Coal is making a comeback in the United States ...

Source: Financial Times, Dan Roberts

In the face of disappointment with gas and rising oil prices, the US government is encouraging coal production. Much to the despair of environmentalists.

In Wyoming, 500 kilometers east of Yellowstone National Park, the changing global energy landscape is visible to the naked eye. Pulling 220 tons of rock with each shovel he gives with his bucket as large as a house, the excavator operator unearths a 25-meter seam of coal, testifying to the unexpected return to grace of one of the oldest and most polluting fuels used by humans. The Coal King is back, much to the chagrin of environmentalists. Favorable to this development, the United States government estimates that the share of coal in world energy consumption will double by 2015 to reach 50%, under pressure, in particular, from developing countries, in particular China and India, who are also looking for a cheaper and more reliable source of energy than oil or gas. The White House's support for coal arouses great mistrust, in the United States and abroad. Europeans fear that by encouraging coal-fired power stations it will destroy any hope of an international consensus on limiting carbon dioxide emissions. In the United States, opponents of George W. Bush believe that his enthusiasm reflects, at best, his desire to win the vote of minors in certain decisive states during the next elections. At worst, it results from the importance of the donations made by the coal industry to the Republicans. Whatever their motivations, politicians on both sides have an interest in coal for one very simple reason: geology. If oil wells and hydroelectric dams symbolize the energy wealth of the United States, it is often forgotten that they have more coal than any other country: the share of the world coal held by the country of Uncle Sam is higher than the proportion of planetary oil present in the soil of Saudi Arabia. The energy potential of these reserves is five times that of Saudi crude and slightly higher than that of all oil resources in the Middle East. The coal renaissance owes much to disappointments with America's old miracle fuel, natural gas. Throughout the 90s, low prices and the apparent abundance of gas in America pushed energy producers to abandon coal-fired power plants in favor of more profitable gas. But, when these new production units went into service, gas production started to slow down, causing gas prices and imports to rise sharply.

92 thermal power plants are planned in the country

This is why, for the first time in twenty-five years, energy producers are once again turning to coal. The US Department of Energy estimates that there are 92 new power plants planned in the country, representing an investment of $ 69 billion for potential power generation of 59 megawatts. Six of these are under construction and are expected to enter service in 2006 or 2007. According to the government, 148 will have to be built by 2025 to meet demand. This evolution is even more impressive in the rest of the world. In Asia, where ecological constraints are much less than in the United States, nearly a thousand new plants are planned. A hundred are already under construction, mostly in China. Financial markets perfectly reflect this trend. Since May 2003, the reference price of coal has doubled in the United States, reaching almost 60 dollars per ton. The sudden interest in the few US listed producers also shows that investors have become aware of the potential of coal. Since the start of the year, shares of mining companies have outperformed those of other sectors of the economy. Peabody Energy, the world's largest producer of coal, remains a marginal player in the international energy market. While it provides more than 10% of the coal needs of American electricity producers and prides itself on having an energy reserve equivalent to 30,5 billion barrels of oil, it has achieved only $ 50 million in profits in the second quarter. As for its market capitalization, it is only $ 3,3 billion. In comparison, with only 28 billion barrels of oil equivalent in gas and oil reserves, ExxonMobil, the world's number one oil company, posts 5,8 billion quarterly profits and a capitalization of 292 billion dollars. This discrepancy is easily explained by going to North Antelope Rochelle (Wyoming), Peabody's largest mine. A simple glance at the 25 meter high coal wall that stretches as far as the eye can see makes it possible to understand the economic reality of the whole sector: coal is really easy and cheap. No need to waste time digging hundreds of meters underground to exploit thin veins, as is common in Europe or in the Appalachians: mining coal in Wyoming is a bit like digging into a heap already all ready. North Antelope Rochelle, the largest mine in the world, is bathed in disturbing calm. Seven hundred employees are enough to extract enough coal to meet the electricity needs of 6 million US households. The unreal atmosphere is reinforced by the inhuman dimensions of the place: the vehicles have wheels twice the height of a man and the freight trains are more than 2 kilometers long. Compared to the emirs of the Organization of the Petroleum Exporting Countries (OPEC), the new American coal magnates are using their political power very discreetly. Irl Engelhardt, CEO of Peabody, is proud of his humble origins. He is said to have grown up on a farm in Illinois and remembers his mother crying in the kitchen over her unpaid electricity bills. Authentic or not, the anecdote explains why Mr.

Republicans and Democrats court minors

One of the industry's many lobbyists has calculated that the poorest American households spend up to a third of their budget on energy costs. According to Engelhardt, "if we focus on climate change and if we increase the price of energy in this country, people with fixed resources will see their disposable income dwindle." Although opposed to the environmentalist rhetoric of some Democrats, Peabody and other mining companies deny that they systematically support Republicans. Because, at a time when John Kerry, the Democratic presidential candidate, is courting the mining vote in the most disputed states such as West Virginia, the two parties are seeking to curry favor with the coal mining world by advocating the increased federal spending on the development of clean combustion technologies. For their part, pressure groups like Americans for Balanced Energy Choices or the Center for Energy and Economic Development are striving to impose the idea that the replacement of imported gas by coal is an issue of internal security that no courageous politician can neglect.