Two U.S. coal regions are weathering the storm of EPA regulations, proving coal production is still viable.
Moody’s Investor Service’s new report on the coal industry shows that the Illinois Basin and Powder River Basin of Montana and Wyoming are maintaining solid production levels despite market pressure and declines in the overall energy sector due to financial instability in China.
The entire energy sector is currently facing a turbulent market, however, Bloomberg reports, “The Illinois Basin stands to be the ‘most resilient to current market dynamics,’” and, “will be able to maintain steady production volumes over the next two to three years.”
The new Moody’s forecast claims that half of the world’s coal production is unprofitable. Last month the global price of coal reached $89 a metric ton, hitting a decade low. Bloomberg observes simply that, “coal isn’t worth digging out of the ground at current prices.”
These are curious observations about an industry that produced 39 percent of America’s electricity in 2014, more than any other energy source, and accounts for thousands of jobs across the country. It’s also worth noting that the assertions on the struggling coal industry that the Moody’s report makes can also be applied to oil, natural gas, solar and wind energy.
The shale industry, which suffers unending criticism over the environmental impact of fracking, has been hit hard by the downturn in China, whose financial contributions represent 20 percent of foreign investment in U.S. shale. The brief shale revolution in America brought jobs and increased domestic production by 3.7 million barrels a day between 2010 and 2014, but continued fear over Chinese markets may set the industry back for the foreseeable future.
Similar factors are hampering natural gas production with the industry facing a drop in production across America’s major shale regions in September.
Renewable energy sources such as wind and solar power are in no better shape. Despite getting touted by environmentalists as the future of energy, they rely wholly on federal subsidies to deal with extremely expensive production costs.
In addition, the long-term maintenance these energy sources require is potentially huge. The American Wind Energy Association reports that in 2011 the warranty expired on $40 billion worth of wind turbines, raising questions about the long term cost sustainability of renewable sources like wind power.
Unlike solar and wind power, which get assisted by favorable regulations and subsidies, the coal industry suffers at the foot of the federal government. The EPA’s Clean Air Act is, “a complex scheme designed to reduce, on a state-by-state basis, the amount of greenhouse gases the nation’s electric power sector emits. The main target: coal,” according to The Washington Post.
The EPA’s actions are likely to hurt the coal industry and give the government new authority to dictate its vision. “The executive branch can impose its will on states and utilities because of the Clean Air Act,” The Washington Post reports.
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