Politics of Poverty

Coal isn’t the solution – and other energy access lessons from Peabody Energy’s demise

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Make-shift solar panels charge up mobile phones in Burkina Faso. (Photo: Andy Hall/Oxfam Great Britain)

Peabody Energy’s recent flop is a window into what not to do when it comes to energy access.

Peabody Energy just declared bankruptcy after years of financial instability owing to sustained low natural gas prices, the increasing social and environmental cost of burning coal, and other market factors. One of the companies’ last ditch efforts to remain relevant was the launch of their Advanced Energy for Life campaign created to promote coal development as a way to lift the poor out of poverty and provide lasting energy access.

The campaign was a flop. First, it was conceived on the misguided premise that it would be profitable in the near-term to export coal to developing countries like India to address access needs. Second, “poverty washing”, as Oxfam has called it, doesn’t sell. Peabody itself has zero investments and gives zero donations related to alleviating energy poverty. And in the UK, the company was sued by WWF for false advertising on based on untrue environmental claims in their campaign and WWF won causing Peabody to retreat.

Interestingly enough, Peabody’s industry peers have made some investments related to energy poverty in developing countries, but none have involved coal mining or coal infrastructure. The Australian Institute names a few: the Indian coal company Adani provides solar-powered street lighting to rural areas in India; BHP Billiton supports solar projects in Pakistan; and the Thai coal company Banpu built a mini grid for villages near a mine in Indonesia
powered by a diesel generator. One concludes that these companies perhaps understand that it doesn’t make economic sense to use coal-fired power to address energy poverty needs head on.

So what lessons does the Peabody collapse provide in terms of coal and energy access moving forward?

  1. The era of cheap coal is seemingly over. Looking to coal as a blanket solution to solve the very real problem of energy access for the poor across the developing world is a fool’s errand. In the US, we need to find a way to support communities who have been reliant on the coal industry for jobs, and we need to provide job training in communities where the clean energy market is growing fast.
  2. Marketing a dirty, harmful, and increasingly expensive form of energy production on the backs of the poor won’t change the fortunes of a dying industry. Innovation, distribution, and storage are the spaces where we need to sell new ideas on behalf of the 1.1 billion people worldwide who lack access to schools and health clinics that are powered by electricity.
  3. The finance sector bears a huge responsibility in how growth in infrastructure is fueled in developing countries. While Peabody may end up being a big loser in the coal industry, the industry isn’t dead yet. There are still important questions to be asked regarding who has a right to extract and sell their fossil fuel resources and the reliability of large-scale renewable energy generation in emerging markets. Public and private financial flows should be based on a sound assessment of social and environmental costs now and into the future.
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