Coal Industry: Ethical Analysis

The energy industry is more relevant today than ever before. As modern technology thrives, so does energy. It has become a necessity used in many areas of life such as agriculture, transportation, waste collection, information technology and communications. All of which are critical components for most functional societies. The industry is made up of many different entities, which include the petroleum industry, gas industry, electrical power industry, coal industry, nuclear power industry, renewable energy industry, and the traditional energy industry. The oil and gas industry account for most of the market, supplying 60% of total demand. Then there is the coal industry coming in second, accounting for 20% of the industries market share. These industries face continuous debate regarding their production and sales, especially here in the United States. The United States is one of the world’s biggest consumers of energy and the energy industry is the third largest industry within our country (“U.S Energy Industry”). This has generated a lot of publicity for the industry, due to the increased use and demand for energy as a whole. And since there is more and more emphasis placed on the environment, the media has highlighted the negative aspects that surround the business. In this section we are going to take a closer look at the coal industry, investigating some of the ethical issues facing coal.

Ethical Issues Facing Coal Industry

Throughout history coal has been a very abundant and essential resource, especially for us in the United States. We most commonly use it for producing our electricity and heat. Today coal generates more than half of our electricity, with there being nearly 600 coal-fueled power plants nationwide. The industry also creates over 550,000 jobs in our country (“Take Action”). So we should not neglect the fact that coal is a major contributor to our society and almost everyone benefits from its use. But unlike most other industries, coal faces a multitude of ethical issues. These issues can be broken down into three categories, environmental, social, and ethical (sustainability).

Coal creates a lot of problems for the environment. The main one has to do with air pollution (carbon emissions). When burned coal emits high levels of carbon dioxide to the atmosphere, which is the main greenhouse gas that causes global warming. It also emits other pollutants to the air when burned which include mercury, selenium, and arsenic. As far as waste management goes, coal creates a lot of solid waste product such as fly ash, bottom ash, and flue-gas desulfurization sludge. This waste contains mercury, uranium, thorium, arsenic, and other metals that are all harmful for the environment. Coal also pollutes the water. This occurs mostly during the various extraction processes. The process that gets the most exposure, especially around the Appalachian region, is a form of surface mining called mountaintop removal. This process involves extracting entire coal seams from a mountain, hill, or ridge by removing the land or overburden above the seam (which pollutes the water and depletes woodland resources). These are just a few examples of the negative environmental impacts of coal (“Environmental Impacts of Coal”).

There are also many social challenges facing the coal industry, but we are just going to focus on the negative health effects and employee safety. Coal can cause a lot of health problems. These problems include respiratory issues (bronchitis, asthma attacks, etc.), black lung, congestive heart failure, and some forms of cancer. Mostly people acquire these sicknesses through the extraction, preparation, combustion, waste storage, and transport of coal, but the general public can also be affected. Employee safety is another social concern that surrounds the coal industry. This type of industry involves the use of heavy equipment, which creates several safety hazards. Fire, explosion, the release of gas and structural failure are some of the other safety risks associated with coal (Fears). Overall, this is a very dangerous job requiring workers to always be alert and aware of their work environment at all times.

Finally let’s discuss sustainability. There are recent figures that show the coal industry is in decline. This is the result of new government regulations and rules, which are trying to decrease carbon emissions. This creates long-term problems for the coal industry, because recent trends show that society wants to do anything they can to preserve the environment and find a cleaner energy source. Another reason for the decline is the recent influx of cheap natural gas to the United States (Plumer). All in all, the future looks pretty grim for the coal industry.

Pressures Facing Coal Industry

Energy companies such as the coal industry have created problems such as pollution, global warming, nuclear wastes, oil spillages, etc. Because these problems affect the environment, the public has started to pay attention. Environmental interest groups and government regulations are responsible for bringing pressure to corporations in the energy industry.

Because the results of burning coal can damage the environment, many environmentalists and activist organizations have brought pressure to the industry. Groups such as Greenpeace, Friends of the Earth, Sierra Club, Environmental Defense Fund, and the Natural Resources Defense Council are some of the more popular environmental activist organizations (Sills). These organizations may pose a threat to the coal industry because they push the use of renewable energy and participate in strikes, protests, complaints to the government, and online video posts to gain public attention against companies in the energy industry that may be a threat to the environment (Tesh). Many of these activist groups have over 1 million members and can potentially create a lot of pressure on the energy industry in the future (Tesh).

The environmental group that causes the biggest threat to the coal industry is the Greenpeace group, as they are the largest independent direct-action environmental organization in the world (Greenpeace.org). The primary goals of Greenpeace are to: shut down “dirty” industries, advocate laws to curb global warming, create a path towards cleaner energy, and publically expose those companies that support the use of “dirty” energy. Greenpeace has also started an Energy Revolution which includes a blueprint for protecting the environment through investing in renewable energy. Part of the Energy Revolution includes the Quit Coal Campaign which fights to eliminate the use of coal because coal fired power plants are the biggest source of man-made CO2 emissions, making the use of coal energy the greatest threat facing our climate. Over the past couple years, campaigns by the Greenpeace group have resulted in victories of shutting down coal plants around the world (Greenpeace.org).

