The Audacity of King Coal

Tucson, AZ -- "Lord, make me chaste -- but not yet." That's how a Utah Sierra Club member, quoting St. Augustine, characterized the latest moves by the coal industry. At negotiations on the Western Climate Initiative, King Coal's lobbyists argued that they should be able to offset their obligations to clean up carbon dioxide pollution from today's power plants with "reductions" in pollution that would result if, in the future, they were able to capture and sequester the pollution from tomorrow's plants. Such a proposal, based on technology that doesn't exist yet, if taken seriously, would make sub-prime mortgages look like blue chip investments.

But the dirtiest secret of all is that while coal is trying to ram a new generation of pulverized power plant polluters down America's throats by claiming to be the "cheap" electricity source, it is privately boasting to potential investors about the windfall profits it expects to make by allowing a huge supply shortage to develop and then squeezing electricity ratepayers.

(Utilities in most states simply pass such cost increases on to ratepayers, so they are delighted to cooperate by pretending that coal will continue to be cheap.)

In a sophisticated investor prospectus,  Peabody Coal's CEO, Gregory Boyce, opens his presentation with a slide titled, "Roaring Coal Demand Growth Straining Supplies in All Markets." He goes on to promise "Exporters Face Numerous Constraint" and "Coal Prices Reaching Record Highs."

His chart shows that in one year coal prices have increased by at least 64 percent for Chinese coal, and 200 percent for metallurgical-grade, the top of the market. Boyce tells investors that the percentage of coal being provided under long-term, price-constrained "legacy" contracts is doubling -- providing "significant upside." He shows how Peabody plans to manipulate demand for coal exports to increase prices domestically.

He downplays the recent cancellation of 58 coal-fired plants emphasizing instead that eleven new plants got under construction before environmental opposition began to roll back the coal rush, and blandly projects that U.S. consumption will dramatically increase yielding -- you guess it --- still higher windfall profits (and air, water and global-warming pollution).

And he closes by hinting that in the future, coal reserves deserve to be valued as highly on a BTU basis as those of oil and natural gas. Clearly he wants the same kinds of windfall profits that Exxon-Mobil is currently enjoying and thinks he can manipulate the market to get there.

This presentation should be required reading for utility regulators considering demands that they rush approval of new coal-fired power plants to "save customers money." The only thing they are saving is Peabody's share value.

Comments

[PROUD TREE HUGGER]

How many club members eat meat? Did you not see the UN report or are we picking and choosing our science now? People, wake up. Stop eating meat or else you are part of the problem!

[Curious George]

Is it true Al Gore used a compter generated shot of glaciers, from the movie The Day After Tommorow, in his movie and passed it off or failed to acknowledge it was not real? ABC News says so. Why the need to trump things up?

[Dru Bacon]

Those that still have doubts about the destruction of land, water and habitat from coal mining in the Applachian Mountains should do a Google Earth or MSN Maps satelite view of places like Southern West Virginia and Eastern Kentuck. Those huge barren areas are the result of "mountain top coal mining." A crime against the earth.

[JP Morgan]

Note to self" Invest in BTU, make $

[David Moore]

I believe energy prices will have to rise to encourage effecient use.
Gas prices, electricity prices, consumer goods all will go up as the world's population rises towards the 9 billion mark. Americans may actually buy less huge trucks and SUVs if the price of gas climbs.
Some may use less air conditioning if coal and electricity go up in price. There will be many opportunities to encourage conservation but we should keep in mind the effect on the world's poorest and try to limit the effect on world humger of rising grain prices.

[David Moore]

I believe energy prices will have to rise to encourage effecient use.
Gas prices, electricity prices, consumer goods all will go up as the world's population rises towards the 9 billion mark. Americans may actually buy less huge trucks and SUVs if the price of gas climbs.
Some may use less air conditioning if coal and electricity go up in price. There will be many opportunities to encourage conservation but we should keep in mind the effect on the world's poorest and try to limit the effect on world humger of rising grain prices.

[Charles Hale]

I don't mean to be rude, but if coal is so bad, then what is the answer? If we turned off the coalburners tomorrow, what would replace it? There is no viable replacement, with the exception of nuclear power, anywhere on the horizon. Unless you count going back to the dark ages.

Just over a century ago, gasoline was considered a waste by-product of refining petroleum. Then some smart person realized that it could be used. Just as I have faith that mankind will solve AIDS, cancer, and the other bad stuff, I'm confident that we'll find a use for spent nuclear fuel.

Err, nevermind, the French are already doing that. Instead of burying it in a mountain, they find ways to reuse it in their reactors.

If nuclear is bad, and coal is bad, and oil is bad, what is the solution? Recycling, reducing consuption and "alternatives" come nowhere near solving the "problem", unless the goal is to return to subsistence farming (without the nasty fertilizers, 'cause they have chemicals in them, of course).

[Skipper]

Unfortunately, the Sierra Club (which I have been a member of for 19 years) is now an extremist organization because they are against so many things that allows us to live in the 21st century. America is the Saudi Arabia of coal. We should use it for our energy needs instead of imported oil. (Al Gore's history is coal, Gore agreed with George W. Bush to extend and further fund the “Clean Coal” subsidy, for finding ways to clean up the burning of domestic coal, such as “sequestering” the resultant CO2 in sea beds or oil wells) Life is imperfect. Living has its risks. The greatest risk to a person being overweight. We control the hand that puts the food in the mouth. Too many Sierra Club members are food pigs at a time when we are running out of food due to producing too many third world people. On the left coast, we do our part to keep the production of people down, but the third world mind set of popping them out, regardless of the resources to feed them, must be stopped.