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General Electric to Stop Building New Coal Plant Equipment as Renewables Take Focus

General Electric (NYSE: GE) announced on Monday that it would exit the "new build coal power market," in yet another blow to the troubled coal industry.

In a press release, the company said it would "work with customers on existing obligations," which it expected would include servicing equipment at existing plants. According to the release, though, the exit could include divestitures, site closings, and job impacts.

A large pile of coal.

Image source: Getty Images.

Chase the money

The U.S. coal industry has been in decline for years, according to data from the U.S. Energy Information Agency (EIA). Consumption peaked in 2007 at 1.1 billion short tons and since then has declined to just 587.3 million short tons per year as of 2019. U.S. coal production has seen similar declines. 

Russell Stokes, the CEO of GE's power businesses, said in a statement that the company was repositioning its portfolio away from energy markets in decline. "With the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory," he said. While he didn't explicitly say that coal doesn't meet those parameters, it was certainly implied. 

Portfolio changes

GE has been making major changes to its portfolio over the past several years, divesting underperforming businesses like appliances (sold to Haier in 2016), oil and gas (merged with Baker Hughes and spun off in 2019), and transportation (merged with Wabtec in 2019). 

With the change, GE's power portfolio will primarily consist of making and servicing wind turbines, steam turbines for natural gas and nuclear power plants, and power-management equipment. 

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John Bromels owns shares of General Electric. The Motley Fool owns shares of and recommends Westinghouse Air Brake Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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