Activist groups against the coal industry can even be found on the Virginia Tech campus. Greenpeace at Virginia Tech and VT Beyond Coal are two major groups on campus that are fighting for a better environment. According to the website of VT Beyond Coal, the campus power plant burns 46,000 tons of coal (VT Beyond Coal). VT Beyond Coal has started a petition that is committed to transitioning VT’s coal plant to 100% clean, renewable energy by 2020. This petition to “Invent a clean future” is part of a movement to bring clean energy to over 60 universities in the United States (VT Beyond Coal).

Along with pressures from activist groups, energy and environmental regulations by the United States government are increasing and becoming more complex. According to “The Daily Caller” magazine of Washington D.C., the Environmental Protection Agency is working with President Obama to tighten regulations on oil, gas, and coal for the next four years (Bastasch). So far, the coal industry has been affected the most by the regulations and has experienced a shutdown of more than 200 coal-fired generators across 25 states. Coal mining companies have also been hurt by these regulations and have seen a loss of 17,000 jobs since May 2012. Also, research from Thomas Pyle, President of the Institute for Energy Research, has determined that energy prices will continue to rise as a result of the environmental policies. Due to the Environmental Protection Agency’s oppressive regulations, Pyle also quotes, “coal is toast” (Bastasch).

The pressures from activists groups and the government will push for companies in the coal industry to be more accountable towards societies needs instead of the needs of the shareholders (Tesh). Actions of activists groups may cost companies money and may cause more people to protest against traditional energy sources. Government policies will also be a financial strain to energy companies as they impose fines if regulations are not followed. As a result of these pressures, the coal industry will have to make changes.

Corporate Social Responsibility Activities

Because there are a number of ethical issues facing the coal industry, companies in this industry have being working at its best to improve the social and environmental impact of their activities. Peabody Energy is known for being the world’s largest private-sector coal company. They are also the global leader for finding alternative clean coal solutions and sustainable mining. It is Peabody Energy’s mission to be “a leading worldwide producer and supplier of sustainable energy solutions that enable economic prosperity and a better quality of life” (Peabody).As their corporate responsibility, they have been addressing issues in employee, economic, public, and environmental responsibility.

Peabody’s Safety Vision is to prevent zero incidents, occupational illnesses, and property damage. Safety improvements remain a priority to Peabody Energy in all of their global coal plants. They have been making efforts to increase a safe workplace environment by using surveys and assessments to gain feedback from its employees. In 2011, Peabody completed the installation of underground communication systems so that miners underground are able to better communicate problems that may arise so that rescue teams are notified to assist workers right away. Peabody has also introduced “Safety a Way of Life”, which is their training program for employees to transition into the company’s safety systems and processes (Peabody).

In addition to employee responsibility, Peabody Energy believes in the importance of preserving the environment. The key principle of their mission is to “leave the land in a condition equal to or better than we found it” (Peabody). In 2011, Peabody restored more than 5,100 acres of mined lands and has been creating rangeland, wildlife habitat, hardwood forests, and wetland. The company encourages regular monitoring so that they meet or exceed compliance standards. Peabody has spent $290 million on just land restoration alone (Peabody). They have also introduced a three year study of global energy and water use to enhance environmental conditions. Peabody is one of the very few coal companies that is advancing in clean coal technologies and pursuing different practices to maximize energy efficiencies so that they can improve the carbon dioxide intensity. Beginning in 2006, Peabody has partnered with the U.S. Geological Survey to undertake methane content in its mines. Peabody has been focusing on their environmental responsibilities as a company through partnerships with other organizations and participating in projects toward zero greenhouse gas emissions, new clean coal technologies, maintaining energy efficiency and emissions intensity, and shaping effective carbon policy .

ArchCoal is another coal mining company known for its corporate social responsibility initiatives. Like Peabody Energy, ArchCoal has been focusing on the same responsibilities in safety and environmental conditions. ArchCoal’s guiding principle is safety. They promote the “Perfect Zero” principle of zero injuries and zero environmental violations. Like Peabody, ArchCoal has been finding ways to make their working environment safer for its employees. In 2011, they invested $14 million in a two-way communication and tracking systems for mines to prevent accidents underground. Additionally, ArchCoal has been constantly training its employees for preparedness and preventing possible accidents (ArchCoal).

ArchCoal is working on various initiatives to reduce air emissions from coal electricity. They have been investing in technology to find ways of reducing greenhouse gas emissions and carbon dioxide emissions. ArchCoal has recently introduced its waste management program where water, oil, and metal are recycled.

Coal companies are more active in their corporate social responsibilities that other companies in different industries. Because the industry itself is so dangerous for both employees and the environment, coal companies have been working hard to provide the right environment and resources for employees. Furthermore, because the environment is detrimentally affected by the activities of coal companies, companies are taking more initiative to focus and take responsibility for their actions.

