Green groups anticipate "dawn of a clean industrial era" as Peabody files for bankruptcy
The world's largest privately owned coal producer Peabody Energy Corp has today (13 April) filed for bankruptcy, with organisations lamenting its inability to 'adjust to new energy markets' as a detrimental factor in the decision.
The company has filed for Chapter 11 bankruptcy after a drastic fall in coal prices left it unable to accommodate for recent expansions into Australia. According to a court filing, Peabody has listed assets and liabilities between $10bn and $50bn.
"This was a difficult decision, but it is the right path forward," Peabody’s chief executive officer Glenn Kellow said. "This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."
Peabody’s debt issues – which intensified during the $5.1bn buyout of the Australian firm Macarthur in 2011 – has irked many green organisations and companies, with reactions ranging from the optimism over the dawn of the “clean industrial era” to anger over deliberate efforts to “delay, dismantle or destruct climate action”.
Peabody bankruptcy: The reaction
Tom Sanzillo, director of finance, Institute for Energy Economics and Financial Analysis
“Peabody Energy, to the detriment of its investors and employs, is bankrupt today because its leadership has been unable to adjust to new energy markets where coal is being displaced by new energy sources.
“That said, the coal industry is not dead, but it faces a time now in which is must innovate in ways that it has not done before. That means smaller markets and fewer mines.”
Richard Black, director, Energy and Climate Intelligence Unit
“Be in no doubt; this is very big news. The coal industry around the world has been under sustained pressure for a number of years now due to a range of factors, including a glut of coal pushing prices down and the increased availability of natural gas.
“But environmental pressures are the biggest factor. In many countries, air pollution is now a major concern, governments are becoming more and more concerned about the climate impacts of coal; and now the biggest private company of all has succumbed.
"Phasing out coal in favour of cleaner forms of energy, like natural gas or renewables, is a process which is accelerating around the world. US companies are going bankrupt, European countries including the UK are phasing it out, and our research also shows that talk of a coal renaissance in Asian countries is likely to be a red herring.”
Alice Garton, lawyer, ClientEarth
“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.”
Bill McKibben, co-founder, 350.org
“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.”
Ilmi Granoff, attorney and senior researcher, Overseas Development Institute
“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.”
Dr. Alison Doig, principal climate change advisor, Christian Aid
“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.”
Mary Anne Hitt, director, Sierra Club’s Beyond Coal Campaign
"The biggest coal giant has fallen, and 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.
“As we transition to the clean energy economy, it’s essential that we don’t forget the immense contributions that coal communities have made to America and that we secure every family’s livelihood as we transition to new economic opportunities.”
Despite big oil companies claiming that oil will reign supreme – especially in developing countries – Peabody’s bankruptcy has heightened the belief that the renewable revolution is in full swing, with £286bn invested into clean generation sources in 2015.
With the Paris Agreement set to be ratified later this month – pending a potential boycott – both developed and developing countries have begun transitioning to a low-carbon economy, with the world’s largest emitter China, leading the way.
But while countries including China and Brazil continue to show oil and fossil fuels the cold shoulder, questions must surely be asked about the UK energy mix, which saw oil production gain its first significant increase this millennium.