Climate Change Strategy Could Keep Pressure On Coal ETF

Jul. 3.13 | About: VanEck Vectors (KOL)

Cheap natural gas has pressured the coal industry, along with related exchange traded funds, in the second quarter, but President Barack Obama's so-called war on coal could smother any flickering embers.

The Market Vectors Coal ETF (NYSEARCA:KOL) dropped 5.7% over the past week and is down 23.6% since the start of April. KOL is comprised of global companies engaged in the coal industry.

According to Luke Popovich, a spokesman for the National Mining Association, U.S. demand for coal has declined due to the relatively low natural gas prices and electricity usage - natural gas is seen as a cheaper alternative fuel for power generation, reports Wendy Koch for USA Today.

On Tuesday, Obama unveiled a new climate change strategy to limit pollution from existing coal-fired power plants, the largest source of carbon emissions in the U.S., reports Ashley Killough for CNN.

Specifically, the president wants the Environmental Protection Agency to establish a carbon pollution standard for plants that are already active, arguing that the benefits of diminished greenhouse gases outweighs the costs for implementing new rules.

However, the coal industry is not as stoked.

"The impact could be economic havoc," Popovich said in the CNN article.

"The president's announcement yesterday of essentially a national energy tax and the continuation of the war on coal will only make matters worse, putting thousands and thousands of Americans out of work; increasing the cost of electricity, especially in a state like mine, Ohio, where about 95 percent of our electricity comes from burning coal," House Speaker John a. Boehner (R-Ohio), said in a news conference, reports Glenn Kessler for Washington Post.

Market Vectors Coal ETF

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Max Chen contributed to this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.