It was inevitable that the increasingly dire threat of catastrophic climate change would hit coal companies — especially since neither the Bush administration nor the coal industry have taken climate change seriously, and therefore they failed to pursue clean coal (i.e. carbon capture and storage) aggresively.
In fact, they pursued CCS incompetently (see “Can the coal industry be saved in spite of itself? Should it be?” and “In seeming flipflop, Bush drops mismanaged ‘NeverGen’ clean coal project”).
The 2007 Supreme Court ruling that CO2 is a pollutant began a chain of events that led to the landmark ruling yesterday by the EPA Environmental Appeals Board yesterday, which in turn hits coal stocks hard today (see below).
The AP reported today that, as I suggested yesterday, “The fate of scores of new coal-burning power plants is now in limbo”:
Environmentalists and lawyers representing industry groups said the ruling puts in question permits — some being considered, others approved but under appeal — of perhaps as many as 100 coal plants….
Michael Gerrard, a lawyer not involved in the Bonanza case and author of “Global Climate Change and the Law,” said the decision “will embolden the lawsuits” challenging construction of new power plants based on their impact on climate.
“It means that the appeals board recognizes that carbon dioxide regulation of power plants is a very live and open issue. It does not ban them. It puts a cloud over them, by making it clear that this is a real issue,” Gerrard said in an interview.
And this translates into coal companies losing value today:
Arch Coal Inc. (ACI) 15.86
Peabody Energy Corp. (BTU) 27.07
Foundation Coal Holdings Inc. (FCL) 13.92
Massey Energy Co. (MEE) 16.20
Yanzhou Coal Mining Co. Ltd. (YZC) 5.14
The coal industry is starting to look like a bit like the auto industry. Yes, it’s richer and more profitable, but it’s just as much in denial and therefore ultimately self-destructive and generally destructive (see “Why bail out the car companies when they bailed out on us?”).