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Coal's Future looking grim, how the virus changes that

The coal sector has been in decline for a long time—year upon year—and 2020 will be no different. Indeed, this may be the year in which an array of market forces in combination may simply overwhelm the industry.

Five problems persist: • Long-term low gas prices and capacity expansion by both the solar and wind sectors will continue to take market share from coal;

• Current levels of production capacity are unsustainable; • Coal-industry financing is increasingly difficult to secure, raising the price of insurance and making it harder to meet bonding requirements;

• Investor-owned utilities continue to move away from coal;

• Cooperative and municipal utilities are reconsidering their historical support for coal-fired generation; and

• Exports, particularly of steam coal, are likely to fall as other countries move toward cleaner generation.

While it can be difficult to appreciate the speed of the decline of the U.S. coal industry, the numbers speak for themselves. In 2014, coal supplied 38.6% of the nation’s electricity needs. By 2019, that figure had dropped to 23.4%. By 2025, the number will approach if not collapse into single digits. Coal’s importance will continue to decline, in other words, as market erosion gains momentum across the industry through 2020 and beyond. The coronavirus pandemic will clearly have a serious effect on the economy for the remainder of 2020, at a minimum dampening growth significantly and possibly pushing the world into recession. Meanwhile, the price war between Saudi Arabia and Russia has thrown the global oil industry into turmoil, creating as-yet unknown impacts on the coal sector. Nonetheless, the trends that have impaired the U.S. coal industry for years will persist.





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