Fascinating Idea to Keep Coal Market Burning

In the past couple of years, we have seen the energy market completely turn around. We’ve seen the demand for natural gas increase while reliance on coal has continued to decrease. Add that to increased use of renewable energy in the form of wind, solar etc. and it spells big time trouble for the coal industry.

President Obama has continued to push away the use of coal and tried to focus on slowing down Global Warming in the form of renewable energy and agreements across the world. Coal companies are being forced  to shut down because of how much Carbon they contribute to the atmosphere and it is leaving many people out of work. This all seems very dark, but the fact of the matter is they must shut down if the USA (and world) want to slow down Global Warming. Could there possibly be another way to keep the coal industry alive but also make no impact on the environment? It seems like a dystopia, but the New York Times (NYT) recently published an article written by Michael Corkery and Michael Wines about a man that is trying to do both.

Tom Clarke, a man that had no experience in the coal industry before he dove in, is trying to buy coal companies with full intention to produce coal but with a catch–he wants to attach credits to the energy. So for all of the coal energy he is producing, they buyers would also be purchasing credits that would go to planting trees to offset the production of Carbon in the environment. When you first hear this idea, you think of a lot of restrictions with it. You think about if the buyers would even buy the energy with the credits attached, you think about how he could possibly have a one-to-one transfer of carbon against trees and you think about the government that is currently trying to slow down coal production. There are some other concerning points.

Clarke first started this endeavor by purchasing Patriot Coal, a company that had filed for bankruptcy two times in three years and had many problems with environmental liabilities that had to be dealt with. All of these liabilities were transferred over to Clarke and this has been the case for all of the companies that he has bought from. It’s a dream scenario for these companies, as they are purchased and don’t have these environmental liabilities any more. According to the Times’ article, Clarke is currently offsetting only ten percent of the emissions that he has produced so far, but it’s a matter of him having enough revenue right now. There is some hope. Wines and Corkery put together some valuable information:

“One of Mr. Clarke’s believers is Chandler Van Voorhis, a founder of C2I, a company outside Washington. C2I’s business is planting trees. The trees soak up carbon dioxide, converting it to wood and leaves. An acre of trees can convert 156 tons of carbon in one year, Mr. Van Voorhis said. C2I plans to reforest a million acres in the southern Mississippi River Valley and sell the carbon offsets to companies to reach pollution-reduction goals. Together, Mr. Clarke and Mr. Van Voorhis sketched a plan to bundle C2I’s carbon offsets with coal.”

One of the main points in the article was the idea that there has not been a market set at all for coal with credits for pollution on it, and that can be a problem. Clarke is trying to deal with that too.

“Undaunted, Mr. Clarke hired an investment banker and lawyers to hatch his idea. ‘Wall Street’s a pretty cynical place,’ said Tim Hess, a real estate developer in Virginia, who introduced Mr. Clarke to his banking contacts. ‘But when you see somebody with that kind of passion and integrity, if there’s a way to make business sense out of it, I think people lean forward.'”

It’s an interesting story to watch, but it is one that could run into a bunch of issues. We will keep an eye on this one.


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