Peabody Energy's Five Biggest #Fails

This article is co-authored by Kert Davies at the Climate Investigations Center.

Peabody Energy (NYSE: BTU), as their website exclaims in big bold letters, is the "World's Largest Private Sector Coal Company", with 130 years of experience building big shovels and sending men into mines to chip out black rocks and put them on trains.

But over the past few years this coal company has gone from King to Clinker, with its stock price plummeting from a high of over $72 per share in 2011 to less than $5 per share today as their 2015 Annual General Meeting takes place in St. Louis.

Peabody's 5-year stock price graph somewhat ironically resembles one of the many mountains they've torn down over the years to mine their product:

peabody coal NYSE: btu

 

The company is clearly failing to thrive and here's five reasons why Peabody Energy will continue to #Fail:

1. Peabody is "100% coal", there is no Plan B.

There is nothing else in the Peabody "Energy" portfolio but coal.  As Senior VP Fred Palmer told the Guardian a couple years ago, "We are 100% coal. More Coal. Everywhere."  

It isn't an energy company, it's just a coal company.  

Their stock is in the tank but they are not broke, which is made clear with CEO Gregory Boyce's $11 million paycheck last year. Not to mention the company's $13B in assets at last published account. However, most of that is in mining assets - coal they haven't mined and marketed yet. And that's the problem, the world is trending away from coal.

Scientists have said we simply can't burn all the coal and oil we know is underground and still hope to avoid catastrophic climate change. The United State's Environmental Protection Agency (EPA) effectively banned new coal plants with its tough new regulations on pollution. 

2. Peabody chooses denial and delay in the face of overwhelming evidence on climate change.

As President Reagan's Secretary of State, George Shultz recently wrote, climate deniers "will wind up mugged by reality."  Peabody is as extreme a climate science denier as there is in the corporate community. Peabody's press release last week is a case-in-point with the coal giant calling for a "transition to [a] low carbon economy", then referring disparagingly in the next breath to the "climate theory" based on "flawed computer models."

3. Peabody faces carbon liability.

Peabody Energy is the largest investor owned coal company on the Carbon Majors study published in 2013. Carbon Majors lists the top fossil fuel companies historically responsible for the carbon dioxide that is already heating up the atmosphere.  

Translation: Peabody is responsible for bringing to market a measurable percentage of the carbon that is causing current atmospheric disruption and therefore arguably responsible for their share of the resulting impacts. Lawyers are studying how to hold fossil fuel companies accountable, just like they did with tobacco. The key is what they knew when, and that they at some point knew better on climate science but kept selling doubt and uncertainty.  

Greenwire reported earlier this year, that while Peabody repeatedly denies climate change in public, they take a different tone in their SEC reportsThe most recent carbon liability for Peabody comes from a group of Colorado mountain towns seeking compensation for climate change damages.

4. Peabody stock is first on the divestment list.

Norway's national pension fund recently sold off it's Peabody stock in spite of a 50-page Powerpoint slideshow pleading their case against divestment last year. Stanford University dumped its coal stocks in 2014. There is a huge global push underway pressuring major institutional investors to divest of equity tied to fossil fuels, and of all the various forms of dirty energy to drop, coal stocks are showing to be the easiest first choice.

5. Peabody continue to drink the "Clean Coal" Kool Aid.

Rolling Stone contributing editor Jeff Goddell put it best about clean coal, saying that "clean coal is not an actual invention, a physical thing - it is an advertising slogan. Like "fat-free donuts" or "interest-free loans."

Goodell wrote that observation here on this site when it launched almost seven years ago. Yet here we are today with coal-fired power plants still as dirty as they were then, just now with a trail of unfulfilled promises by companies like Peabody who continue to say "clean coal" is just around the corner.

Where Peabody did invest in clean(ish) coal, their Praire State project, they've taken a bath, spawning lawsuits and leaving workers in the lurch. Energy policy experts at the Institute for Energy Economics and Financial Analysis have shown in great detail that the true costs of Peabody's Praire State project are through the roof.

We could go on with more fails, but I think you're getting the picture now.

While coal may have once been the answer to many of our problems, its days are numbered in a world quickly moving to clean energy technology and grappling with the urgency of climate change. And companies like Peabody Energy will fall if they continue to hold on to their dirty past.

Photo credit: Paul Sableman on Flickr