Investment Policy Recommendations

Virginia Tech needs to take corporate social responsibility and ethical issues of the coal industry into account when determining its investment decisions. Energy from coal is under a lot of scrutiny in the public eye since it is perceived as “dirty” and old technology. With the future of energy pointing towards clean technology such as solar and wind energy, Virginia Tech needs to be on the forefront. They need to set themselves as a leading academic institution that is moving away from coal and into clean technology. The slogan for the institution is “Invent the Future”(www.vt.edu), therefore taking the initiative to be ahead of the curve.

When investing the schools endowment funds, it is important to take ethical issues into account but at the same time not take a financial loss. The great thing about not investing in coal but other technology is that they are taking ethical issues into account but are also focusing the funds into an area that is growing at an exponential rate and will lead to financial gains rather than losses.

As a public institution there is a constant eye on Virginia Tech’s every move, whether it be policy with students, academic rankings, but most importantly where their endowment decides to invest their money. With that being said, it is acceptable to take a financial loss because you have to take the public views into account. Virginia Tech is closely related to the coal industry, with a coal power plant on campus and being located in SouthWest Virginia where the surrounding areas are heavy in coal, so it is a tough choice to not invest in coal. Therefore there will be both sides arguing over the investment in coal. You will have the local coal areas feeling as though the University is not looking out for them and then you will have the group that is all for clean technology and that has been trying to get the school to find a new source for power. Though, just because we will not be recommending that Virginia Tech invest in coal it doesn’t mean that the power plant has to go immediately. We are saying that by investing in other technology, they will be putting money into companies that are developing new technology that Virginia Tech can then go and use to harness their own energy for use on campus and in the surrounding areas in the future. As they focus their investments into cleaner energy and choosing ethical reasons over financial technology, the public eye will change and they will see Virginia Tech as a leader in the future.

Investment Recommendations

When looking back at the state of Virginia’s long history it is impossible to forget the impact that fossil fuels have had on the region. Fossil fuels and more specifically coal have been some of the biggest employers and revenue generating industry in the state. “2006, the total value of fossil fuels mined in Virginia was about $2.4 billion. Coal accounted for about 72 percent ($1.7 billion) of this total value, while natural gas accounted for about 28 percent ($660.3 million), and oil less than 1 percent ($1.1 million).(Virginia Tech Department of Mines) In recent years the total amount of coal produced in the country has been a little more than one billion tones still a huge number despite the push for new green energy. In Virginia production has been around thirty to forty million tones, mostly in the southwestern coalfields (VEPT). However coal production has decreased in the state to the low 30’s consistently. Our group would suggest Virginia Tech to not invest in fossil fuels and specifically coal mining as coal prices have decreased while the costs for obtaining and operating mines have increased. This is due to a number of factors, one of the most important factors is the trend of coal mining moving westward to states like Wyoming where mining is cheaper and easier due to the geological conditions there. One major problem is that almost all coal mines in the Appalachian area are underground mines in contrast to their western counterparts which tend to be surface mines allowing for easier and cheaper extraction. Virginia also has had a long history of coal mining which has led to the depletion of easily obtainable reservoirs forcing mining firms to look for untapped reserves.

It is common knowledge that the use of fossil fuels has negative effects on many aspects of our lives, from health concerns including higher rates of asthma in areas with heavy pollution but also the potentially devastating effects of global warming. These are only a few of the ethical concerns facing an industry as controversial as the coal industry. Specifically coal industry creates many issues for the environments that contain coal mines. Coal mines generate large amounts of solid waste especially when considering that several coal mining companies engage in the practice of mountaintop removal. Mountaintop mining uses explosives to expose the coal seams and transform what would have been underground mining to a form of surface mining. This is a common method of mining in the Appalachian Mountains. Studies have shown that mountaintop mining has had very serious consequences for the environment. One of the biggest impacts of this form of mining is the contamination of local watersheds. This is caused by placing the undesired materials created by exposing the coal seam in valleys or “filler holes” which inevitably ends up contaminating streams that eventually flow into the watershed. Exposure to these streams have been shown to lead to hospitalization for a verity of health concerns including; “Rates of mortality, lung cancer, as well as chronic heart, lung and kidney disease are also increased.”(M.A. Palmer et al. Mountaintop Mining Consequences, Science, 8 January 2010, Vol. 327, p. 148)

Instead of investing in more untapped reserves our group would instead look towards more renewable resources to cover our energy needs. The energy produced in Virginia accounts for less than half the total energy consumed in the state leading to the obvious conclusion that the state relies on other sources to provide energy. Based on estimates by The U.S. Energy Information Administration Virginia Energy consumption was estimated to be 2,558 trillion Btu while the energy produced as fossil fuels mined in Virginia was about 28% of total consumption. In Virginia Coal-fired power plants remains the largest chunk of electrical power generation in the state with 45%.