The Decline of Coal is Due to Market Forces, Not a Conspiracy by Asset Managers to Harm the Industry: Echoing Benji Backer’s Op-Ed in The Hill

    I wrote about Benji Backer and the new Conservative Environmentalism last year. I think it is an important movement towards pragmatic environmentalism on the political right that can counter both the biased and activist-oriented environmental left and the anti-environmentalism of the right. It advocates common-sense bipartisan solutions.  

    In a recent op-ed in The Hill, Backer argues that the decline of coal is not the result of collusion by fund managers to destroy the coal market, as alleged by coal state attorneys general and the current FTC and DOJ, but rather the result of market forces and realities. He writes quite correctly:

“The simple reality is that coal’s decline in the United States did not start with asset managers or ESG (“environmental, social and governance”) investment policies. It started decades ago with the shale gas revolution, when fracking technology unleashed an abundant, cheap and cleaner-burning alternative.”

     In late November 2024, eleven state attorneys general filed a lawsuit against BlackRock, Inc. and The Vanguard Group, Inc., alleging that they colluded to damage the U.S. coal market. The facts of the matter are that coal was declining long before the ESG movement was a thing. Sure, there were accusations of Obama having a “war on coal.” This was mostly untrue. The lawsuit argues:

“For the past four years, America’s coal producers have been responding not to the price signals of the free market, but to the commands of Larry Fink, BlackRock’s Chairman and CEO, and his fellow asset managers.  As demand for the electricity Americans need to heat their homes and power their businesses has gone up, the supply of the coal used to generate that electricity has been artificially depressed—and the price has skyrocketed.  Defendants have reaped the rewards of higher returns, higher fees, and higher profits, while American consumers have paid the price in higher utility bills and higher costs.”

     The argument is that these investors have become the largest investors in public coal companies and are using their share ownership to suppress competition in order to keep coal supply low and coal prices high for their own advantage.

     While it is true that these asset managers have the largest investments in these companies, they also have them in companies in other industries. As these asset managers control more funds than any other investors by far, this is not unexpected. In other words, it does not suggest a conspiracy. In Fink's famous letter in 2021, I think it was, he stated that BlackRock will screen investments to make sure they are in accordance with the public good. The fact that they are well-invested in these coal companies shows that they see them as in accordance with that public good, since they have not been screened out. 

     Backer notes EIA data that show U.S. coal production declining to less than half of its peak in 2001 of 1.127 short tons to 535 short tons in 2020. 

     The EIA noted:

“The decline of U.S. coal production in 2020 was largely the result of less demand for coal internationally and less U.S. electric power sector demand for coal. Lower natural gas prices made coal less competitive for power generation.”

     He writes:

“Natural gas outcompeted coal because it made economic sense — lower operating costs, fewer regulatory burdens and, perhaps most importantly, reduced environmental impact. Add in the drop in the cost of renewables, and coal’s decline was not only inevitable, it was predictable. These asset managers saw the writing on the wall and adjusted their investments aligned with their fiduciary duty to their clients.”

     He notes that the change is about economics and smart business decisions and not about politics or ideology.

“Asset managers have a legal duty to evaluate long-term risks and returns for their clients. When coal projects increasingly face uncertain demand, regulatory headwinds and operational volatility, choosing to limit exposure is prudent investing.”

“We must be honest about what’s happening to coal — and to energy more broadly. Rather than distorting reality for short-term political gain, let’s focus on developing solutions that respect our economic system, support innovation and ensure energy security.” 

     He also notes, importantly, that coal production declined not only for public coal companies but for private coal companies as well. As noted, the bulk of this decline occurred before ESG was even a thing of relevance.

     He goes on to advocate for an all-of-the-above strategy for energy, a strategy first proposed by Obama, but one in which many conservatives advocate for now, when there is a clear need for energy abundance.

“We should all care about America’s energy future, and to best do so, we have to stop pretending market evolution is sabotage. The decline of coal in the United States is simply capitalism doing exactly what conservatives have always trusted it to do: adapt and allocate capital where it best serves growth, stability and prosperity.”

     I must say, it is nice to see a conservative viewpoint (or a liberal viewpoint for that matter) that is well-presented with accurate data and conclusions and is not mired down in unnecessary politicization.

  

 

References:

 

Opinion: The decline of coal isn’t a conspiracy — it’s pragmatic market reality. Benji Backer. The Hill. August 16, 2025. Opinion: The decline of coal isn’t a conspiracy — it’s pragmatic market reality

Antitrust Cops Say BlackRock, Other Fund Giants May Have Hurt Coal Competition: Justice Department and FTC raise concerns about how institutional investors wield ownership of shares in rival companies. Dave Michaels. Wall Street Journal. May 22, 2025. Antitrust Cops Say BlackRock, Other Fund Giants May Have Hurt Coal Competition - WSJ  

Case 6:24-cv-00437. Document 1. Filed 11/27/24. States vs. BlackRock, Inc, and The Vanguard Group, Inc. States v BlackRock Complaint Filed.pdf

In 2020, U.S. coal production fell to its lowest level since 1965. Energy Information Administration. July 14, 2021. In 2020, U.S. coal production fell to its lowest level since 1965 - U.S. Energy Information Administration (EIA)