World’s largest private coal company files for bankruptcy

Intro

Peabody Energy, the world’s largest privately-owned coal company, has filed for Chapter 11 bankruptcy protection in the US, becoming the 50th coal company to do so since 2012. The company blames “prolonged industry downturn” on its predicament, hinting at the structural decline the coal industry is in, but fails to admit how its willful denial of climate change and refusal to move with the rest of the world towards a low carbon economy has destroyed its business. Investment in renewables has outstripped fossil fuels in recent years, with more and more clean energy coming online. When combined with the historic Paris Agreement last year, it is becoming abundantly clear that there is no place in a low carbon future for companies like Peabody Energy, and strong questions are now being raised around whether it and others like it can fulfill their obligations to workers and affected communities and clean up the mess their mines have left behind.

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Key Points

  • Renewables are the future, and it’s a healthier, wealthier future for all. Renewable energy is already far outstripping coal in investment and new capacity globally; and this trend will continue as technology improves and countries increase climate action, boosting GDP, creating new jobs, saving millions of lives and increasing access to energy. . Coal’s only answer has been the misnomer of “clean coal” but this fails to solve the many issues it comes bundled with, such as human rights abuses, and health impacts.
  • The zero carbon transition is inevitable, and happening increasingly fast. As Peabody’s case makes clear, some fossil fuel companies are delusional about the change happening before their eyes, and are at risk of absconding from their responsibilities. As governments look to turn their Paris pledges in action, their first step should be urgent measures to keep dirty fossil fuels in the ground and ensure a smooth transition that protects workers, communities and taxpayers.

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Key quotes

  • “We’re 100% coal. More coal. Everywhere. All the time.” – Fred Palmer, Senior vice president of government relations at Peabody Energy in 2011
  • “This is a company that wilfully and deliberately sought to delay, dismantle or destruct climate action. Perhaps if they had spent more time and money diversifying their business rather than on lobbying against climate action and sowing the seeds of doubt about the science, they might not have joined the long (and ever growing) list of bankrupt global coal companies.” – Co founder of 350.org, Bill McKibben
  • “Peabody’s bankruptcy follows its moral bankruptcy on climate change for many years. We know they have been funding the climate denial movement that has played a lead role in delaying government policy action.” – Executive Director, Climate Investigations Unit (CIC), Kert Davies
  • “For decades the coal industry has denied the realities that were staring them in the face.  For a while this seemed like a good business strategy. Today’s announcement shows that sooner or later reality catches up.” – Professor of the History of Science, Affiliated Professor of Earth and Planetary Sciences Harvard University and Author of the acclaimed book Merchants of Doubt, Professor Naomi Oreskes
  • “We know from history what happens when a business or a government sets its face against a change that is coming anyway. It’s usually not the politicians or the chief executives who end up at the unemployment office. Leadership mistakes are worn by people who are least at fault for the bad decisions: the workers, their families and the communities that depend on them. […] Stranded assets are a terrible waste, but stranded communities are a human tragedy – and both should be avoided at all costs.” – Former Chief Executive of National Australia Bank (NAB), Cameron Clyne
  • “We are still reviewing [Peabody’s] filing, but we’ve seen this situation before. Bankruptcy should never be used as a haven for a huge corporation to escape its obligations to clean up its mines. With over ninety square miles of coal mines in Wyoming’s Powder River Basin, Peabody’s mines will take over $800 million to clean up. State and federal taxpayers must not be left with the bill.” – Chair of Powder River Basin Council, Bob LeResche
  • “Peabody Energy’s bankruptcy should serve as a wake-up call to anyone promising that coal’s glory days will return. As Peabody grapples with the reality that the world is turning away from coal, it’s essential that it doesn’t turn away from its obligations to workers, communities, and the environment. Unfortunately, Peabody has a history of spinning off its responsibilities into smaller companies that seem built to fail, while taxpayers are left holding the bag.” – Director of Sierra Club’s Beyong Coal Campaign, Mary Anne Hitt
  • “We know their playbook. As coal majors like Peabody lose out to cleaner technologies in their home markets, they pitch their industry as the solution to poverty.  But increasingly developing economies – from Ethiopia to China – aren’t buying the pitch. Cleaner technologies are delivering better on everything from household energy access to national energy security.” – Attorney and Senior Researcher at the Overseas Development Institute (ODI), Ilmi Granoff

