Coal and Solar Power Sectors in Trouble in USA

There are a number of reasons behind the demise of the U.S. coal industry and the solar power sector, but the biggest factor is displacement of coal by natural gas in the power generation sector. The coal industry has been in trouble for long as evidenced by the announcement of the US based Peabody Energy, the world’s largest private coal company, that it is on the verge of bankruptcy due to the crash of coal, fierce competition from cheap gas and a radical policy shift by China. It may be forced to invoke Chapter 11 protection under US insolvency law. China, on the other hand, aims to lay off 5-6 million state workers over the next two to three years as part of efforts to curb industrial overcapacity and pollution. This will be Beijing’s boldest retrenchment program in almost two decades. Also, China’s coal companies are shifting to solar, wind, ultra-efficient coal and nuclear energy. However, to maintain stability and ensuring that redundancies do not lead to unrest, China will spend nearly 150 billion yuan ($23 billion) to cover layoffs in just the coal and steel sectors in the next 2-3 years. This hugely inefficient state sector employed around 37 million people in 2013 and accounts for about 40 percent of the country’s industrial output and nearly half of its bank lending.

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