1 Shocking Slide on the Dramatic Shift in Coal Emissions

Coal gets most of the blame for the rise in carbon emissions throughout the world. While it's true that coal is a much more carbon-intensive fuel, with the right regulations in place the fuel isn't as dirty as it used to be. Just take a look at the following slide from a recent investor presentation from Peabody Energy (NYSE: BTU  ) .

Source: Peabody Energy Investor Presentation (link opens a PDF)

The left hand of that slide shows the dramatic shift the city of Pittsburgh has seen since the 1950s. What was once a dirty city has become a sparkling clean city despite the fact that coal remains vitally important to its economy. In fact, top coal producer CONSOL Energy (NYSE: CNX  ) still makes its home in the Steel City and coal flows through the city day and night on both barges and trains. Yet despite its dependence on coal Pittsburgh has been ranked as one of the top 10 cleanest cities in the world according to Forbes. Having previously lived in the city, I believe it. This truly is a city that has come a long way from its dirty industrial past.

The reason Pittsburgh has transitioned from the filth of coal dust in the 1950s to one of the world's cleanest cities is found on the graph on the right hand side of that same slide. That chart notes that coal-based power generation in America is up 173% since 1970. But at the same time, regulated emissions per megawatt hour from coal have plunged 89%. Clearly, coal isn't as dirty as it once was as America has really cleaned up its emissions profile.

Peabody Energy and other big coal producers like CONSOL Energy and Arch Coal (NYSE: ACI  ) firmly believe that large coal growth markets like China will begin to follow America's path to lower emissions while still using more coal. Quite honestly, China has no choice. It leads the world in carbon emissions already by a wide margin. Its biggest hope to reduce those emissions is to tap its massive shale-gas reserves, but it still can't figure out how to unlock that natural gas. Now, with a massive urbanization plan and out-of-control carbon emissions, the country's only real choice is to clean up its coal emissions.

Photo credit: Flickr/Thomas sauzedde 

The fact that America was able to cut its coal emissions, while still growing its usage of coal, is why coal producers are so confident in coal's future as the dominant fuel in emerging markets. Peabody Energy sees global coal demand growing by 48% from 2010 to 2030 as emerging markets need a cheap fuel to support growing urban populations. It sees coal as the only affordable fuel at scale that can be used to meet the rising energy needs of these economies. Meanwhile, Arch Coal sees China and India doubling coal imports by next year because neither country can keep up with increasing demand from domestic output.

Investor takeaway
While natural gas took a lot of market share in America's power market over the past few years as companies like CONSOL Energy unlocked its potential through fracking, it's not likely to do the same overseas. Because of that, coal is positioned to become the dominant fuel across the rest of the world in the years ahead. While that has the potential to fuel an even more dramatic rise in carbon emissions, as American cities like Pittsburgh have demonstrated coal doesn't have to be the dirty fuel of yesteryear. That should keep coal producers like Arch Coal, CONSOL Energy and Peabody Energy very busy exporting it in the years ahead. 

Do you know this energy tax "loophole"?
You already know record oil and natural gas production is changing the lives of millions of Americans. But what you probably haven't heard is that the IRS is encouraging investors to support our growing energy renaissance, offering you a tax loophole to invest in some of America's greatest energy companies. It's an advantage that coal producers like CONSOL Energy, Peabody Energy and Arch Coal don't have at the moment, which is why you might want to look elsewhere for energy profits. Your best option right now to take advantage of this profitable opportunity can be found in our brand-new special report, "The IRS Is Daring You to Make This Investment Now!," and you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.

Read/Post Comments (1) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 20, 2014, at 5:13 PM, iamunion wrote:

    I have 6780 shares of Peabody and if I were to sell today would loose about $85,000 should I take my lose and go on and try to make it back somewhere else,the div is not to bad.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3020984, ~/Articles/ArticleHandler.aspx, 9/5/2015 8:20:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Matt DiLallo

Matthew is a Senior Energy and Materials Specialist with The Motley Fool. He graduated from the Liberty University with a degree in Biblical Studies and a Masters of Business Administration. You can follow him on Twitter for the latest news and analysis of the energy and materials industries:

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,102.38 -272.38 -1.66%
S&P 500 1,921.22 -29.91 -1.53%
NASD 4,683.92 -49.58 -1.05%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/4/2015 4:02 PM
BTU $2.28 Up +0.11 +5.07%
Peabody Energy Cor… CAPS Rating: **
ACI $5.41 Down -1.03 -15.99%
Arch Coal, Inc. CAPS Rating: **
CNX $13.40 Down -0.83 -5.83%
CONSOL Energy, Inc… CAPS Rating: **