More Quotes:

  • “Peabody serves as a pertinent example of what happens when directors fail to account for changing market dynamics. The companies of the future will be those who survive the zero net carbon transition by addressing climate risk head on in strategic business decisions. Directors of other carbon intensive companies should study what’s happened to Peabody carefully and learn lessons very quickly. These directors have a duty to the company to steer a course for business success – and that requires factoring climate related risks into their business decisions, and adapting their business models where necessary. Directors who breach their duties to the company can find themselves personally liable for losses.” – Lawyer ClientEarth, Alice Garton
  • “Peabody took an exceptionally irresponsible position on climate change. Peabody’s departure is ironic in that had it taken an honest approach to dealing with climate change it might still be in business, transforming itself away from coal without having destroyed large amounts of shareholder’s money.  It is an object lesson to other fossil fuel companies and their industry bodies, in Australia and elsewhere, who continue the same irresponsible practices today.” – Former Chair, Australian Coal Association, Ian Dunlop
  • “Africa’s future is renewable. The dirty, dangerous, unreliable and expensive coal-powered future proffered by Peabody and their ilk, is not something Africa wants or needs, especially when new statistics come out by the day showing that renewable energy can save millions of lives and inject trillions of dollars into the global economy. 100 per cent renewable is what Africa stands for and it’s what can guarantee sustainable development for our people.” – National Coordinator, Climate Change Network Nigeria and Co-Facilitator, African Mayors Action on Climate Change, Surveyor Efik
  • “Burning coal is like waging a war on health. Coal’s effects on air pollution and carbon pollution are unforgivably high, costing billions of dollars and thousands of lost lives each year. Peabody’s bankruptcy does not necessarily mean the end of coal is nigh, but I hope it will be taken as a sign that we need to act swiftly to end the era of burning fossil fuels, which has unleashed climate chaos that our kids will inherit.” – Senior scientist and deputy director of the Natural Resources Defense Council’s science center, Kim Knowlton
  • “Peabody’s legacy is a number of enormous open-cut coal mines throughout Australia. If the true rehabilitation cost for Peabody’s abandoned mines is not covered by financial assurance held by governments, as the Queensland Audit Office found in 2014 for many mines, taxpayers will need to foot the bill.” – Environmental Justice Australia lawyer specialising in finance and climate change, David Barnden
  • “As the world unites to fight climate change, it is clear that coal and other carbon-intensive energy sources do not have a realistic future – particularly in climate-impacted areas like the Colorado Plateau. When Peabody transitions out of the Colorado Plateau, it is imperative that they provide direct support to all coal-dependent communities that will lay a foundation for more sustainable economies.” – Energy program director at the Grand Canyon Trust, Anne Mariah Tapp
  • “Regulators in the U.S. have already raised concerns that taxpayers could be left on the hook for coal mine reclamation obligations as the coal industry declines, and a Peabody bankruptcy significantly exacerbate these risks. Australian regulators should have also been investigating the risks to protect taxpayers and the environment from a Peabody bankruptcy. Australian taxpayers have already heavily subsidised this industry during its decline. We need ASIC (Australia’s corporate, markets and financial services regulator) to act because this isn’t a one-off. There are many other struggling mining companies in Australia and unless proper plans are made for when they go bankrupt, the overall cost to the country and mining workers could be far greater.” – Greenpeace International Lawyer, Marina Lou
  • “For years, Peabody Energy and the coal lobby have fought against climate science and action to address climate change in the face of the scientific consensus confirming that greenhouse gas emissions from the fossil fuel industry are warming the planet. Just like ExxonMobil and the Koch Brothers, Peabody ignored that reality and pumped large sums of money into the coordinated attacks on climate science and denial campaigns to delay policy action. Instead of becoming part of the solution, the coal giant dug in its heels and continued to pursue pollution-based profits. The news that Peabody has filed for bankruptcy shows just how wrong that strategy was.” – Executive Director and Managing Director of DeSmogBlog, Brendan DeMelle
  • “We are starting to see the dawn of a new clean industrial era, in which coal power belongs in the past. It is time to make a big shift towards a renewable world which delivers sustainable energy for all, providing power for the world’s poorest without increasing the risks of climate change.” – Principal Climate Change Advisor, Christian Aid, Dr. Alison Doig

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