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Carbon backlash: coal divides corporations

Steve James, Reuters
U.S. coal mining companies, which for years have been branded the bad guys of global warming, are fighting back.

They are questioning not only the science but also the motives of some of the big-name corporations who have made well-publicized commitments to cleaning up their act.

…A more outspoken executive, Robert Murray, chairman and chief executive of Murray Energy Corp., warned the coal industry could collapse with the loss of 3 million to 4 million jobs if carbon dioxide emission controls are introduced.

He has even put his money where his mouth is by refusing to do business with Caterpillar Inc. — a manufacturer of the very mining equipment his company needs.

“There are a number of companies that are promoting constraints on coal use to achieve greater profits and/or competitive advantages,” Murray said at the coal conference.

He branded more than 20 major corporations that make up the U.S. Climate Action Partnership (USCAP) “un-American” for allying with environmental groups he calls “enemies of coal.”

USCAP, which backs moves to cap carbon dioxide emissions, includes Caterpillar, General Electric Co., Dupont Co, AIG, General Motors, Dow Chemical Co, Johnson & Johnson, Pepsico Inc., Alcoa Inc. and ConocoPhillips.

…Murray said he sent Caterpillar CEO Jim Owens a letter a few months ago telling him he would no longer do business with him – a decision he said will result in the loss of millions of dollars in business to Caterpillar. He also pointed out power company Exelon Corp’s John Rowe, as “one of the biggest enemies of coal for decades because he’s got nuclear.”
(1 July 2007)
Also posted at MSN Money

It is not a pleasant time to be running a coal company. Coal is strongly implicated in global warming, and the prospects for widespread carbon sequestration are dubious. As this article says, coal companies are cast as “the bad guys.” And yet coal is relatively cheap and supplies are more abundant than other fossil fuels.

Some utilities companies that depend on coal have developed sophisticated strategies to deal with the ambiguity:

Unfortunately, some sectors of the U.S. coal industry have opted for a two-fisted, paranoid strategy that is more suited for the 1930s than the 21st century. The combattive approach is not a strategy with much of a future, as ExxonMobil demonstrated in its recent turnaround on global warming.

On the other hand, the Southern States Energy Board (coal industry-related) is openly talking about peak oil. See Peak oil at the Southern States Energy Board -BA

Coal executives show their charm. -LJ

Coal for power generation

Gulf Times/Reuters
They hold over 30 per cent of global oil and nearly eight per cent of gas reserves, but at least four GCC states are considering importing coal for power generation as they struggle to meet domestic demand.

Saudi Arabia, the UAE, Oman and Bahrain are all looking at the possibility of building coal-fired power plants, analysts and industry sources said. The region’s electricity needs are soaring as petrodollars feed rapid economic expansion.

‘It’s absurd in a way but there is not enough gas,’ said Mark Lewis, managing director of Energy Market Consultants.

‘They have a serious problem in power generation and are having difficulties balancing their systems. Coal is a well known technology and could be built fairly quickly. It’s probably quicker than the lead times for importing gas.’ ..
(28 Jun 2007)

NZ Greens challenge coal mine prospectus

NZ Green Party Press Release, Scoop
The Green Party has complained about what it believes is misleading advertising and a failure to warn investors of the financial risks in a private South Island coal mine.

“We believe Pike River Coal Company should warn potential investors that they are likely to be liable for a multi-million dollar bill for greenhouse gas emissions released during the mining process,” Co-Leader Jeanette Fitzsimons says.

“The Government has made it clear that it plans to introduce an across the board carbon price and this means Ma and Pa investors face additional financial risk. However, nowhere in Pike River’s advertising for its current share offer, which closes on July 10, does it disclose this.

The Party has also laid a complaint with the Securities Commission over the company’s failure to disclose to potential investors the likely financial liability for the greenhouse gas emissions from the operation.

“The future price on carbon has been estimated at between $15 and $100/tonne. This would lead to a cost of between $100 million and $678 million over the life of the mine. That would be a significant impact on any returns to investors,” Ms Fitzsimons says, “which the company should not attempt to conceal.”
(2 July 2007)
From Pike River denies misleading investors:

The chief executive of Pike River Coal, Gordon Ward, says the claims have no basis whatsoever. He says the prospectus has been through an extensive due diligence exercise. Mr Ward says the prospectus makes it very clear that government regulations may change and could affect the company’s operations.

Botswana showcases coal prospects

Rodrick Mukumbira, MineWeb
..Twenty companies from India, Australia, the United States and neighbouring South Africa are among the 200 delegates in the capital, Gaborone, for a two-day government-organised conference designed to point out the sector’s potential.

The conference, which started Thursday with the theme “Botswana 2007 – The Awakening of the Coal Giant”, comes at a time the country is preparing to mine the Mmamabula coal deposits projected to be the next main energy source for the entire southern African region.

The Mmamabula Energy Project is a planned coal mine and a power plant with a proposed capacity of between 2100-MW and 2400-MW, and is considered a crucial project for meeting a looming electricity shortfall in the Southern Africa region. ..

Dangling a carrot to investors, Tombale said Botswana had one of the most “progressive” mining codes in the world, with stability and predictability in the mineral legislation. He said the country’s mining code allowed for “virtually automatic” granting, renewal and transfer of mineral concessions. He said the code made provisions for a retention licence allowing a company that has completed an exploration programme and confirmed discovery to retain rights over the mineral deposit in the event that it could not be economically exploited immediately. ..
(29 Jun 2007)
See also Will Botswanas coal cure South Africas energy cold?