Coal stocks rise, even as the planet warms
These phenomenal stock returns are embarrassing to say the least. The long-term needs of the planet are clear if the world is to avoid the most catastrophic effects of climate change: to burn much less coal and reduce it as quickly as possible.
Consider that the International Energy Agency has warned that all coal-fired power plants are to be shut down or fitted with carbon capture technology within the next 20 years. Of all the blocked assets – those owned but unlikely to ever be used – owned by fossil fuel companies, coal is generally considered to be the most likely to be phased out in years to come.
The gloomy outlook had weighed on the stock prices of coal companies in recent years. In Peabody’s case, the stock price peaked above $ 42 in 2018, then headed for a long downtrend. It scraped nearly $ 1 a share last year as the global recession reduced demand for energy and electric utilities phased out their most inefficient coal-fired power plants.
But that was then.
Today, as demand soars and supplies are limited, the world is going through a kind of crisis, a crisis that the Economist labeled “the first great energy shock of the green era”. Despite large global investments in green energy, old back-up fuels are back in fashion.
Monday a new report by the US Energy Information Administration concluded that by 2021, “the annual production of coal-fired electricity in the United States will increase for the first time since 2014,” an increase of 21% from 2020. It will increase. expects this increase to be temporary.
But the global economy has grown rapidly and there is a severe energy shortage, especially in China and Europe. Natural gas in the United States has been relatively abundant and inexpensive and has replaced coal and oil as the source of electricity generation. But its price rose as the supply tightened. This increased the demand for coal and also contributed to the rise in coal prices. A cold and expensive winter is forecast for the United States.
As global demand for energy has increased, exports of coal from the United States to China and other regions have surged. China relies heavily on coal for power generation. Already, it has started to ration electricity, forcing a drop in the production of its factories and deterioration global supply chain issues. Despite its stated commitment to reducing greenhouse gas emissions, China has strived to add coal supplies (as well as cleaner fossil fuels such as liquid natural gas and oil).