also been increasingly concerned about electricity generation using coal. Due to the COVID-19 pandemic, industrial production contracted, reducing coal-based power generation, during which people experienced improved air quality.

In India, for the first time in 40 years, carbon dioxide emissions decreased due to the COVID-19 crisis. As a result, the country's chronic air quality problems noticeably improved. Lockdown measures to prevent the spread of infection unexpectedly allowed people to experience the effects of environmental policies such as coal phase-out. Mark Lewis of BNP Paribas Sustainable Research Institute noted, "After weeks of lockdown, clear skies were visible in mega-cities across Asia," adding, "This made investment in the coal industry even more difficult." The Indian government is also accelerating the transition to solar energy and other renewables amid reduced electricity demand due to the COVID-19 crisis.

China has also set a goal to achieve carbon neutrality by 2060. Notably, it promised to peak carbon emissions by 2030. To meet this commitment, China must also part ways with coal. There are expectations that no additional coal-fired power plants will be built beyond those currently under construction.

As coal power is being shunned, related experts predict that coal demand will not return to previous levels after the COVID-19 crisis. There are forecasts that the already declining coal industry will shrink rapidly due to the pandemic. In fact, coal demand appears to have peaked in 2013.

Rob Jackson, Chair of the Global Carbon Project, analyzed, "Coal emissions have significantly decreased due to the COVID-19 crisis and will not recover," adding, "Falling natural gas prices, declining costs of solar and wind power, and concerns about climate change and health are permanently weakening the coal industry."

Financial companies are also accelerating the collapse of the coal industry. Major financial firms such as BlackRock and BNP Paribas, the world's largest asset management companies, have stated that they will withdraw from high-risk sectors like coal mining, citing environmentally friendly and sustainable investments. Earlier this year, Larry Fink, CEO of BlackRock, warned in his annual letter, "We will withdraw funds from unsustainable businesses like coal power generation, and if companies do not disclose sustainability information, we will exercise voting rights to hold boards accountable."

The reason financial companies are joining the coal phase-out movement is partly due to regulatory moves related to climate change and strong pressure from civil society organizations. However, more fundamentally, many analyses suggest it is a matter related to the future of the business. Climate change response is not just about financial companies' reputations but also a result of considering actual profitability.

Jeff McDermott, head of the green energy investment division at Nomura Group, a Japanese investment bank (IB), said, "The market is looking to the future," adding, "Renewable energy is expected to grow, but businesses with high carbon emissions do not have a bright outlook."

This content was produced with the assistance of AI translation services.