Anyone who thinks coal is history has another thing coming.
Today, the International Energy Agency released its Medium-Term Coal Market Report, outlining the global future of coal.
And it looks like it’s here to stay.
According to the IEA, over the next six years coal demand will grow at an annual rate of 2.6 percent until the natural resource actually rivals oil as the most highly demanded energy source.
By 2017, the report predicts, coal demand will hit 4.32 billion tons of oil equivalent, while oil demand will reach 4.4 billion tons.
And 90 percent of that demand increase to 2017 will come from China and India.
China, as the Huffington Post suggests, is essentially fully industrialized. Still, it will account for 77 percent of that increase in consumption in the next five years. India will account for 22 percent.
And the U.S., one of the biggest coal producers, will likely expand its markets in these Asian nations.
From the Huffington Post:
“To the degree that affordable coal has allowed hundreds of millions of people in emerging economies to enjoy the conveniences that the industrialized world began taking for granted long ago, its proliferation is a blessing,” [IEA executive director Maria] van der Hoeven wrote in commentary accompanying the release of the report. “Yet for a society increasingly concerned about the amount of carbon it is sending into the atmosphere, the surge in coal burning is not good news.”
This much has climate scientists concerned. China already accounts for most of the world’s pollution. Per capita, the U.S. is worse. But U.S. coal consumption isn’t going up.
It’s already begun to drop as cheap natural gas takes the helm. The IEA predicts that in the years between 2011 and 2017, U.S. consumption will fall as much as 14 percent as natural gas continues to be favored.
But though that means coal-fired plants may retire, the U.S. will still have exports to rely on – and as consumption surges globally, this will be a good thing.
The U.S. is growing as a coal exporter, with exports overseas increasing 31 percent just between 2010 and 2011.
But European Union imports may begin to thin as climate change issues are addressed in the form of coal legislation.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the newsletter below.
“Increasing renewables, coal-plant retirement and more balanced gas and coal prices will decrease coal consumption in Europe,” according to the report.
Climate change is a rising issue, particularly in the coal industry. Recently, the World Bank warned the climate was in danger of rising more than three degrees Celsius above pre-industrial levels. Anything above two degrees Celsius is considered dangerous.
And in fact the pollution isn’t all from developing nations that rely on cheaper coal. As the World Bank’s Robert Bisset told the Huffington Post:
“The problem with coal emissions rests squarely in the most highly-industrialized nations. If you took all the developing countries in the world and added up all their emissions together, it still would be one-third of the emissions of the U.S., European Union, and China combined – just one-third.”
Coal consumption is declining in all but China. Natural gas-fired plants have helped reduce U.S. emissions to 20-year lows. And emissions are still high.
But coal demand will still continue to increase, even if the EU and U.S. are not a part of that increase. It’s good news for the struggling U.S. coal companies, which will profit off a rising demand for imports from these developing nations.
That’s all for now,
Energy & Capital’s modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.