SOURCE:  desmogblog.com

“the amount of money companies are mandated to pay into these funds has been vastly under-calculated, and these bond pools are also facing insolvency.”

By Mark Olalde

For more than a century-and-a-half, the forests, streams, and hollows of the Appalachian Mountains have been scraped and gashed to unearth their heart of rich black coal. These lumps of hydrocarbons historically played a vital role in America’s electricity mix, accounting for a third of the country’s energy production as recently as 2008.

But over the past decade, a devastating combination of forces has pummeled the industry, from cheap natural gas and the falling cost of renewables to growing public pressure to respond to the climate crisis. U.S. coal production has dropped 40 percent since its peak 12 years ago, and the commodity accounted for only 14 percent of the country’s electricity generation last year.

With the coronavirus pandemic now stalling energy demand, coal production has dropped about 26 percent in the past 12 months alone, perhaps ringing the death knell for coal as an energy source in America.

“The pandemic has even further depressed the use of energy, and oil prices have collapsed, making it even more difficult to compete,” said Ohio Coal Association president Mike Cope, who estimated a strong industry would need to provide a third of the country’s energy. “Nothing really to cheer about in the coal industry these days.”

Hit with another wave of bankruptcies, King Coal is on its deathbed. But even as it fades away, the industry could land a final, painful blow to communities and the environment in Appalachia.

An investigation by DeSmog has found that several key financial instruments meant to guarantee environmental cleanup have been pushed to the brink of insolvency, potentially leaving taxpayers on the hook for hundreds of millions — if not billions — of dollars in reclamation costs.

Even as coal companies go bankrupt and walk away, a federal law passed in 1977 created an ostensibly fail-safe system to fund future cleanups: Mining companies put up millions of dollars in security deposits intended to pay for reclaiming individual mines. These funds, called bonds, usually come as surety policies, which are provided by insurance companies and guarantee a third party will fill pits, seal shafts, and mitigate water and air pollution.

But DeSmog has found that the bonding system now faces dangerous levels of risk. The large insurance companies that once wrote surety policies are fleeing the industry, allowing a few insurance providers to take on much more liability than they can handle. If enough coal companies go under, it will set off a chain reaction, taking these insurance companies down with them.

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