The US Energy Information Administration released new numbers today, with shocking news for the coal industry: the nation’s electric utilities used 18 percent less coal in the first half of 2012 than they did in 2011, and 27 percent less than they did during the peak year, 2008.

In short, big coal companies are in the middle of a free-fall, and nobody’s sure when they’ll hit bottom.

The chart to the right shows one way of looking at the trends: it depicts the minimum monthly coal consumption by the US electric power sector over a rolling 12-month period. And as of April of 2012, monthly consumption had fallen to its lowest level since 1986!

In all my years of examining economic and environmental trends, I’ve never seen anything like this. Gasoline consumption might shift by a few percentage points per year at most. Coal consumption trends had been very much of that ilk: consumption would shift slowly, but with a long-term trend towards steady growth.

So a drop of this magnitude is a proverbial “black swan“—an unforeseeable event with dramatic, world-changing consequences.

  • These trends are great news for the climate and human health, since coal is by far the dirtiest of all fossil fuels. Declining consumption means less mercury in our kids’ bloodstreams, lower levels of smog and acid rain, and less long-term risk to the climate. And the collapse in coal consumption is a major reason that US climate-warming emissions from fossil fuel combustion fell to a 20-year low earlier this year. (Yes, that’s right, because of declines in both coal and petroleum combustion, the nation’s fossil-fuel emissions earlier this year fell back to where they were in about 1992.)

    But for purveyors of the nation’s dirtiest fuel, the trends come as a disturbing wake-up call, because they underscore the fundamental fragility and riskiness of what had looked like a stable and profitable industry. And if anything, coal’s collapse is accelerating: consumption slumped during the economic downturn in 2008 but dropped even faster during the recovery.

    Coal’s troubles can mostly be traced to a single cause: a boom in natural gas. High gas production has sent prices tumbling to historic lows (after adjusting for inflation). They’re so low that many utilities are now shunning coal power plants in favor of efficient gas-powered turbines. The chart below from the US Energy Information Administration shows that natural gas generation (the green bars) has cut deeply into coal’s share of the generation market (blue bars) over the last few years.

    From a climate perspective, of course, the trends aren’t all rosy. The decline in natural gas prices can be traced to fracking—a production technique that carries substantial greenhouse emissions risks and contributes to other environmental problems as well. Meanwhile, domestic coal companies are looking to offload their unwanted coal on overseas markets; in fact, CO2 emissions in the EU are now on the rise, as cash-strapped European nations are importing cheap US coal.

    Regardless, what may be most fascinating about all these trends is how little notice they’ve received from the national press. Just look at the trends: there’s a fundamental, structural shift afoot in the energy industry. But it’s almost as if nobody except for a few energy geeks and coal investors have noticed. Which suggests that the coal industry’s mantra—that it’s a vital and indispensable contributor to the nation’s economic wellbeing—might be little more than empty talk.