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Friday, December 18, 2015

Coal industry modeling is just plain wrong

The Coal Lobby and Climate Change - A Story of Corporate Greed, Arrogance and Stupidity

Reducing carbon dioxide emissions with high efficiency power stations using coal-derived fuel was a simple, affordable solution to climate change concerns. The coal lobby walked away from this solution because it reduces the demand for coal. The result of this arrogant, greedy and stupid approach is a collapse in the value of coal mining corporations with billions of dollars wiped off shareholders' funds.

Peabody Energy, May 2008 -

May 2008 "Coal use expected to accelerate over next several decades"

August, 2012 -

"Cheap" Coal

"Electricity from the new Prairie State coal-fired power plant now costs between 40 and 100 percent more than Peabody Energy originally promised, raising electric bills for 2.5 million ratepayers and costing hundreds of Midwestern towns millions of dollars apiece.
...spearheaded in 2012 by Peabody Energy, [the Prairie State coal plant] has saddled more than 200 Midwest communities with electricity costs that are unaffordable and that stand to hinder their economies for the next 30 years. Subpoenas have been pending for some time at the SEC and the case is being pressed in two lawsuits on the matter. At issue are Peabody’s wildly optimistic projections and estimations that sold Prairie State as a source of cheap electricity to towns and cities now being crushed by the deal."


November, 2014 - 

"Peabody Energy has been regularly closing higher-cost coal mines in order to remain profitable (profit/ton). After a few unfavorable years, the overall coal market outlook is positive, due to expected price increase, demand increase, and efficiency increase. However, the rapid decline of the market size will position few firms able to compete, as growth in other markets such as renewable energy and natural gas continues to surge. This trend is clearly demonstrated in the chart below."

November 2014 "History of energyconsumption in the US (1776-2012)"

April, 2015 - 

"Investors in Peabody Energy have lost over $16 billion of their stock value since the end of 2010, as the stock price has plunged from $64 per share to $4.50 per share. The company reports it has cut over 20% of its work force, and more layoffs seem likely as the company seeks ways to cut costs."


November, 2015 -

"After a long investigation by the New York State attorney general, Peabody Energy says it’s going to do a better job of how it discloses the many financial risks it faces around climate change.
In its next filing to the S.E.C., Peabody agreed to a fuller disclosure of the risks as well as projections by the International Energy Agency of lower global coal demand in the future, should stronger regulatory action be taken around the world. The risks noted will include unfavorable lending trends for financing coal-fueled power plants overseas as well as divestment campaigns targeting the investment community, “which could significantly affect demand for our products or our securities.”"