Deal of the century: buyout the US coal industry in The Guardian UK’s Sustainable Business Section, March 11, 2014: Co-author Gil Friend and I point out the surprisingly low price to buy up and shut down all the private and public coal companies in the US, breaking the centuries-old grip of an obsolete, destructive technology that threatens our present and our future. We ask how that could happen. And we suggest it’s part of a conversation about whether the world can afford to spend a small percentage of our global wealth to avoid catastrophes. (Here’s a PDF version: Guardian-CoalBuyout-2pageflyer.)
Below you’ll find:
- Ideas about how to advance the concept
- Links to online reports and discussions that resulted from the publication
- Our comments about the context — the big picture we had in mind
- Resources & Notes about areas needing more research and work
Since then we have been contacted by a number of people who are interested in advancing the concept. We’re in discussions with people who have been thinking along the same lines — great minds think alike!
IDEAS: Here are some of the practical ways we might move forward:
- sparking or affecting equity researchers’ risk analyses of fossil fuel and other companies
- explorations of revenue streams, including ways to involve sovereign and pension funds, crowdfunding (a stretch), etc.
- a demonstration buyout of one or more small/troubled FF companies
- influencing discussions going on in the EU, including green and climate bond markets
LINKS: Quite a bit of discussion has resulted, in the comments at the Guardian website and at some other places reporting on the proposal. I have posted responses at some.
- GreenCar Reports: http://www.greencarreports.com/news/1090826_proposal-buy-out-shut-down-u-s-coal-industry-for-50-billion
- Business Insider (repost of GCR with a different headline, in a publication that gets lots of distribution: http://www.businessinsider.com/car-maker-wants-to-buy-out-coal-industry-2014-3
- Slashdot: Over 600 comments, some insightful, from the tech community: http://hardware.slashdot.org/story/14/03/12/1655214/environmentalists-propose-50-billion-buy-out-of-coal-industry-to-shut-it-down
- Examiner.com: good summary: http://www.examiner.com/article/close-the-coal-industry-save-the-environment-reap-huge-rewards-just-50bn
- Mining.com: http://www.mining.com/hybrid-cars-magnate-says-shutting-down-us-coal-industry-would-save-the-earth-for-only-50-billion-83243/
- Gil Friend’s post http://natlogic.com/deal-of-the-century-buyout-the-us-coal-industry-for-50bn/
- Joel Makower, cleantech analyst, as part of discussion of “Exxon, stranded assets and the new math:” http://www.greenbiz.com/blog/2014/03/24/exxon-stranded-assets-and-new-math
FELIX’S COMMENTS at The Guardian:
We are proposing a ten-year phaseout that could be accomplished by expanding renewables with no supply interruptions. (Coal has already gone from about 50% of US electricity to 30%.)
The cement industry is working toward low-carbon solutions. Steel is a tough one at scale: we can go up from 30% to 80% recycling of steel and use electricity to make heat, and there are biomass alternatives for chemical processes; the Coal Action Network Aotearoa has a good article on this.
As for dumb ideas, here’s an inspiring precedent people in Britain will especially appreciate: When slavery was abolished in Britain’s colonies, 200 years ago, the British government paid out 40% of its annual budget to compensate some 3,000 slave-owning families for the loss of their “property.” Britain’s colonial shame: Slave-owners given huge payouts after abolition
The fossil fuel industry globally, while enormous, is relatively small in terms of global wealth and productivity; let’s hope we recognize the urgency and have the will to leave it behind and ultimately improve living standards for almost ten billion people.
And at Green Car Reports:
More broadly, our coal proposal is a starting point for a national and international conversation that recognizes, as the Stern Report did, that we can afford to take the necessary steps — once we decide that it’s important. (And that some of the strongest opponents will have to be compensated rather than simply defeated, as when slavery was abolished in Britain’s colonies, 200 years ago, the British government paid out 40% of its annual budget to compensate some 3,000 slave-owning families for the loss of their ‘property’. )
The fossil fuel industry(coal/oil/gas) globally, while enormous, is relatively small in terms of global wealth and productivity/Globally, the private and nationally owned fossil fuel industry is probably valued at around $50 trillion. That would be a one-time cost to buy out/shut down/transition, spread over many years, and the price will go down as the carbon bubble grows and bursts. The annual global product is over $80 trillion. Just as we need to realize that all the fuss about the coal industry involves only 80,000 miners who could be retrained and retired, why don’t we look at the relatively small part of the global economy this dominant industry represents?
Let’s hope we recognize the urgency and have the will to leave it behind and ultimately improve living standards for almost ten billion people.
RESOURCES & NOTES FOR THIS ARTICLE:
- VALUATION OF COAL INDUSTRY: WELL UNDER $100 BILLION: We need an accurate figure for the market capitalization of public coal companies, most of which are part of the Coal Stock Index http://www.tickerspy.com/index/Coal-Stocks ($40B) and of private companies. Peabody Energy (NYSE: BTU), the world’s largest private-sector coal company, producing 10% of US electricity, has a share price of 19, down from over 70 in 2011. It has $1B/year net income, assets valued at over $15B, but a market capitalization of $5B.
- ONE TROUBLED COAL COMPANY: James River’s stock price is $0.80, down from $60 in 2009, with a market capitalizaiton of $29 million (and huge amounts of debt). It could be a candidate for a demonstration project!
- NUMBER OF EMPLOYEES IN THE US COAL INDUSTRY (FEWER THAN SOLAR INSTALLERS!): US Department of Labor’s May 2012 National Industry-Specific Occupational Employment and Wage Estimates for the Coal Mining, http://www.bls.gov/oes/current/naics4_212100.htm total employment for the industry is 87,520
- THE CARBON BUBBLE: http://www.carbontracker.org/wastedcapital http://www.rollingstone.com/politics/news/global-warmings-terrifying-new-math-20120719 (Mckibben) http://online.wsj.com/news/articles/SB10001424052702304655104579163663464339836 (Wall Steeet Journal Op Ed by Al Gore and David Blood) (also from World Bank, McKinsey, International Panel on Climate Change)
- EMISSIONS IMPACTS OF COAL: http://www.ucsusa.org/clean_energy/coalvswind/c02c.html lists coal emissions
- VALUE OF AVOIDED GHGs FROM US COAL INDUSTRY: Deleted from draft: We can get some idea from the numbers if we taxed carbon as Europe and British Columbia do. The *tons of U.S. CO2 would be worth ***.
- GLOBAL VALUE OF FOSSIL FUEL INDUSTRY: Al Gore says it’s $7 trillion private plus $14 trillion sovereign nations. I’ve seen others in the area of $25T. (Compare to global economy’s gross world product of >$80 trillion/year)
- ANNUAL US COAL EXPORTS: About 120 million short tons/year @$100/ton = $12B http://www.eia.gov/coal/production/quarterly/
- GLOBAL TRENDS ON COAL: Medium-Term Coal Market Report 2012 Factsheet http://www.iea.org/newsroomandevents/news/2012/december/name,34467,en.html
- BEYOND COAL CAMPAIGN: http://www.sierraclub.org/environmentallaw/coal/plantlist.aspx
- GATES GIVING PLEDGE PHILANTHROPISTS: The letters the signers of the Pledge sent in explain their motivations. http://givingpledge.org/pdf/Pledge%20Letters%20Collection.pdf
- GREAT MINDS THINK ALIKE: Nobel-winning physicist Burton Richter also wants to close, not regulate, all coal plants http://www.nytimes.com/2013/10/24/opinion/new-clean-air-rules-would-do-little.html