![]() The company produced about 100m tonnes of coal last year and will mine about 120m tonnes this year following a deal to buy out partners in a Colombian mine. ![]() Glencore has pledged to cap its coal production at 150m tonnes a year - but that figure will still allow room to increase output. Commodity trader Glencore says that part of the reason prices, and profits, are so high right now is because of that structural decline, which means a lack of investment into new coal projects and consequently a smaller supply. The coal industry itself largely agrees - or at least, the publicly listed European and American coal companies do. “We are not in some grand period of time where thermal coal will get better and more investable.” “Coal is having a dead cat bounce, in my view,” says Mackin. “The momentum is still very strong toward the energy transition, in the big picture.”īehind the record profits of the coal sector lies an industry in structural decline. “These are bumps on the road,” says Scott Mackin, managing partner at Denham Capital, a sustainable infrastructure fund based in Boston. Bumps on the roadĭespite these setbacks, many energy executives believe that a transition away from fossil fuels is still happening - if perhaps not as quickly, or as easily, as expected. “If there’s any natural gas shortage, China may have to again resort to increasing domestic coal production - often cited as the last defence for energy security by officials,” says Xizhou Zhou, vice-president of power and renewables at IHS Markit.īeijing has pledged to cap its coal consumption during this decade, which means that its coal consumption, and emissions, are likely to keep growing for several more years. This year, Beijing is targeting 5.5 per cent gross domestic product growth, which implies a further increase in energy demand.Įven though China gets only 5 per cent of its gas supply from Russia and 10 per cent of its oil supply, according to data from IHS Markit, it is not insulated from the global energy shock. The increase in Chinese power demand in 2021, compared with 2019, was the equivalent of the entire power output of Germany and France combined. (The US was not far behind, accounting for about 22 per cent of the global increase in emissions last year.) The country is still constructing new coal plants, and emissions there rose 4 per cent last year, accounting for a quarter of the total global increase in emissions. ![]() This is most likely due to being offline or JavaScript being disabled in your browser.Ĭoal is still dominant in Asia too, especially in China, the world’s largest emitter. You are seeing a snapshot of an interactive graphic. Russia accounts for about 30 per cent of Europe’s imports of thermal coal, which is burnt in power stations to generate electricity. As banks, insurers and shipping companies shun Russia, coal consumers in Europe and Asia are now scouring the market for alternative sources of supply and pushing up prices, which last week hit more than $400 a tonne, from $82 a year ago.Īt those prices, 2022 promises to be another year of bumper profits for the industry. ![]() The conflict in Ukraine is having an impact on the global coal market in other ways, as Russian coal exports are called into question. “The faster EU policymakers seek to move away from Russian gas supplies, the greater the potential implication, in terms of economic costs and near-term emissions,” the IEA said, in a report last week. The IEA recently acknowledged this trade-off. Gas prices hit a record above €335 per megawatt hours this week, and at that level it is cheaper for some power stations to burn coal rather than gas even when the cost of carbon permits is taken into consideration.Įnergy security concerns are also contributing, with some countries including Italy saying they may need to burn more coal, in order to burn less Russian gas. That point was acknowledged last week by Germany’s economy minister Robert Habeck, of the country’s Green party, who said Europe may be forced to burn more coal in the face of Russian aggression and spiralling gas prices. The war in Ukraine could boost coal demand even further, at least in the short term. Peabody chief executive Jim Grech expects this year to bring “a period of elevated demand” for coal, and continued high prices. A solar park sits beside a power station in Lippendorf, Germany, which plans to cut its dependence on Russian energy imports by reaching 100% clean power by 2035 © Krisztian Bocsi/Bloomberg
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