Apr 14, 2016
Peabody Energy filed for Chapter 11 bankruptcy on Wednesday morning. Their executives claimed it was a hard decision, but the right one for the company.
The news was expected - they had been signaling that this event was coming all Spring, deferring loan repayment and essentially getting their affairs in order. But even before the company knew it was headed for bankruptcy, those of us watching market signals knew this day was fast approaching. Over the course of the last 5 years, Peabody's stock value dropped steadily from over $1000/share to where it lives now, hovering around $2. If I had heard this news 7 years ago, I would have danced on Peabody's grave.
"Make no mistake, the fossil fuel industry is going down, but it won't go down easy."
Peabody Energy was the company that brought me into the climate fight. I was a student at Washington University in St. Louis (Peabody is a St. Louis-based corporation) back in the days of their 4-digit stock prices. I recall watching my university publicize a deal with Peabody and a handful of other coal companies to begin research on carbon capture and sequestration, or as my chancellor affectionately called it, "Clean Coal." At the time, I was an Environmental Studies major, taking classes on climate science, business and public health. The climate and human rights catastrophes in my text books were directly and inextricably tied to the coal executives brunching with our administration. A well-documented corporate scoundrel, Peabody is on record dismissing climate science, prescribing coal as a solution to poverty, union-busting, displacing Dineh (Navajo) communities for coal operations on Black Mesa, Arizona, and demanding tax breaks from the floundering budget of the city of St. Louis (who cut school funding to compensate).
At the time, my fight was with my school, an institution that would sell its credibility in exchange for funding. Wash U was enabling Peabody's business model to continue by embracing its brand. It was a campaign not unlike those of today's fossil fuel divestment movement. In 2009, arguing against an alliance with big coal felt like an uphill battle. But now, I see the "clean coal campaign" as one of the last gasps of a dying industry.
Peabody's bankruptcy (along with the bankruptcies of dozens of other coal, oil and gas companies) is indeed a harbinger of the end of the fossil fuel era. There have been 50+ coal company bankruptcy filings in the US alone since 2012. You can see that this decline was not the product of some singular catastrophe, but a death by 1,000 cuts - new coal regulations, more expensive leasing and extraction, the rise of cheap renewables, together with bold resistance of movements comprised of divestment activists and impacted communities. Like the dozens of other coal, oil and gas companies that have gone bankrupt in the last year, Peabody watched the world surrounding its business change, but chose not to change with it.
"If we can learn anything from recent bankruptcies in the sector, Peabody's chapter 11 is simply a new variation on the company's habit of externalizing the costs of its dirty and destructive business practices onto its workers, impacted communities and the environment."
But despite the pop-cultural understanding of bankruptcy as closing shop, what it actually leads to is a restructuring of the company, allowing it to cut expenses (read: jobs, healthcare and other worker benefits, and environmental protections) in order to pay back debts and extend the life of the company. If we can learn anything from recent bankruptcies in the sector, Peabody's chapter 11 is simply a new variation on the company's habit of externalizing the costs of its dirty and destructive business practices onto its workers, impacted communities and the environment.
Last year, Alpha Natural Resources (don't let the name fool you - it's a coal company) filed for bankruptcy, laid off 4,000 of their workers, and is now working to cut the insurance benefits of nearly 5,000 retired workers and their families. Meanwhile, they are guaranteeing bonuses of a whopping $11.9 million for a handful of top executives. In July of 2015, a bankruptcy court approved a similar request from Patriot Coal "protecting" $6 million in bonuses for executives and middle managers as they worked through their own Chapter 11.
We can assume that Peabody, without grassroots and federal intervention, will follow suite.
But as this moment, while Greg Boyce and the rest of Peabody's executive class are drawing up the plans for their golden parachutes, those of us fighting for a just transition have got our work cut out for us. In Peabody's 2014 SEC filing, they explained their lower-than-anticipated profits by citing risks such as stigmatization from the Fossil Fuel Divestment movement. Organizers from Black Mesa, to Wyoming, to St. Louis and Illinois, to the mountains of Appalachia have been resisting Peabody for decades (you can read some of their statements here), and have made a real dent. In one very real sense, we are winning.
But moments like this require us to ask the crucial question, "how do we transition?"
The companies that got us into the intertwined crises of climate change and economic inequality and community displacement and public health will not be the ones who chart a just transition out of them. They have always chosen profit over people, and even in the twilight of the industry, especially in the twilight of the industry, we anticipate nothing different. So it is up to us to create the alternative vision, and to bring our legislators, our courts, our churches and schools and communities with us. It means divesting from the fossil fuel industry and reinvesting in clean energy solutions that work for our communities. It also means when our efforts to take down the fossil fuel industry actually work, we need to pay attention to how they go down and what grows up in their place.
"Moments like this require us to ask the crucial question... 'How do we transition?'"
In short order, Peabody will bring a proposal to bankruptcy court, much like Alpha Natural Resources and Patriot before them. They will ask to cut costs--jobs and benefits, to forgive their obligations to clean up mine sites and compensate impacted communities, and you can bet they will ask for executive bonuses. That's why activists with Missourians Organizing for Reform and Empowerment in St. Louis and community leaders from Black Mesa are asking for something different from the court--not a bailout, but a just transition.
You can sign the petition here to ask the bankruptcy court to prioritize the workers and pensions of mine workers; funds to transition communities and coal miners out of extraction-based economies, including reemployment and new economic opportunities; and money for land reclamation and mine clean-up.
Make no mistake, the fossil fuel industry is going down, but it won't go down easy. The priority now is to make sure it doesn't take its workers the communities it has impacted with it.
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