David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian. Read more opinion SHARE THIS ARTICLE Share Tweet Post Email

As any lobbyist knows, industries stand their best chance of influencing governments if they display unity -- or at least its semblance. That should be a worry for coal miners, who've seen their old allies in the oil and gas industry turn frenemies ahead of this week's UN Conference on Climate Change.

Back in the day, there wasn't even a distinction between the two sectors. In the late 1990s, Shell employed more than 1,700 people mining coal in Venezuela and Australia. BP quit the business in 2003, followed by Chevron in 2012. Total had South African mines producing about 4.5 million tons of coal a year until it sold out last year.

Now that they're no longer selling the stuff, the oil majors are falling over themselves to stick the boot in. BP, Shell, Total, Statoil, Eni and BG wrote in June to the UN calling for governments to encourage the use of natural gas instead of coal. The replacement of coal with gas was helping to reduce U.S. carbon emissions, Chevron CEO John Watson said in a speech the same month.



Even Exxon Mobil, not a company known for its green credentials -- it sees renewables accounting for a bare 17 percent of Europe's energy demand in 2040, compared with the International Energy Agency's 50 percent forecast for the EU -- expects coal's share of rich countries' energy demand to slump 10 percentage points by 2040.

Gas Rises Forecast share of OECD energy demand, by fuel Source: ExxonMobile 2015 Outlook for Energy

Coal is being caught in a brutal pincer movement. On one side is climate science, which has singled it out as the dirtiest of a dirty bunch of fossil fuels. Methane isn't perfect, but with gas-fired power stations emitting greenhouse gases equivalent to 523 grams of carbon dioxide for each kilowatt-hour, compared with 1,205 grams at coal plants, it's a distinct improvement.



That's taking away the market for the black stuff. The U.K. is planning to close all its coal plants by 2025. In the U.S., 13 gigawatts of coal generation will be shut this year, according to the Energy Information Administration. China's coal consumption fell 4.7 percent in the first 10 months of this year as it added renewables to cut urban smog, according to government data.



On the other side, there's an oil and gas industry with a vested interest in accelerating this process. As the world inches toward a carbon budget -- the hard ceiling on carbon emissions beyond which catastrophic climate change may become inevitable -- companies still in the fossil fuel business are going to fight harder for their share of the remaining pie. Burning less coal allows a sliver more room for petroleum companies to sell their products without busting the planet's ability to absorb the pollution. No wonder they quit the sector.

China's coal consumption, first 10 months of 2015 -4.7%



Even without a global carbon price, the economics of the business are pushing in this direction. A global glut of methane has driven gas-storage levels in the U.S. above 4 trillion cubic feet for the first time on record, and prices are falling as a result. While coal's woes have caused its price to drop, the yet-steeper fall in gas has narrowed the price premium for the cleaner fuel. Each unit of energy in Henry Hub natural gas now costs just 26 percent more than that in Central Appalachian coal, according to data compiled by Bloomberg:

Mind the Gap Price per million British thermal units of selected U.S. fossil fuels Source: Bloomberg data

That's even before you start thinking about the threat from renewables, which will see the cost of solar electricity match the price of coal-fired generation in most major markets by the end of 2016, according to Deutsche Bank.



One more worry for coal: Net debt among listed coal miners in North America, Europe, and developed countries in the Asia-Pacific region stands at $29 billion, almost double their aggregate $15 billion in market value, according to data compiled by Bloomberg. Prospects for paying that off look grim, with $3.6 billion in Ebitda losses over the past 12 months. Of 86 companies that reported an Ebitda result, 60 posted a loss. If you're going to get into a lobbying fight with Big Oil, now would be a good time to have some cash.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:

David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story:

Paul Sillitoe at psillitoe@bloomberg.net