Why Coal Will Never Make a Comeback

What is the future of coal?
Nov. 27 2012 2:10 PM

Coal Is Doomed

The grim death spiral of a once booming industry.

Greenpeace activists burn a symbol of carbon dioxide as they demonstrate in 2008 in front of the Klingenberg power plant in Berlin.
Greenpeace activists burn a symbol of carbon dioxide during a 2008 demonstration

Photo by Theo Heimann/AFP/Getty Images.

Imagine I hand you the keys to an Apple Store. 

It's a big one, a warehouse-like, multiacre affair running floor-to-ceiling with Apple products in tightly packed rows. And it's yours to do with what you want.

Obviously, you'd sell everything. And within an hour, you'd be making money hand over fist. You'd have some costs—staff, bags, whatever—but nothing big. Customers would be lined up out the door. Even if I charged you a $5 fee for every device you sold, it's a spectacular deal.

After a while, though, things start to slow down, almost imperceptibly. You'd need more staff to pull items off shelves farther back in the store or closer to the ceiling. The hectic pace of extracting the right product would invariably lead to spills and clutter. More popular items like iPhone 5s would become harder to get to than things like first-generation iPads. But these are minor distractions.

Eventually, you start to sweat. You've given up your regular job to manage this massive moneymaker. It's taking you more and more time to find the products people want. It's not quite the cash cow it used to be. So I make a deal with you: If you find other Apple warehouses, I'll let you run those for the same fee. You dedicate staff to seeking out new stores, and you find some. But in each, the same problem repeats itself: a burst of high profits until products are harder to find.

Late one evening, the New York Times breaks a story revealing that the use of Apple products has been linked to serious, long-term health consequences. The effects are usually tiny, incremental but potentially serious; in very rare cases, they're suddenly fatal. There's some outcry, but the time lag and mental distance between use of the products and the health problems are great enough that most people ignore the link. The government promises to look into the problem, but in the interim, sales barely stumble at all.

But then you face a real problem. Something newer comes along. Better. Cheaper even than your bargain-basement prices, more popular, hipper. One day you're running an Apple Store. The next you are selling BlackBerry. Your customer base rapidly dries up. Customers in India and China are still eager to buy, but finding and shipping the products across the ocean proves harder than it looks.

You used to be the luckiest person in the world, blessed with the sweetest deal imaginable. Now, you run a string of stores in vacant malls with plummeting margins, unpopular products, and the looming specter that every BlackBerry you sell is the last nail in some poor fool's coffin.

You run, in short, a coal company. It is possible that there is a magic spell somewhere out in the world that can reverse the fortune of the coal industry. But the way things are going, that spell is buried deep underground where it's just far too expensive to get to. The American coal industry has key life-support mechanisms beeping by its bedside, but it's doomed.

That's difficult to deal with, particularly if you're the owner of a coal company. It's hard to deal with if you're a coal miner or live in a coal community. Coal has been so successful for so long, its halo of economic benefit so wide, that affection for coal is in some places religious. At tourist shops in West Virginia you can buy statuettes carved from coal, including crucifixes. Coal mines were once portals into the middle class. In the future they won't be.

The Apple Store analogy is the birth and decline of the coal industry in brief.

The good products are harder and more expensive to get to. After decades of extraction, rich seams of high-quality coal that run near the surface have been exhausted. The Department of Energy's Energy Information Administration suggests that the United States has enough coal reserves to last 239 years. In a breezy aside, it notes that "advancements in mining technologies have tended to compensate" for difficulties in extraction. "Mountaintop removal" mining is one such advancement. Coal companies simply blow apart the tops of hills instead of digging mine shafts, saving time and expense. (This haphazard process has polluted more than one-fifth of streams in southern West Virginia.)

Other coal companies have turned to lower-quality coal, like high-sulfur coal from Illinois, because the economic advantage of easy access to high-quality coal has vanished. Digging deeper and longer for higher-quality coal is not much cheaper than easily digging up lower-quality coal and running it through better "scrubbers," devices that remove the sulfur from emissions. Remember those scrubbers. We'll come back to them.

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